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To: MileHigh who wrote (52219)	12/2/1999 12:06:00 AM
From: Glen L. Peden	Read Replies (1) \| Respond to of 152472

Hi folks - found this on ZICA thread (hope it hasn't been posted here): By Lester J. Gesteland ChinaOnline News (11/29/1999) In response to continuing price wars between China Unicom and China Telecom, the Chinese government will regulate telecommunication fees starting next week, according to the Nov. 29 China Daily Business Weekly. Under a plan agreed to by The State Planning and Development Commission (SPDC) and the Ministry of Information Industry (MII), the government will run a series of inspections to regulate mobile phone, fixed phone and Internet access charges. The inspections "will be carried out in three phases ending in February," the report said. The move follows a series of interventions by the government to stop "vicious competition" in the telecom sector. Despite an MII regulation released in March forbidding such actions, China Unicom and China Telecom have been slashing prices in local markets across the country in an effort to gain market share. In May, for example, China Unicom cut local calling prices in half in Hubei Province with the introduction of a new calling card. The Wuhan Municipal Telecommunications Bureau complained to the Provincial Commodity Price Bureau and China Unicom was forced to withdraw the card from the market. An official from the Price Bureau told the Zhongguo Jingji Shibao (China Economic Times) that the phone card "would have sparked a price war." The incident spurred the SPDC to make a public announcement in May vowing to put a stop to "mobile phone price reduction schemes of local telecom companies," according to the Beijing Chenbao (Beijing Morning Post). An official from the SPDC said the price reductions were "greater than China?s telecom operations can bear" and that the fee cuts represented "abnormal market competition aimed at monopolizing the market," according to the report. Telecom enterprises cited for price violations included operations in the provinces of Shangdong, Anhui, Henan and Hunan, as well as in the cities of Chongqing and Guangzhou. Welcoming China?s WTO Entry The recent successful conclusion of a trade agreement with the U.S. provided China Unicom with a convenient reason to cut prices, and on Nov. 19 the number two telecom provider discounted mobile phone rates in Chengdu by RMB 500 (US$60.24) per handset "as a gesture welcoming China?s WTO entry," according to China Daily Business Weekly. The local China Telecom branch responded almost immediately with a price cut of its own, slashing its mobile phone charges from RMB 800 (US$96.39) to RMB 10 (US$1.20). The marketing strategy was a huge hit and within four days the two services signed up 10,000 new mobile phone subscribers. The party didn?t last long, however. Authorities stepped in and on Nov. 24 forced both local telecom companies to rescind their discounts. Yi Difei, an official with MII?s telecom administration bureau, explained his agency?s action. "We can understand their motivation, an attempt to expand market share, but we can hardly accept these kinds of price cuts," he told China Daily Business Weekly. Very interesting....... Glen