Ring-tone complaints cost millions in China

The latest financial data from companies offering ring-tone downloads, text information and other mobile services in China reveal sharp falls in revenue as new policies designed to protect consumers take effect.

Some service providers have lost more than a quarter of their anticipated revenue, totalling tens of millions of dollars, after the introduction of the new rules.

Earlier this year, China's two mobile phone network operators, the giant China Mobile and its smaller competitor China Unicom, changed the rules under which third-party providers can sell services over their networks. 

The changes were prompted by customer complaints and new government regulations.

Thousands of customers had complained that they were being billed for services and downloads to which they had not agreed, or were unable to cancel services from the so-called wireless value-added services providers.

With the introduction of the new rules, customers were first required to opt-in to continue receiving services to which they were already subscribed.

Subsequently, the new rules require that they receive clear, repeated notification of any new service when they sign up. Additional restrictions include a preset upper limit on monthly service fees.

Nasdaq-listed Tom Online and Kongzhong Corp are among the largest of China's numerous wireless value-added services providers. 

These companies earn most of their income from mobile phone users who pay for ring-tone and desktop wallpaper downloads, information such as news, weather and stock market reports via SMS, and interactive voice response services.

Most services are paid through the customer's mobile phone bill, from which the network operator takes a percentage.

See also:

China business VoIP exchange spending to triple

Voice exchange hardware spend nearing $500m within four years, analysts say  09 Nov 2006

Chinese government reins in IPTV growth

Regulatory hurdles blocking telco investment  03 Nov 2006

Chinese games firms face cut-throat market

Tough times ahead for one hit wonders, warn analysts  03 Nov 2006

Asia leads mobile phone music revolution

Music sales growing faster than handset market  17 Oct 2006

China to have 80m online gamers by 2010

40 million paying customers expected, and more to come  28 Jun 2006

Korea's SK Telecom looks to China

No more room for expansion at home  23 Jun 2006

China's mobile giants squeezing smaller players

End of easy pickings for value added service providers  13 Jun 2006

Nokia expands GSM network in China

First time in Sichuan  21 May 2006

China 3G delayed to spring 2007

TD-SCDMA manufacturers could benefit from subsidised trial  28 Jun 2006

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