It’s the end of an era. China Telecom warned yesterday that it will take a “significant” hit to profits in 2008 because of a massive write-down in asset value of the wireless local access network called Little Smart (小灵通/Xiaolingtong). China was one of the last major markets for PAS, based on Personal Handyphone System technology still in use in some parts of Japan.

According to a Financial Times article, analysts estimate China Telecom has Rmb27 billion ($3.9bn) to Rmb30 billion worth of Xiaolingtong assets and this year's write-off is expected to reduce net profit by about 90 percent to Rmb2.1 billion. China Unicom also operates a Little Smart network that needs to be wound down, so this is probably an harbinger of what it will do.

Some background: Little Smart is the hybrid fixed-line wireless service offered by China Telecom and the former China Netcom (now part of China Unicom). It was a way for the fixed line providers to get a slice of the wireless market and became quite popular because of its cheap pricing, despite the limits placed on roaming. At one point, users topped 90 million, but they have been steadily abandoning the service, lured by ever cheaper pricing and no roaming limits from GSM and CDMA plans.

Telco regulator MIIT plans to reclaim the 1900-1920MHz frequency band used by Little Smart before the end of 2011. It may reallocate the band to 3G services. For a story on one customer’s fight to save Little Smart, click here.