China Starting Telecommunication Co.
September 19, 1999
Filed at 8:28 a.m. EDT
By The Associated Press
BEIJING (AP) -- China will launch its third major telecommunications
company next month in its attempts to bring competition to a sector long
dominated by a government monopoly, the official China Daily reported
Sunday.
China Netcom Corp. is using $50 million in government funds to offer
high-speed data services for big businesses and Internet service
companies in 15 cities, the newspaper reported in its Business Weekly
edition.
China Netcom will use Internet Protocol technology, which helps
networks run faster and more efficiently, the newspaper said. Its network
will initially rely on fiber-optic lines owned by two of its four government
founders, the Ministry of Railways and the agency that regulates
broadcasts.
Despite the government's desire to use limited liberalization to spur
innovation in telecommunications, China Netcom will face stiff
competition from China Telecom, the dominant phone company.
China Telecom enjoys strong backing from its former owner, the Ministry
of Information Industry, which regulates the sector. It has used those ties
to try to keep the country's second telephone company, China Unicom,
from developing into a competitor.
Ministry backing, however, has not fully protected China Telecom.
Consumer complaints and government eagerness to tap the Internet for
economic growth have forced China Telecom to reduce charges.
Another round of price cuts is likely later this year, following reductions in
March for Internet and phone services, China Daily reported, quoting
Zhang Cunjiang, a telecommunications regulator.
Although Zhang did not provide details, the China Daily cited unidentified
sources as saying that Internet charges will drop by half from the current
50 cents an hour.
March's price cuts spurred consumption. According to Ministry of
Information Industry statistics, in the first eight months of the year
fixed-line customers rose 14 million to more than 100 million and mobile
phone users increased nearly 11 million to 36.2 million, the newspaper
said.
Internet use in the first half of the year nearly doubled, from 2.1 million
users in the end of 1998 to 4 million, China Daily said. |
