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Expansion on hold for Little Smart wireless device
( 2002-07-29 10:12 ) (1 )

The proposed expansion of the Little Smart wireless telecom device to the suburbs of Beijing and Tianjin has been put on hold, according to sources close to the telecom carrier China Netcom and the Ministry of Information Industry.

Industry insiders said the government was concerned about the fortunes of the overseas-listed mobile telecom carriers China Mobile and China Unicom and the issue of new mobile licences.

The Little Smart system is technically known as the personal handyphone system or PHS. It provides cheap wireless phone services in most provinces and municipalities other than Beijing, Guangzhou, Shanghai and Tianjin.

Using the main equipment of fixed-line telecom networks, Little Smart has become an important revenue earner for the fixed-line carriers China Netcom and China Railcom and China Telecom.

Although Little Smart does not have the roaming services of mobile phones or such good voice quality, it has attracted millions of customers due to its cheap service charge - 0.10 yuan (1 US cent) per minute compared with 0.40 yuan (5 US cents) per minute with a mobile phone.

There were 6 million users of Little Smart last year and the figure could easily surpass 10 million, according to executives of UTStarcom, the major vendor of Little Smart equipment.

Metropolises such as Beijing, Guangzhou and Shanghai have been forbidden cities for Little Smart as the adoption of this cheap wireless device could hurt stock investors' expectations for the two overseas-listed mobile carriers China Mobile and China Unicom.

The government wants to stop the share prices of the two companies going down.

The government may have another reason for suspending the provision of Little Smart in the major metropolises, the industry insiders said. There is the possibility that the government may issue new mobile licences in the not-too-distant future, they said.

With mobile telecom licences, the fixed-line carriers could proceed directly to the more modern mobile telecom technology instead of Little Smart, which has always suffered from unclear regulatory policies.

Minister Wu Jichuan told China Daily earlier this year that China plans to issue two more mobile licences.

But he also made clear that the two new licences would not be issued in the short term.