The policy would allow China’s mobile users to enjoy lower costs from as early as next month. Today, when a mobile call is made, both the caller and the receiver must pay.

A source close to the MII said the decision to adopt the CPP system had already been made. "The new policy has been kept secret by both the regulator and the mobile operators," he said.

The government has hinted at interest in moving to a CPP system for 10 years. The move will bring the mainland into line with most of the rest of the world. Carriers in the United States, Canada and Hong Kong still use the two-way model.

Regulators adopted the existing billing model when China Mobile and China Unicom were set up in the 1990s because the companies needed extra revenue to support the construction of nationwide networks. The system continued to prevent price wars that might undermine their financial health. Now, with the mobile sector rapidly maturing, policymakers and consumers believe the mobile operators can afford to move to CPP.

Mobile and Unicom would likely see an initial revenue reduction after the change. In 2000, analysts estimated the change to CPP would cut both firms' revenues by around 20%.

CPP is expected to have the largest impact in big cities where, due to wider profit margins and larger user numbers, the two operators have stuck strictly to the two-way billing system. In some smaller cities the operators have already launched discount packages that effectively amount to one-way billing.

China Mobile and China Unicom averaged an ARPU of US$ 9.12 per month in the first half of this year, compared with US$ 8.24 for fixed-line operators, the MII said – and the gap is widening.

CPP could lead to a further reduction in fixed-line revenues. China Telecom and China Netcom fear the impact of lower-cost mobile services on their personal handyphone system, a geographically limited service that competes with mobile services.

Source: South China Morning Post - WDR/Intelecon Regulatory News