China Mobile has been under fire in the mainland over its pricing practices, with critics pointing out that the company is charging much higher service fees in China when compared to what it levies on its Hong Kong users.
In a scathing piece published by a news website recently, a blogger took China Mobile to task for discriminating against mainland users. Taking China Mobile Hong Kong’s cheapest unlimited mobile data plan as example, the article notes that the Hong Kong unit charges users HK$68 each month for 1700 voice minutes and 10,000 text messages plus unlimited 3G data with 384kbps speed, while a similar price plan in China only offers 10MB data usage and 350 voice minutes.
Not surprisingly, Chinese netizens reacted furiously, complaining about the unequal treatment of the firm’s mainland and Hong Kong customers. China Mobile is wrong in its pricing strategy, they said, with some people remarking caustically that the company appears to think that the living standards of mainlanders are far higher than those in Hong Kong.
The heartburn is understandable, but industry analysts say it is may not be appropriate for the public to directly compare the price plans of China Mobile in the mainland and Hong Kong, as the two markets are completely different.
The pricing difference reflects the difference in regulatory environment and market competition.
China Mobile Hong Kong needs cheap service plans to maintain its competitiveness in Hong Kong, a city which has four other major private sector players in the market and where the phone bills are among the cheapest in the world.
In the mainland, China Mobile is to a greater extent under government pricing direction and facing limited competition from two state-owned players.
China Mobile has no intention of lowering the service fees in the mainland unless it is ordered to. It also needs those fat margins to support its heavy 4G investments. By comparison, its 4G rollout effort is much less aggressive in Hong Kong.
That said, the company cannot afford to ignore complaints from its mainland users for too long, as the current criticism is just a reflection of the long-simmering discontent among its customers.
Given the present realities, the telecoms giant should proactively look at the possibility of lowering the service fees and eliminating unnecessary charges. The company can also do more to improve its services to win customer confidence.
Meanwhile, China Mobile also needs to get ready for an era of more intense rivalry as numerous mobile virtual network operators are entering the market with more innovative packages.
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