The Chinese Government is to give value-added telecom services a shot in the arm, according to Jiang Yaoping, vice-minister of the Information Industry.

Speaking yesterday at the eighth China Beijing International High-Tech Expo, Jiang pledged to support development of the sector.

"Value-added telecom services are already becoming a new business growth area for China's telecom industry," he said.

"Through enhancing the infrastructure as well as adjusting related policies accordingly, we hope to build up a sound business environment."

The government will also strengthen laws and regulations to better supervise the market and protect consumers, he added.

Government statistics show that last year revenue from value-added IT-related services accounted for 7.2 percent of the nation's gross domestic product.

"Value-added telecom services based on the Internet and mobile networks have had a meteoric rise," Jiang said.

In the first quarter of the year, a total of 67.2 billion short messages were sent, about 700 million per day. The figures represent growth of 39 percent over the same period last year.

Meanwhile, broadband users grew to more than 28.3 million.

Analysts believe that a sound business environment will help participants in the value-added telecom services industrial chain form effective and profitable business models.

Figures showed that by the end of last year, there were 13,000 enterprises devoted to value-added telecom services, with 693 firms able to provide nationwide coverage.

"Privately-owned enterprises are now the industry mainstream, accounting for about 84.1 percent of all companies providing nationwide services," Jiang said.

Jiang believes the huge domestic market has provided great business opportunities for value-added telecom services.

The Ministry of Information Industry's figures showed yesterday that 353.7 million subscribers nationwide had signed up for the services by the end of April, a 20 percent rise from a year earlier.

Meanwhile, fixed-line users grew to 329.5 million by the end of April, a 15 percent rise from a year earlier.

"We believe that value-added telecom services will become one of the major growth areas in the coming years," said Wang Yingpei, general manager of the Value-added Business Department of China Unicom.

As one of the leading telecom operators, China Unicom is the only telecom carrier who operates both GSM and CDMA (code division multiple access) networks.

Last year the company had a registered revenue of 3.94 billion yuan (US$475 million) from its short messaging service, up 40 percent from the previous year.

"We are expecting to maintain growth of 30 percent in our short messaging service this year," Wang said.

"However, for other value-added telecom services, we still need more time to further cultivate the market and help our customers build up their use of value-added services," he added.

The company figures show that value-added telecom services accounted for about 11.7 percent of its total mobile business in March.

According to Wang, China Unicom is to promote its value-added telecom services by enhancing cooperation with content providers, telecom equipment suppliers and handset makers.

"Enhanced cooperation is a win-win deal for all participants to create new applications and improve revenues," he said.

Value-added telecom services offered by China Unicom include instant messaging, multi-media photos, ring-back, wireless e-mail services, wireless finance and online gaming.

Both China Telecom and China Netcom are also busy venturing into broadband and Web-based television to bolster income as fixed-line services are overtaken by wireless operations.

(China Daily May 26, 2005)