However, with the precondition of buying a certain amount of outgoing calls, the packages Beijing Mobile offered are not real caller-pay mechanisms. Moreover, the cheapest fee package costs 99 yuan per month, while according to China Mobile's interim report, its average revenue per unit has reached 88 yuan and every subscriber uses the mobile phone for an average of 367 minutes every month. This means that less than half of the users can benefit from the new caller-pay packages.

Chen of the MII disagreed, saying leading service providers won't be badly affected despite possible profit fluctuations in the coming one or two months, as they will benefit from new subscribers signing up to take advantage of the one-way charging schemes and a higher threshold for caller-pay schemes.

Mobile service providers will not be badly affected despite possible profit fluctuations in the coming one or two months, said Zhu Min, Chen's colleague. According to her, because users need not pay for receiving calls, a lot of new subscribers will be attracted to the mobile phone operators. At the same time, money saved from incoming calls may be used to dial more phone calls or buy other services, which can pull up revenue growth of mobile service providers.

There is also a huge potential for Chinese mobile phone operators to continue cutting prices. According to Kan Kaili, a telecom expert, the profit rate of Chinese telecom companies is higher than 20 percent, but that in other parts of the world is less than 10 percent. In the United States where the telecom industry is highly developed, the profit rate is even lower than 1 percent.

"Take China Mobile as an example," Kan said. "In 2005, its turnover was 240 billion yuan and the net profit stood at 53.5 billion yuan, with the profit rate surpassing 20 percent, which is rare in the world."

Figures from China Mobile show that the per-minute operating expenditure of calls averaged 0.216 yuan in 2004, but it was reduced to 0.188 yuan in 2005 and 0.167 yuan in the first half of 2006. On the other hand, its per-minute revenue of calls averaged 0.63 yuan in 2001, but it declined to 0.271 yuan in 2005 and further to 0.237 yuan in the first three quarters of 2006. This means that compared with 2001, subscribers actually enjoyed caller-pay mechanisms in 2005, and charges in 2006 were only one third of those in 2001.

Chen urged the government to provide a fair environment for competition by speeding up anti-monopoly regulations and allowing fixed-line operators to conduct mobile business with 3G licenses, which are expected to be issued later this year.

"The government is likely to formally adopt a caller-pay rule after issuing 3G licenses, which is an excellent opportunity to restructure the telecom industry," said Chen.

He predicted that overall mobile costs will drop as consumption increases, meaning that the burden of monthly rental charges and roaming fees will ease gradually for Chinese consumers.