Important> China Unicom gets key roaming agreement that will enhance its ability to attract cdmaOne subscribers
China telecom upstart scores
key mobile deal
BEIJING, June 29 (Reuters) - China has boosted the fortunes of
China Unicom by giving the upstart telecommunications player
access to a national mobile phone network owned by rival China
Telecom, a senior industry official said on Tuesday.
''The two companies will be able to roam on one another's
networks,'' said the official, who asked not to be identified.
''It has already been approved by the State Council,'' he said,
referring to China's cabinet.
The plan would allow China Unicom's mobile subscribers to
make and receive calls in areas where the company lacks
infrastructure by borrowing capacity from China Telecom's more
extensive network.
The ''roaming'' agreement is reciprocal, opening Unicom's
networks to subscribers of China Telecom, the official said.
But industry analysts said Unicom, which has only a fraction of
the network coverage of near-monopoly China Telecom, was the
clear winner because it would help attract customers who
demand the flexibility of being able to roam between cities.
''This is very good news for Unicom,'' the official said.
China Telecom, a state-owned colossus with $21.7 billion in
revenues last year, serves 95 percent of the country's 22 million
mobile users. China's Ministry of Information Industry estimates
the number of users will reach 40 million by the end of the year.
China Telecom has long succeeded at thwarting the business
plans of China Unicom, which was founded by a consortium of
government ministries in 1994 to spark domestic competition.
China Telecom's local affiliates, which double as industry
regulators, often blocked Unicom's applications to build its own
mobile networks.
That changed earlier this year when members of the State
Council, led by Premier Zhu Rongji, garnered political and
financial backing for Unicom and ordered that China Telecom be
split into several companies.
The company quickly won a nationwide license to expand its
infrastructure to rival China Telecom's.
Analysts said the roaming agreement would give Unicom a head
start at growing its subscriber base as it struggles to raise capital
for building new networks.
''That's giving Unicom a huge step-up in terms of the criticisms
that it didn't have adequate coverage,'' said Jason Billings, head of
Asian telecom research at Warburg Dillon Read in Hong Kong.
Details of the plan were unavailable and a system for roaming
charges between the two carriers was still being worked out, the
Chinese official said.
Billings said it was a highly unusual arrangement because it risked
robbing Unicom of the main incentive for building its own
infrastructure.
''You don't normally do that, because one of the purposes of
competition is that you want the new player to introduce a quality
network,'' he said.
A possible solution would be to place a time limit on the
agreement that would force Unicom to continue expanding, he
said.
He cited such an arrangement in Thailand, where dominant mobile
carrier Total Access Communications ceded roaming rights to
upstart Digital Phone Company (DPC) several years ago.
Facing a phase-out of the agreement in 2000, DPC has continued
to build its infrastructure in spite of the agreement, he said.
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