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User base dropping for Little Smart

CHINA'S Little Smart subscriber base dropped 17.4 percent last year as users switched to mobile phones and carriers transferred major investment to mobile businesses, especially 3G, the industry regulator said yesterday.

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

The service allowed carriers such as China Telecom and China Netcom expand their wireless businesses when they didn't have mobile licenses.

By the end of last year, China's Little Smart user base was 69.83 million, compared with 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.

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

Under the national telecommunications reorganization that started last June, China Telecom acquired China Unicom's CDMA (code division multiple access) network and business, and China Unicom's remaining GSM (global system for mobile communications) network and business merged with China Netcom.

At the beginning of last month, the carriers, along with China Mobile, received 3G licenses.

Now the fixed-line carriers have the mobile licenses they urgently needed and aim to capitalize on the opportunities presented by 3G.

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

Despite the decrease of fixed-line phones and Little Smart business, China's broadband user base jumped 15 percent to 83.42 million last year, according to MIIT.

China's total telecommunications revenue was 813.99 billion yuan (US$119.7 billion) last year, up 7 percent from the previous year, MIIT said.



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