Joint Ventures Strictly Controlled from "Invading" Telecom Market

The Ministry of Information Industry recently issued a circular pointing out that only when telecom businesses take a 51 percent share in joint ventures can they be licensed and license must otherwise be re-applied for conducting telecom business in China.

As to external dealers from radio, film and television sectors they will find it hard to enter the telecom market through cooperation with current seven telecom operators launched unless they surrender their dominant status in newly-established joint ventures.

Before release of the circular, China Netcom mounted powerful assault in Chongqing, Hangzhou and Zibo, etc, which poses enduring pressure to China Telecom in telecom business, especially broadband business in the near future.

Chongqing Broadband Company will have to re-apply for telecom business license since China Netcom merely possesses merely 28 percent of the shares according to the circular. This is to say there is still no end to the procedures of re-application that must be gone through in a short period of time.

The circular makes it mandatory telecom operators report related situations of the joint ventures to the Ministry of Information Technology or provincial communication administration for record and go through the formalities to obtain a telecom business operation license even they do hold a 51 percent share in joint ventures.

It is also required that the business sorts and service range of joint ventures shall be consistent with the content specified in the license of telecom business operators. The license holder shall not set up more than one joint venture concerning the same business in the same region.

Analysts pointed out that Zhang Chunjiang, vice minister of Information Industry put forward the suggestion on a two-way entrance by telecom units and radio, film and television departments at the International Internet Seminar held in Beijing last month. However, the suggestion was quickly turned down by related personages in charge of the State Administration of Radio, Film and Television under the excuse that "all the radio, film and television systems across the world adopt spontaneous monopoly". Release of the circular is also an important measure by the Ministry of Information Industry in straightening out domestic telecom market and preventing radio, film and television operators and other forces from entering the telecom market in a circuitous way.

By PD Online staff member Du Minghua

People's Daily Online ---