Many of China's wireless value service providers have issued statements about how they plan to operate under new rules set by China Mobile.
Beginning July 10, 2006, for any new subscriptions to WVAS including short messaging services (SMS), multimedia messaging services (MMS), and wireless application protocol (WAP), China Mobile will send out two reminder notices to the customers prior to charging subscription fees in the customers' monthly mobile phone bills.
In addition, customers will get a free trial period of 11 to 41 days depending on the day of the month that the subscription is first ordered. Currently, China Mobile sends one reminder notice immediately after a subscription is ordered and requires a free trial period of three to eleven days.
China Mobile will also begin to cancel existing WAP subscriptions that have not been active for more than four months.
Finally, China Mobile and its provincial subsidiaries plan to gradually send SMS to all existing WVAS subscribers over the course of August and September 2006 to remind them about their subscriptions and fees being charged.
Hurray! announced that it is reaffirming its second quarter 2006 revenue estimate of US$16.5 to US$17.5 million, but anticipates significant negative impact from new operator policies on its wireless value added services business for the rest of 2006.
Likewise, KongZhong revised down its revenue projection for fiscal year 2006 to the range of US$85 to US$105 million. On May 18, 2006, the company projected its fiscal year 2006 revenue to be between $110 and $115 million.
Chinese portal Sina.com says the policy changes will reduce the Sina's ability to acquire new monthly MVAS subscribers and increase churn of the company's existing monthly MVAS subscribers. Although Sina has not completed its assessment of China Mobile's policy changes, the company believes these policy changes will, nevertheless, have a significant, negative impact on its MVAS revenues going forward.
