BEIJING -- As China's largest mobile operator kicks off caller-pay schemes in Beijing for the first time on Thursday, subscribers are rubbing their hands in anticipation of free incoming calls.

China Mobile announced a week ago that Beijing subscribers who buy monthly prepaid fee packages available as of Thursday will no longer have to pay to receive calls.

China Unicom, the country's second largest mobile operator, also promised its Beijing subscribers cheaper caller-pay schemes. The two mobile giants rushed to promote caller-pay schemes in the southern economic powerhouse Guangdong Province and in western metropolis Xi'an in the past week.

Europe, India and Japan have had caller-pay policies for years, but China has allowed mobile companies to charge both callers and receivers. When calculated in terms of income levels, calls cost more in China than they do in other two-way charging countries like the United States.

The two-way charging mechanism, high monthly rental charges and high roaming fees have all drawn complaints from Chinese consumers.

"China needs to make a bigger effort to protect consumers' interests, because they have certainly taken a back seat in recent years," said Chen Jinqiao, a telecom expert in Beijing.

Analysts say the government's original aim was to fund the development of the telecom industry and avoid diluting state-owned assets.

Regulators are at last beginning to favor the interests of ordinary consumers. "Things are moving," said Chen.

Without changing the number or type of calls they make, caller-pay will save each subscriber 20 to 30 percent of their mobile fees, said Chen.

"Mobile service providers are showing respect for consumers' feelings," said Li Chunchun, a China Mobile subscriber working at the Beijing-based China Central Television Station. "It's unfair to charge me for answering phone calls from anyone anytime."

Xi Guohua, vice minister of information industry, said at the end of last year that the government would encourage telecom companies to adopt caller-pay schemes.

Moreover, sources with the National Development and Reform Commission, the country's top economic planner, told journalists this month that new charging schemes that fail to incorporate caller-pay services will no longer be approved.

Analysts hold diverse views on whether the trend will threaten the profits of mobile operators.

Shanghai-based Orient Securities Co. has predicted that caller-pay schemes will cut China Unicom's revenues in 2007 by 1 to 3 percent year on year and slow the growth of net profits by 6.5 to 20 percent.

Chen 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.

The cheapest fee package with caller-pay bonus offered by China Mobile in Beijing costs 99 yuan (US$12.4) per month, compared to a minimum 88 yuan for the previous package.

But the blow will be severe for smaller mobile operators and fixed-line companies, because the big mobile companies will further dominate the market by roping in more customers, said Chen.

Data from the Ministry of Information Industry (MII) show that the domestic revenue share of major fixed-line players China Telecom and China Netcom fell from 2003 to 2005, while China Mobile's share shot up to hit 42.4 percent last April.

Apart from fears of further unbalancing the market, the industry's reformers also have to find a way of distributing earnings when one-way charging calls involve two different operators.

The country has yet to work out an earning sharing mechanism that can satisfy all parties, said Xin Yongfei, researcher with the China Academy of Telecommunication Research under the MII.

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 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.

MII data show China had 461 million mobile users at the end of last year, about 17 percent up from 2005. The figure rises by more than 5 million a month.