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Mobiles cut Little Smart's business

CHINA'S Little Smart subscriber base dropped 17.4 percent last year as users turned to mobile phones and carriers made major investment into mobile business, especially on 3G, the industry regulator said today.

Little Smart is a city-wide cordless communications technology based on fixed-line network. Little Smart users enjoy lower rates than mobile phones but they are often not allowed to make long-distance calls.

Carriers such as China Telecom and China Netcom concentrated on it before they got mobile licenses last year.

By the end of the year, China's Little Smart user base had dropped to 69.83 million from the 84.54 million a year ago.

The mobile phone user base, however, jumped 93.92 million in the year to hit 641.23 million by the end of last year, according to the Ministry of Industry and Information Technology (MIIT).

"Now the fixed-line carriers have stopped the investment on Little Smart. Instead, they focus on the newly acquired mobile business and broadband business, the long-term profit engine," said Wan Yangsong, an analyst at AJ Securities.

In the national telecommunications reorganization started in June, China Telecom acquired China Unicom's CDMA (code division multiple access) network and business while China Unicom kept its GSM (global system form mobile communications) network and business when it merged with China Netcom.

At the start of January, the carriers along with China Mobile got 3G licenses.

Now the fixed-line carriers have the mobile licenses they urgently needed and aim to move into 3G, which is investment-intensive, they do not need to continue develop Little Smart, industry insiders said.

"The Little Smart, however, won't disappear within two or three years. The challenge to the China Telecom or China Unicom is how to persuade the users to transfer to their new mobile networks, but not China Mobile's," said Sandy Shen, a Shanghai-based analyst at Gartner Inc.

While fixed-line phone and Little Smart business decreased last year, China's broadband user base jumped 15 percent to 83.42 million, according to MIIT.

In the year of 2008, the combined telecommunications revenue was 813.99 billion yuan (US$119.7 billion), 7 percent growth from the previous year, MIIT said.


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