The following is from the Wall Street Journal. I wonder if there will be any affect on Metromedia.
Dow Jones Newswires -- December 1, 1998
AWSJ: China Puts Telephone Reforms On Hold
By IAN JOHNSON Dow Jones Newswires Staff Reporter
BEIJING - China has put off indefinitely a decision to break up its national telecommunications monopoly, officials said, dashing hopes that the industry's much-ballyhooed deregulation soon would open doors for competition.
Though recent state press reports have suggested the long-promised breakup is under way, officials from the Ministry of Information Industry said the reforms are still a long way off. "I think currently
it would be difficult to talk about a timetable," said Cheng Guanghui, the head of the ministry's general office.
Ministry officials also said they just completed a study of a recently banned form of foreign investment - so-called China-China-foreign joint ventures used to circumvent rules banning foreigners from most sectors of the telecommunications industry - and are contemplating how to compensate foreign investors who used this method to invest in China. Sprint Corp., for example, used the structure.
Wang Jianzhou, the head of the ministry's planning office, said the ban on such investment isn't a new policy, but only an enforcement of existing rules. He said he doesn't know when compensation will be made to foreign companies that lost their investments as a result of the crackdown. "We are actively considering ways of clarifying this issue," Mr. Wang said.
Officials were equally vague about the long-promised restructuring of China Telecom, the state-owned company that has a monopoly in most facets of the country's telecommunications industry. The company is controlled directly by the Ministry of Information Industry and enjoys
protection from most foreign competition. Preferential policies also keep its small domestic rival, China Unicom, out of fixed-line service. China Unicom operates paging and limited mobile-phone
networks.
China Telecom will be separated from the ministry, Mr. Cheng said. But he added that the ministry needs to deal with "many questions," such as who will operate and manage the company or how to pay for the country's telecommunications infrastructure after the separation occurs. This year, for example, much of the $20 billion China will spend on new telecommunications infrastructure - such as laying telephone lines in western China - will come from China Telecom, whose revenue is based on long-distance charges and local service on China's prosperous coast.
Analysts and Western telecommunications executives say the ministry wants to protect China Telecom by splitting it up along business lines, such as paging, satellite, data, long-distance and mobile-phone service - effectively allowing each new, smaller company to keep a monopoly in its sector. But that plan has been rejected by China's central government, these observers say, and ministry officials have been told to come up with a new plan that fosters more competition. They say that new approach could be along the lines of China's oil industry, which was reorganized recently to create two competing oil giants divided along regional lines.
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