China's three major telecom operators suspend 'free phone' installment purchase plans

Starting September 24, the three major Chinese telecom operators—China Mobile, China Telecom, and China Unicom—have suspended their installment-based phone purchase programs, commonly known as "free phone" or "broadband gift" promotions. These programs, which allowed customers to receive a phone for "free" by signing up for a plan, have been the subject of widespread consumer complaints.

The Problem: Hidden Loan Contracts

In many cases, consumers who believed they were signing up for a communication service were actually entering into loan agreements. Monthly phone bills included repayment amounts for the phone, and missed payments could lead to loan defaults and damage to personal credit records.

For example, three years ago, a Mr. Wu from Zhuzhou, Hunan Province, was approached by a salesperson who promised a free phone if he stayed with the network for three years. Days later, Mr. Wu received a text message saying a loan had been successfully issued. According to the contract, he had unknowingly taken out a 36-month consumer loan of 1,950 yuan.

Operator Confirmations

When contacted by media, customer service representatives from China Telecom, China Unicom, and China Mobile's "HePay Credit Purchase" program confirmed that these installment purchase services have been suspended.

• China Telecom (Shenyang branch): "The new service is currently undergoing system optimization and upgrades. New applications are temporarily suspended. If you want to sign a phone contract, you can inquire about other promotional purchase activities at the business hall."

• China Unicom (Beijing branch): "The installment products are all being upgraded. The specific date for resumption is pending further notice."

• China Mobile's "HePay Credit Purchase": "Due to version updates and upgrades, new applications are temporarily unavailable. We are waiting for further notice on when it will resume."

• China Mobile (Hunan branch): Published an official announcement stating that from 24:00 on September 23, all HePay installment phone purchase products were officially discontinued. New applications are no longer supported, but existing users are not affected.

Regulatory Context

On September 30, the Measures for the Administration of Online Marketing of Financial Products, jointly issued by the People's Bank of China, the Ministry of Industry and Information Technology, and other departments, will take effect. The measures explicitly require that financial product marketing must not contain false or misleading content.

Expert Analysis

Pan Helin, a member of the Expert Committee on Information and Communication Economics under the Ministry of Industry and Information Technology, believes the direct trigger for the suspension is that this model has become a typical "negative asset"—financially unsustainable and fraught with legal and reputational risks.

Pan noted that with the continuous development of digital technology, the role of physical business halls is shrinking. At the same time, the regular implementation of the "number portability" policy has fundamentally broken the barriers that previously allowed operators to lock in customers through long-term contracts.

Important Reminder for Existing Users

Existing users who have already signed installment contracts are not affected by this adjustment. Their original contracts remain in effect, and they should continue to fulfill their agreements as before. After the contract expires, they can switch to other available plans.

Consumers are advised not to trust any phone calls promoting "installment phone purchases" or "free phones through internal channels."