Interview: Telecom Price Decided by Market

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Last updated at: (Beijing Time) Thursday, March 14, 2002

Interview: Telecom Price Decided by Market

China's information industry, particularly the telecom sector, has made remarkable progress in recent years. However, the industry's monopoly, reform, competition and costs incurred have become the problems of people's concern. Considering this, Wu Jichuan, minister of the information industry, gave his views in an interview with reporters during the ongoing CPPCC and NPC sessions.

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China's information industry, particularly the telecom sector, has made remarkable progress in recent years and it has come to reveal by itself being ever more closely related to the daily life of people in China. However, the industry's monopoly, reform, competition and costs incurred have become the problems of people's concern and turned out to be the focus of people's talks. Considering this, Wu Jichuan, minister of the information industry, gave his views in an interview with reporters during the ongoing CPPCC and NPC sessions.

Reporter: People have complained about the telecom sector for couple of years. The main point is the telecom service price is too high. What's your opinion?

Wu: The market by itself decides the supply-demand relations and the telecom price. I think the reasons why people are dissatisfied with the telecom price lie in the following facts:

First, stockholders and customers are two different groups in China. The Mobile and Unicom's listing in Hong Kong and New York ended up with the separation of stockholders from customers. On one hand, stockholders hope price rise in stocks brings more profit, but on the other hand, as customers also, they don't wish the price to increase too much high.

Second, I admit in 2001 the price for local calls was rising, but telecom price adjustment, approved by the State Council, is a kind of constructional adjustment. It will surely result in the price up or down since it's a constructional adjustment. But that rise involves a multitudinous number of users. Currently there are 170 million fixed telephone customers, including 100 million individual users. Usually one telephone is used by all family members, so the figure will climb to 200 or 300 million. That's why so many people complained about the price.

According to the world practices, GDP per capita should be at an average US$1,500 if the rate of phone spread reaches 10%. However, China's GDP per capita is only US$ 800 while the rate of phone spread has already hit 24%. The figure shows phone users in China don't have too much money, so they are understandable to complain about the raise of service price.

Reporter: The State Council approved the reform scheme of the Telecom to divide it into two at the end of 2001. What's your comment on the reform of the Telecom in recent years?

Wu: The Telecom deepened its reform in 2001. It has quickened the pace of its reform since the Mobile was separated and the Unicom was reorganized in 1998. The Telecom was split into two, one in China's north and the other its south in giving rise to a competitive pattern. The competition will speed up the Telecom's development.

China just spent three years in establishing the competitive mechanism. Three reasons bring the remarkable achievements: First, rapid and healthy economic development provides a good foundation for Telecom's development and reform; Second, the State Council formulated clear-cut regulations to break the monopoly of Telecom; Third, it's thanks to the understanding and support of all working personnel.

Reporter: How do you comment on some foreign countries' worries about the policy risks when Telecom absorbs foreign investment?

Wu: The foreign countries are unnecessary to worry because all the newly-released rules and regulations will be conducted according to Telecom's rules and the regulations and in line with the WTO regulations as well as supervised by all quarters of the society.

by PD Online Staff Yang Ruoqian

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