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|Tuesday, July 24, 2001, updated at 08:26(GMT+8)|
Cable Authorities Decline Telecoms Sector's Plan to Converge MarketsChina's Ministry of Information Industry (MII) has been faced with stony silence from the State Administration of Radio, Film & Television (SARFT) after proposing an open market covering the telecommunications and cable broadcasting sectors.
The two organizations, governmental watchdogs for the telecoms industry and cable broadcasting industry respectively,currently operate in two mutually exclusive sectors.
Zhang Chunjiang, vice-minister of MII, said his ministry encourages telecoms and cable broadcasting companies to enter each other's business fields on an equal footing.
"China has over 90 million families linked to the cable broadcasting network, this is the biggest subscriber base in the world. And China has the world's second biggest telecoms network that reaches nearly 300 million people. If the two enter each other's business fields, the telecoms monopoly would be further broken down and network capacity would be significantly upgraded," said Zhang.
This is MII's first declaration on the issue although Wu Jichuan, head of MII, has hinted about the ministry's attitude many times.
MII's move received a warm welcome from most domestically listed cable broadcasting companies.
Share prices in the firms immediately jumped after the announcement.
Yet Zhang's counterpart in SARFT, Zhang Haitao, vice-director of the ministry, refused to respond to MII's proposal.
"There are no technical problems at all, policies are the only barrier," said Kan Kaili, dean of the management school with the Beijing University of Post & Telecommunications.
The components of the telecoms and cable broadcasting networks are both based on optic fibre and have no functional difference.
In fact, the broadcasting sector rents bandwidth from telecoms companies to transmit TV signals when it does not have enough capacity.
Telecoms and cable broadcasting networks will eventually converge, as the State Council has made this a working target, he said.
Opening the market would benefit both sectors significantly as new operators would bring new ideas and promote competition.
"The earlier the better," he said.
Although it tightly closed its door to outsiders, the cable broadcasting sector is busy making preparations to operate telecoms businesses.
It will launch a nationwide cable broadcasting company which links all the nation's broadcasters together and is very likely to become a basic telecoms carrier.
This company will have a capital of 10 billion yuan (US$1.2 billion).
The unified network will no doubt become a strong competitor to fixed-line telecoms operators.
But without agreement on equal entry, will MII issue the new company a telecoms licence?
A senior official with the network management centre of SARFT said the telecoms industry was like a park and should be open to everybody, while the broadcasting sector was like a military camp and was related to national security which may have a strong influence over people's life.
This vivid analogy seems to sum up SARFT's position: it will enter the telecoms business but keep its own door closed.
Industry analysts say rapidly developing technology will push together the three major networks computer, telecoms and broadcasting making current policies redundant.
Building a policy "Great Wall" will not protect the broadcasting sector forever. An open door policy in other sectors has produced significant economic success.
Income in the broadcasting sector has shrunk significantly in recent years, with its development lagging far behind those of the telecoms sector.
SARFT has targeted Internet access as a new revenue pool. Since cable broadcasting reaches over 90 million homes, providing access to the Internet via high bandwidth cable will also help increase revenues.
Few people currently access the Internet via cable networks, with most using slower connection through telecoms operators.
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