More Chinese than ever have mobile phones and are using them to download music and send multimedia text messages, although revenue per user fell at China's largest carrier in the first quarter.
Competition for high-end users has grown among China's three state-owned carriers as each unrolls an expensive next-generation mobile network.
China had almost 648 million mobile users after adding 26.7 million [M] subscribers in the first quarter, according to statistics from the carriers released late Monday.
Users sent over 174 billion text messages on China Mobile's network alone, said a statement from the carrier, the largest in the world with around three-quarters of China's mobile subscribers.
More China Mobile subscribers used their phones to download songs and send messages via MMS (Multimedia Messaging Service), which lets users transmit photos or videos.
The carrier counted over 384 million users of its wireless music service, where paid downloads of songs by Chinese and Taiwanese pop stars are particularly popular.
But average revenue per user fell for China Mobile as it added mostly low-end users and launched promotional deals in a marketing move, it said. The number fell to 73 yuan (US$10.70) per month from 83 yuan at the end of last year.
The carrier is offering "more economical" packages and plans for users, a company spokeswoman said by phone, declining to give further details.
Those may include the subsidized handset, phone card and minute bundles China Mobile has started offering to draw new users, said David Wolf, CEO of Wolf Group Asia, a Beijing-based technology consultancy.
Those have hurt revenue per user, as has the low potential value of new subscribers in a country where most people willing to pay for value-added services already have phones, Wolf said.
"We've kind of reached saturation of what I would call the high-end to the medium-end market in China," said Wolf.
China's launch of 3G networks this year could make it easier to sell more value-added services, Wolf said. Still, China Mobile and its rivals, China Telecom and China Unicom, will have to develop new applications to seize that opportunity, he said.
China Mobile's lack of attractive handsets compared to its rivals is an added challenge as the carrier seeks to attract high-end users, Wolf said.