Telecom operators will be the major winners from the government's decision to gradually relax controls over telecommunications fees this year, according to industry analysts.

The Ministry of Information Industry (MII) announced last week that there would be further reform of its management of telecommunications fees, in a further effort to liberalize the sector.

Information Industry Minister Wang Xudong told the ministry's working conference, held last week in Beijing, that the management of telecommunications fees system will be gradually made more transparent, with the ultimate goal of enterprises being able to set their own fees.

"That's our target," said the minister, without elaborating on the date of the full liberalization of the fee system.

Telecommunications fees are currently set by the National Development and Reform Commission.

"Right at this stage, we have to enhance supervision to ensure the healthy development of the industry in line with related laws and regulations," Wang said.

Enterprises should also enhance their self-discipline to help standardize the market, he added.

As a matter of fact, the Chinese market is beset with price wars launched by almost all of the major telecom operators such as China Mobile, China Unicom, China Telecom and China Netcom.

"Telecom operators welcome the relaxed controls on telecommunications fees as they will be able to set their prices to suit market demand," said Chen Jinqiao, director of the China Academy of Telecommunications Research under the MII. "Looser control means more flexibility for telecom operators."

However, he said that telecommunication fee have become an extremely sensitive factor affecting the market performance of the major listed telecom operators. Therefore telecom operators should adopt caution while rolling out seasonal promotional activities.

Chen expected that the approaching Spring Festival holiday, which falls next month, will witness the slashing of mobile telecommunications fees.

One of the first shots in this new price war was fired by Beijing Mobile Corporation, which slashed its prices for sending multimedia messaging services (MMS) from January 1 to the end of February.

According to the company, its "Gotone" mobile phone subscribers only have to pay 2 yuan (24 US cents) to send 10 MMS messages.

Normally, the price for each MMS service is 0.90 yuan (10.8 US cents).

"Slashing telecommunications fees is part of the companies' overall strategies to attract more customers and consolidate its business," Chen said.

"However, telecom operators should also develop new business and services to seek new growth areas," he said.

He believed that new IP-based and wireless data services will be strategically important for telecom operators to maintain their future growth amid increasing market competition.

China Unicom last week kicked off its "Uni" multi-media portal to provide a full range of value-added telecom services in order to realize the sustained development of its data business.

The development of more value-added telecom services will also help telecom operators to increase the number of 3G customers before the real roll-out of commercial 3G services, likely to take place later this year.

"In the meantime, operators should turn to services, network upgrades and innovations," he said.

In an earlier interview with China Daily, Chen said that preparations are being made to establish an independent supervision organization, the State Telecommunications Management Commission, to supervise the country's telecommunications fee system.

"But the commission is unlikely to be unveiled immediately given the complexity of the nation's telecom industry," he said.

MII figures indicated that China had signed up 334 million mobile phone subscribers and 316 million fixed-line users by the end of last year.

Meanwhile, revenue from the telecom industry totalled 520.5 billion yuan (US$62.7 billion), representing a year-on-year growth of 13 per cent.