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CRT Dabbles in Fixed-phone Service, Monopoly Broken
From September 8 China Railway Telecom (CRT) began to dole out its telephone numbers in Guangdong, with almost all service items priced 10 to 20 percent lower than that of China Telecom. Experts say, this signals that the competition has entered into a substantive stage among China Telecom, China Mobile, China SAT, China Unicom, CRT, Jitong and Netcom. From now on Guangdong's fixed-line market would no longer be dominated by China Telecom only and people will have more choices.
What will CRT bring to the fixed-line phone market? Let's try to compare it with China Unicom's entry into the mobile market back in 1994.
China Unicom's entry invigorated the market
Looking back at the development of China's mobile market, we can easily find out that every time we saw a drop of around 30 percent when China Mobile lowered its charges and the network entry fee dropped out from 6000 yuan to none. However, its service quality was much improved with service items expanded. If without the joining of China Unicom in the competition this is totally unimaginable.
Since Guangdong set up mobile system in November 1987, the market had been dominated by China Telecom with user number and charges much higher than that of the inland provinces. The situation was not changed until China Unicom set up its Guangdong division in July 1994. Not long afterwards, China Telecom announced the cutting of its monthly rent charge to 100 yuan. After that a balance was achieved, resulting in benefiting the ordinary users from their competition.
CRT focuses on service
Lower prices to certain extent are permitted in foreign countries in order to ensure the new enterprises' entry into the market. As learnt from it, China Unicom's charge was allowed to be 10 percent lower than China Mobile.
As reported, charges of Guangdong CRT would be 10 to 20 percent lower than China Telecom. However, since the installation fee was nipped off and the fixed phone is of comparatively low profit, there's not much room to manoeuvre for lowering fees. CRT can only bend on service quality if it wants to reap certain amount of market shares.
Guangdong CRT says that relying on its former railway communication network "a pattern of telecommunication has already come into being wherever the railways extend'. Among the total 120,000 kilometers of fixed-line across the country, telecommunication network in Guangdong, Hunan and Hainan alone add up to 5,000 kilometers, with more than 120,000 subscribers. Guangzhou CRT has landed its business to some backward mountainous areas where other telecom heavyweights cannot reach. In the coming three years, Guangzhou CRT is confident of seizing 3 percent in Guangdong's telecom market share and 10 percent of that of fixed-line business, with its eyes riveting on customers along the railways and living round train stations. Meantime, in consideration of its strong base in Guangzhou market, it has the ambition to compete with other telecom giants for the lion's share of the market in a move to lower its cost and develop its business in trunk call, IP telephone and the Internet.
Experts hold that for the moment Guangzhou CRT is not able to run in the same track with China Telecom, who had won another 500,000 new subscribers in Guangzhou last year. Nevertheless, the competition from the daily expanding CRT should not be underestimated, especially its service competition strategy, which will bring more real benefits to its end-users.
By PD Online staff member Li Heng
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