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Tuesday, 8 January, 2002, 07:31 GMT
China plans four-way phone race
A Chinese man makes a mobile phone
China has more than 175 million fixed-line users
China is planning to shake up its near-monopolised telecoms market by creating four nationwide carriers to boost competition.

The plans follow the announcement late last year that China Telecom, long the dominant supplier, is to be split into two from the 12 February.

The brace of existing mobile operators, China Mobile and China Unicom, will make up the numbers.

In a change from previous policy, all four will be allowed to compete across the board, from fixed-line and mobile communications to business and data services.

According to the official China Daily newspaper, the Minister of Information Industry, Wu Jichuan, suggested that China's hundreds of millions of customers could face the four-way choice within two years.

"With four integrated service providers, the market will become fully competitive, and customers will be able to enjoy high quality services at reasonable prices," he said.

He also suggested that operators could tap the domestic stock market for investment, rather than - as China Mobile and China Unicom have done - resorting to the Hong Kong bourse for a listing.

The question remains whether all four carriers will be able to provide across-the-board services.

China Unicom - which has just launched a new nationwide mobile service using the CDMA technology popular with US and South Korean networks, if almost nowhere else - already has fixed-line operations.

But China Mobile, the result of a split from China Telecom in 1999, does not, and analysts believe it is likely to stay focused on the wireless end of the market.

Shake-up

Unsurprisingly the announcement leaves several question marks over the way the reorganisation will be managed.

It also fails to tackle the prospect of broader foreign involvement in the telecoms market, heralded by China's entry last year into the World Trade Organisation.

Foreign companies are meant to be allowed up to a 24% stake in mobile carriers immediately.

This rises to 35% by next year and then 49% by 2005.

The split of China Telecom into Telecom and Netcom is in theory a regional split reinforced by network sharing - hardly a blueprint for tooth-and-nail competition.

The fact that China Telecom is still owned by the Ministry of Information Industry, which is its regulator, will also need clearing up.

See also:

11 Dec 01 | Business
China Telecom splits
28 Sep 01 | Business
China gets top-level telecoms panel
01 Oct 01 | Business
China to invest $120bn in telecoms
22 Jun 00 | Business
Ringing debut for China Unicom
11 Dec 01 | Business
China joins the WTO - at last
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