Concession or Stratagem? Analysis on China Telecom and Railcom CooperationChina Telecom, the dominating fixed-line giant in the country, hammered out a network inter-connection deal with newly founded China Railcom last yearend, being the first cooperation between the nation's only two fixed-line operators.Although details have not been talked yet, China Telecom has pledged to offer fair inter-connection services and China Railcom is ready to dole out its telephone numbers nationwide July 1, breaking into the last telecom field free of competition. Why China Telecom joins hands with a rival eyeing on one fourth of its market? Experts say the possibility of concession can not be ruled out. Earlier news tells that because of the slowdown of sci-tech stocks on international markets, China Telecom has to put off its HK and US listing time to September, or even next year. But its biggest headache lies in country people's doubt on telecom charge adjustment and rising request to spin it off. Despite China Telecom's declared big sacrifice for the adjustment, news from Beijing tells that users paid some 30 percent more for their telephone in the first month. What's worse, it is blamed by State Statistics Bureau report as the chief culprit that leads to price hikes. A survey covering Beijing, Guangzhou and Shanghai indicates that nearly half users paid more after the charge adjustment, and the sharp rise of monopolized urban telephone service also receives strong criticism. Therefore comes call for spinning off China Telecom to break fixed-line monopoly and the State Development Planning Commission is reportedly considering the possibility. This is nothing but a nightmare for the telecom giant, for its listing plan would be put off indefinitely and its attraction to international investors weakened. At such a critical moment, dragging Railcom into fixed-line competition will practically divert people's attention from spinning off and earn time for it to maintain itself and get listed as a whole. Restricted by telephone number resources and other conditions, the competition between China Telecom and Railcom is limited, but still capable to bring more benefits to users. Most obvious is that Railcom's charge for urban calls would be 90 percent that of Telecom's, and 80 percent for long-distance calls. Railcom stresses that the prices have not been fixed but charges are made according to costs. Then it is so embarrassing for the much bigger China Telecom to explain why urban call service has long been declared as money losing. Because its scale didn't bring due returns or there are unknown things in its cost calculation? By PD Online staff member Li Heng |
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