CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 4, No. 8 - May 28, 2003
TOPICS THIS ISSUE:
- Telecommunication Goes Beyond Sars
- Phone Kingdoms At War In China
- China Maxxtel Reached Agreement With China Railway Com
- Chinadotcom Mobile Unit Launches Weather News Channel In China
- World Semiconductor Council Wants China To Lift Trade Barriers
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Telecommunication Goes Beyond Sars
China Mobile will face stiff competition now that the cheaper 'Xiaolingtong' ("Little Smart") is entering the big cities and China Unicom is aggressively selling its new CDMA-service.
In order to overcome fierce competition in the domestic market China Mobile intends to launch new and different services to meet customer demands. Among the new services that will be launched are: Mobile-zone (a special cheap service for sending short messages) and multi-media services.
Moreover mobile wallets that will enable customers to conduct online purchase via handsets will soon be tested in Beijing and Changsha in the Hunan Province.
China Unicom, the second biggest mobile operator in Mainland China, intends to improve its market position with its newly launched CDMA (code division multiple access) 1X network. In late March, China Unicom presented five brand new businesses based on the CDMA 1X network, including colorful multi-media e-mail services, broadband services and interactive communications services.
Both China Netcom and China Telecom, the country's two fixed-line operators, started their "Little Smart" wireless phone services in Beijing and Shanghai, which had previously been banned for fear of price competition.
"Little Smart" is built onto a city's existing fixed-line network. It is an attractive and cheap product with its one-way charges and cheap monthly fees. However, it does not allow movements between cities and international roaming services.
The "Little Smart" wireless phone service will be introduced at government office buildings, hospitals and other places where Beijing's health departments are located, as reported in China Daily recently quoting a source from Beijing Communication Corporation, a subsidiary of the China Netcom Communication Group Corp.
The SARS plague could positively trigger the spread of this wireless phone service. It was reported that the company hopes that the service can make its contribution to the current war against SARS by providing a new and effective way of telecommunication.
The construction on the related networks and facilities for "Little Smart" was delayed by SARS as it has been built unevenly, so far.
Due to its comparatively low telecommunication fees, the new service is likely to put a dent into the upsurge of the conventional mobile phone operators in Beijing and Shanghai.
(Source: ChinaBiz)
Phone Kingdoms At War In China
Beijing's Mobile phone operators have reported less number of new subscribers in April. SARS but also an increasing competition from local wireless systems put the sector under pressure to readjust prices, as reported in the Financial Times.
China Mobile, the world's biggest cellular operator by subscribers, registered only 1.7 million new users in April, a comparatively low figure in the world's largest market for mobile phones. The company blamed the decrease in user's growth on the outbreak of the severe acute respiratory syndrome (SARS), Hong Kong Standard reported recently.
However, it is the end of China's telephone duo-poly now, China Mobile and China Unicom face changes in the users behavior. The two leading phone companies have to find more than ever before ways to widen margins and generate greater returns from existing customers.
The competition from "Xiaolingtong" or "Little Smart"'s local wireless services offered by fixed-line operators China Telecom and China Netcom is increasing, as reported in ChinaBiz.org recently. Regulators have not officially approved Xiaolingtong, which uses the wireless Personal Access System (PAS) to offer mobile telephone access. Nevertheless, it has been launched in Guangzhou, Shanghai and Beijing without objection after having limited themselves initially to the second tier cities.
Telecom regulators have long sought to stop a fierce war for market share between the two mobile operators by imposing minimum prices. While the short range of the base stations used by the system limits the coverage offered by "Little Smart", its low price has helped win an estimated 16 million users.
China Mobile's Beijing subsidiary intends to offer special packages that would cut dramatically the amount that heavy users must pay for receiving calls from other China Mobile users. In Shanghai, China Mobile offers an attractive package that would end the two-way charges where also the receiver has to pay for calls. The "Little Smart" services do not charge for taking calls.
It was reported that foreign phone companies like Alcatel, the world's largest telecom infrastructure provider, see the SARS possible market triggers. Alcatel together with China Mobile donated more than US$200,000 worth of telecommunication goods to the Beijing Government, to support the hospitals and medical workers in China treating patients with SARS.
Growing competition in China's lucrative mobile market has led to difficulties in interconnection among users of different networks. China Mobile's chairman and chief executive officer Wang Xiaochu said, in an interview on China Central Television CCTV, the company had started talks with rivals on the connection conflict.
(Source: ChinaBiz)
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China Maxxtel Reached Agreement With China Railway Com
China maxxTEL, a division of maxxZone.com, has reached agreement with China Railway Com ("CRC") for 5 million minutes per month of China-USA IP telecommunications traffic to test quality of service and customer delivery.
China maxxTEL, recently acquired by maxxZone.com, Inc. concluded a ground-breaking agreement with CRC to handle telecommunications traffic between China, USA and the rest of the world.
Mr. Fernando Rojas, the President of China maxxTEL, said in Houston that "subject only on our ability to meet the needs of CRC, we expect traffic volume to increase to 50 million minutes per month within the next 6 months". He also added, "China Railway Com is owned by the Ministry of Railroads and Department of the Army. It has built extensive backbone networks over its right-of-ways to connect to major cities throughout China and extensively penetrates a population of 1.6 billion people. This provides CRC with unique growth opportunities for domestic and international telephony services. China maxxTEL aims to become a partner in this development".
With the present formal agreement for 5 million minutes, CRC has indicated it will terminate any amount of minutes sent to China. Level 3 has agreed to terminate calls into the US. Negotiations are also in progress with CRC for a significant number of outbound minutes.
"China maxxTEL, via Convertible Notes issued by maxxZone.com, is presently raising US$1million to establish the essential infrastructure in Beijing and Los Angeles. Once in place it will be able to handle all needs of CRC, with capacity to service additional China telecommunications companies," concluded Mr. Rojas.
(Source: Business Wire)
Chinadotcom Mobile Unit Launches Weather News Channel In China
Chinadotcom corporation, the leading integrated enterprise solutions company in Asia, announced recently that its mobile applications unit, Newpalm (China) Information Technology Co., Ltd. (''Newpalm''), a leading short message service (SMS) and mobile software and application developer in China, has successfully launched a weather news channel in China by partnering with Huafeng Weather Group, a national weather content provider.
With this service, mobile users in China can enjoy scheduled or on-demand weather news of any particular cities in which they are interested throughout the country. This is a customized weather news service as users can select the weather news presented by a particular China Central Television weather news presenter and have it delivered to the users at a specific time during the day. The newly launched service is a nationwide service and is charged at 20 cents RMB (US2.4 cents) per message on a subscription or demand basis.
John Xiao, Chief Executive Officer of Newpalm (China) Information Technology Co., Ltd., said, ''The partnership with Huafeng Weather Group allows us to provide customized weather news services through SMS to our users. It is our commitment to providing creative and value added mobile services to our users in China. We expect to see an increasing variety of these kinds of services and products launched in the near future through partnerships or by leveraging on the portal network within the chinadotcom group.''
The weather news service is delivered through SMS and is expected to develop into Java based applications, a more interactive interface on a mobile screen, in the near future. In addition, the weather news service is also available for china.com portal web-based users who can sign-up from the portal network.
''We are pleased to see continued momentum in the launch of new services by Newpalm,'' said Daniel Widdicombe, Chief Financial Officer of chinadotcom Corporation. ''SMS is one of the fast growing sectors in China, and we believe there is great potential for us to build our business in this area. Leveraging the advantages of Newpalm's SMS expertise and our portal experience, we believe chinadotcom is well positioned to become one of the market leaders in this arena and we expect Newpalm to bring additional revenue streams to the group going forward. Newpalm's financial results will be consolidated into the chinadotcom group from Q2 2003 onwards.''
Earlier in April this year, Newpalm and china.com jointly launched the free SARS (Severe Acute Respiratory Syndrome) news service to Internet and mobile users in China. Over 200,000 mobile subscribers are using the free service and more than one million messages were sent since the launch of the SARS SMS content service. Subscribers can retrieve through their mobile phones the latest SARS developments and statistics, as well as SARS preventative educational information.
(Source: PR Newswire)
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World Semiconductor Council Wants China To Lift Trade Barriers
The World Semiconductor Council (WSC) in Nice, France called on China to remove the trade barriers it has placed on foreign semiconductor products, charging Beijing with discriminatory and protectionist use of tax rebates.
The WSC, in addition to admonishing China, in its 7th annual meeting, also condemned chip counterfeiting, recommended that copyright levies not be applied to digital products and proclaimed the importance of proactive support for sound environmental, safety and health practices.
According to George Scalise, president of the Semiconductor Industry Association, a member of the Council, the WSC offers a unique opportunity for the semiconductor industry to proactively pursue policy initiatives on a global basis. He also said that all of the major semiconductor-producing regions agree on the need to eliminate trade barriers, like discrimination against foreign products in China, which is the world's fastest-growing market.
Scalise added that China made great strides in opening its market as part of its WTO (World Trade Organization) accession, but the discriminatory application of the value-added tax negates the benefits it promised to provide when it joined the WTO. Hence, the semiconductor industry is calling on China to honor its WTO commitments by eliminating the discriminatory value-added tax (VAT) on all semiconductors, which will also help China by lowering the cost of access to information technology goods for its consumers.
The WSC reported that China applies a 17% VAT on imports, while domestic products are eligible for a rebate, making the effective VAT rate either 3% or 6%.
The WSC comprises members of the Board of the European Semiconductor Industry Association; the Japan Electronics and Information Technology Industries Association; the Korea Semiconductor Industry Association; the U.S. Semiconductor Industry Association; and the Taiwan Semiconductor Industry Association. China has no representation.
(Source: Electronic Engineering Times)
The China Information Technology Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
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