The Ministry of Information Industry announced at the end of February that prices for Internet access, long distance telephone calls, and new phone line installation are to be cut dramatically. Internet access fees, according to the China Daily, will drop by up to 50%, though most users who use the 60 hour/month package plan will see their cost drop only 20%, from 300 RMB to 240 RMB (US$ 29). Additional hours will cost 8 RMB (96 cents) per hour. New installation of telephone lines will drop from 3,600 RMB per line to between 500 and 1000 RMB, with free installation for a second line. International call prices will also drop significantly for some regions. Calls to Hong Kong, Taiwan, and Macau will drop from 8.1 RMB (96 cents) to 5 RMB (60 cents) per minute. Calls to the US will drop 18%. Not all the news on fee reductions is good, however. Independent Internet access providers apparently received no relief from the high cost of leased lines they use to offer Internet access, which account for up to 80% of their entire operating costs. For comparison, US ISPs spend 5-6% of their operating costs on line rental. This will put increased pressure on indy ISPs already bleeding red ink.
In other news this past week, Internet traffic in China was reportedly high during the Chinese New Year holiday. Beijing Telecom reported that more than 1.78 million people exchanged online New Year greetings in Beijing alone and there were numerous complaints of Internet slowdowns.