Midyear Economic Outlook: Competition in China's Telecom Industry

The recent changes in China's telecom industry have been very impressive. In the first half, the reforms in China's telecom industry have been the focus of the local media.

For a long time, the Chinese telecom industry had been in the process of spinning itself into four separate groups and the dust finally settled in the first half of this year.

The competition between the four major groups: China Mobile, China Telecom, China Telecommunications Broadcast Satellite Corporation (ChinaSat), is showing that China's telecom industry is already what it wasn't before.

This historical change in China's telecom industry has increased the vigor of enterprises and industries, the competition has raised efficiency.

In the first half of this year, the number of fixed telephones installed continued to increase, averaging 100,000 new telephone customers a day. According to a spokesman from China Telecom, between January to June, China Telecom had 18.64 million new customers, reaching its year-end goal six months early.

Entering this year, China Unicom had 200,000 new mobile phone customers every week. In the first quarter, China Unicom's cell phone customers accounted for 14% of the market and 32.5% of the new cell phone customer market. On June 5, China Unicom broke the 10 million-customer mark.

As the largest GSM mobile communications company in the world, China Mobile not only has the goal of covering 98% of the network in cities, it also wants to cover airplane parking lots, docks and highways, allowing international roaming calling in 67 countries and regions.

According to preliminary statistics, in the first half of this year, China Telecom's volume of business increased 35%, new telephone users increased by 15 million customers and Internet users surpassed 10 millon users. Currently, the scale of China's fixed telecom network and mobile telecom network are ranked the second and third largest in the world respectively.

In the face of such heated competition, the few major companies are racking their brains to introduce new services to attract consumers. For example, the "Shenzhou card" for cell phones which eliminates numerous trivial procedures, the WAP cell phones to go on the Internet and the low rate IP telephones are all services designed to make thing more convenient for customers.

As for the question consumers care about most - prices, the telecom industry isn't as stubborn about dropping prices as before. Some companies have invited journalists to talk, using the media to communicate with the consumers. Some have responded to the consumers' strong reaction and taken appropriate measures.

China Mobile, which opened for business this May, has already made huge cuts in twelve cell phone fees. Although the public has said the price adjustments don't translate to a lot of benefits, as China opens up to the world, prices will continue to come down.

At the same time, China Telecom says that to raise the competitiveness of China's telecom industry, its operations, services and pricing structure of need to be more competitive.

After receiving approval from the relevant government departments, China Telecom will lower the international calling and relay calling fees. It will also adjust the pricing structure based on the unbalanced development of China's eastern, central and western areas, and disparities in consumer products and consumer habits.

The competition in the domestic market will give China's telecom industry room to improve its hardware and software.

The development of China's telecom enterprises will eventually run into the international market.

In June, China Unicom went public in both New York and Hong Kong. In Hong Kong, trading of China Unicom shares accounted for 30% of the trade volume the day it went public and shares rose 8.9%. It raised US$6 billion by going pubic, the most in China's history. China Telecom reportedly also has plans to go public in the overseas market.

Government departments are currently drafting a telecom law, which would allow foreign capital to invest in China's telecom markets, something which has been prohibited. When that happens, China's telecom industry will truly become an internationally competitive market.



People's Daily Online --- http://www.peopledaily.com.cn/english/