The Ministry of Information Industry (MII), China's top telecom regulator, has told China Telecom and China Unicom, the country's largest fixed-line operators, to stop providing Xiaolingtong, or PHS, roaming services.

This decision to stop Xiaolingtong roaming services was made to avoid over-competition between Chinese telecom carriers, the MII said.

Xiaolingtong services provide low cost wireless communication services to subscribers based on fixed-line networks, and have become an increasingly significant source of competition for the country's mobile carrier's China Mobile and China Unicom. Regulators feared that roaming services for Xiaolingtong subscribers would lead to further competition between the country's fixed-line and mobile operators.

At present, Xiaolingtong subscribers are only able to access services within a limited geographic area, usually restricted to the city in which they signed up for services. However, both China Telecom and China Netcom, the country's only Xiaolingtong operators, had begun testing roaming services that would have allowed their Xiaolingtong subscribers to access services over a much broader area.

China Telecom's subsidiary in Jiangsu Province had conducted testing of Xiaolingtong roaming services, while China Netcom's subsidiary in Heilongjiang Province had done the same. Moreover, local media had reported that China Telecom's subsidiary in the municipality of Chongqing had planned to launch Xiaolingtong roaming services covering five neighboring provinces on May 17 of this year, International Telecom Day.

Xiaolingtong services have become a major source of revenues for China Telecom and China Netcom. At the end of April, China Telecom had 48.271 mln Xiaolingtong subscribers, while China Netcom had 25.753 Xiaolingtong subscribers, according to Interfax research. However, both operators have seen a slowdown in the growth rate of new subscribers. Roaming for Xiaolingtong subscribers was one of several new services China Telecom and China Netcom were hoping would help reinvigorate user growth for their Xiaolingtong businesses. Officials from China Telecom and China Netcom, however, downplayed this new MII announcement.

"I don't expect this new policy to have an impact on our operations," Yang Xiaochun, Head of China Netcom's Xiaolingtong Business, told Interfax.

In addition to putting a halt to Xiaolingtong roaming services, the MII also said that Chinese telecom operators would not be allowed to provide communication services to stationary telephones using mobile phone networks, nor would they be allowed to provide special line IP (internet protocol) connections.

The ministry said it would make selective examinations in July and August to see that carriers had made relevant changes to their operations and were no longer offering any of the three newly prohibited services.