China to Foster Competitive Telecommunications Markets
Oct 7, 2001

The Ministry also announced the introduction of resellers or virtual operators in the Chinese marketplace. This measures are set to increase competition in the market, which at the moment registers one of the fastest growth rates yet recorded.

Bank of China International said it predicts 10 or more mobile service providers will enter the market in 2003 or beyond. Some of these new players will be joint ventures with leading foreign mobile operators, the brokerage said. Currently there are two mobile operators in China, China Mobile Communications Corp. and China United Telecommunications Corp. China Mobile's China Mobile (HK) Ltd. (CHL) unit and China United's China Unicom Ltd. (CHU) unit are listed in Hong Kong.

Ministry officials also suggested it is unlikely that China will issue additional 2G cellular licenses in the near future. It considers next year an appropriate time to license 3G services, according to Bank of China International's report. Analysts met with Su Jin Sheng, head of the Telecommunications Administration Bureau; Wang Zhan Fu, deputy head of the Department of Financial Adjustment and Clearing; Zhao Mei Zhuang, deputy head of the Department of Policy and Regulations.

The Bank of China International said the MII plans to designate a leading telecom provider as a universal service provider, with its obligations set by the ministry. China Telecommunications Corp., the country's dominant fixed-line operator, is most likely to be designated, the Bank of China International said.

A fund will be established, to which other service providers will contribute, and it will be used to offset economic losses incurred by the USP, according to the bank. It also said implementation of the USP and the fund are expected in 2003.

The Bank of China International report said there has been no decision on whether China Telecom will be split up into several companies.

China's mobile users are currently billed for both sending and receiving phone calls. The Ministry of Information Industry has said previously that CPP won't be implemented this year. Some industry analysts expect implementation of the system to be gradual and completed by 2003. A mainland paper reported in August that China Mobile subscribers in Zibo, Shandong province, are now being charged under a CPP pricing system. That report was denied by China Mobile (Hong Kong).

Concerns over implementing calling party pays have hurt the share prices of both China Mobile and China Unicom. A report by CLSA, published Wednesday, said no decision has yet been made on whether CPP will be implemented. Separately, analysts said they met management from China Mobile (Hong Kong) Ltd.'s parent China Mobile Communications Corp. and Beijing Mobile, a unit of China Mobile (Hong Kong). According to Bank of China, the two companies said they will focus on revenue and profitability and that subscriber growth isn't a very important performance target.