In China, fixed lines look to mobile, as mobile looks to rural

But the same laws of the market operate in the People's Republic as they do in other parts of the world and so, just like the West, the Chinese industry is discovering that the burgeoning popularity of mobile can have a markedly detrimental effect on fixed line operations.

China Telecom, the country's largest fixed-line provider, saw half-year profits fall over the six months to 30 June to 13.48 billion renminbi (£898 million), that's down from 14.16 billion renminbi recorded a year ago.
 
Although the number of fixed-line customers at China Telecom increased by 1.45 million to 224 million during the first half of 2007, China’s incumbent telco is facing increasingly tough competition from mobile operators. Firms such as China Mobile, that offer less expensive sign-up rates are causing "immense pressure of declining voice revenue," says China Telecom in a statement.
 
The world's biggest mobile market is still growing by leaps and bounds and there were over 500 million mobile phone subscribers at the end of June, equating to a 39 per cent penetration rate.  According to the Ministry of Information Industry (MII), the number of China’s mobile phone users is expected to reach 600 million by 2010. 

However, major hubs, such as Beijing and Shanghai, that hitherto have accounted for the rapid growth in demand for mobile phones, are showing signs of slowing down. And, as urban mobile markets saturate, Chinese mobile operators are turning to less developed cities and to rural areas to sustain growth.

One such that has secured considerable reward by targeting new subscribers in under-served rural areas is China Mobile.