Ring-tone complaints cost millions in China

Chinese mobile service providers have lost tens of millions of dollars after the introduction of new rules

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.