China’s largest mobile network operator China Mobile is halving the cost of call charges for subscribers using its 135, 136, 137, 138 and 139 tariffs in response to the threat posed by the popularity of Xiaolingtong (XLT), or Little Smart phones. XLT services were launched in China in 1997 and are based mainly on personal access system (PAS) technology, which was developed in Japan in the early 1990s under the title personal handyphone system (PHS). They essentially enable the user to extend the range of his or her fixed line phone via the incorporation of radio transmission equipment, but do not have the range of a cellular service.
Whereas the popularity of such systems has been waning for several years in Japan, the opposite has happened in China, with connections soaring from twelve million at the end of 2002 to around 30 million a year later and approximately 65 million by December 2004. The wide use of XLT has stripped away part of China Mobile’s customer base because its call rate of CNY0.20 for three minutes is half that of the GSM alternative offered by China Mobile.