China to Open up Its Basic Telecommunications Sector

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Last updated at: (Beijing Time) Tuesday, September 17, 2002

China to Open up Its Basic Telecommunications Sector

China may further open up its basic telecommunications by late 2003 or early 2004. By then, prices of China's basic telecommunication services will be largely up to the market rather than, as until now, the government.

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China may further open up its basic telecommunications by late 2003 or early 2004, the Beijing-based International Finance News quoted insiders as saying.

By then, prices of China's basic telecommunication services will be largely up to the market rather than, as until now, the government, according to the newspaper.

Before this, the Ministry of Information Industry, the watchdog of China's telecommunication sector, already published nine categories, covering 34 items, of telecommunication services, whose prices are subjected to the free ups-&-downs in market. These published items all belong to the valued-added services, a category for which suppliers add a value to the customer's information.

With this move, carriers of basic telecommunications - services mainly focusing on the relay of voice or data from sender to receiver - will be entitled to set the price tags on their own, simply after registering in relevant telecommunication administration.

But the specific pace of the opening-up is closely tied to whether competition in the whole telecommunication sector is adequate enough, the newspaper said.

The planned opening-up of the basic telecommunications is another step forward by China carrying out its World Trade Organization (WTO) commitments, the newspaper quoted the insiders as saying.

In a sequence of first the value-added and then basic telecommunication services, China is expected to open them all within three to five years after the WTO entry.

To the further opening-up decision, China's main telecommunication carriers responded in mixed manners.

China Unicom and China Mobile, two domestic heavyweight mobile telecommunication servers, appear calm, citing the already sizzling competition in their sector.

As a matter of fact, prices of basic telecommunications in the mobile sector have, to a large extent, walked beyond the government's hands. There will not be too much impact upon this sector even with a complete lift of the governmental price control.

Analysts think China Telecom and China Netcom might have to bear more brunt coming with the likely liberated market.

Both controlling nearly half of China's fixed-line phone services, a sector traditionally under the government's wing, the two may well likely to launch a price war against each other to woo more customers, the newspaper said.

The present circumstances may well support such a prediction.

After the restructuring in the past May, both China Telecom and China Netcom have got their own nation-wide fixed-line backbone telecommunication network.

Moreover, the government permits each of the two to penetrate into the other's market.

The other two basic telecommunication service suppliers, China Railcom - so far still relatively young in China's national telecommunication market - and China Satecom, whose business focuses mainly on Satellite-based communication and Internet services, have not aired their reaction yet.

By PD Online staff Forest Lee

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