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Copyright © 1996 and 1999 by Zixiang (Alex) Tan (ztan@syr.edu). All rights reserved.
Monday, September 20, 1999
By SCMP TELECOMS
Mainland sets launch of third telecoms giant
AGENCIES in Beijing
The mainland will formally launch its third major telecommunications company next month in the latest attempt to restructure the industry. About 420 million yuan (HK$391.8 million) would be invested in the third operator, China Netcom Corp (CNC), made up of 120 million yuan of government debt plus share capital and a state capital allocation, China Daily Business Weekly reported.
It would run a new optical fibre network covering 15 mainland cities and provide Internet protocol backbone services and integrated data services. The report also said Beijing was considering cutting prices for Internet access by about half from the present four yuan per hour, and lowering telephone charges to boost use.
The company's four investors are the Chinese Academy of Social Sciences, the State Administration of Radio, Films and Television, the Ministry of Railways and the Shanghai municipal government. Each had a 25 per cent stake in the company which had a registered capital of 120 million yuan, the report said. The Ministry of Railways also has a stake in the country's second telephone operator, China Unicom.
Despite the government's desire to use limited liberalisation to spur innovation in telecoms, CNC will face stiff competition from ChinaTelecom, the dominant phone company. China Telecom enjoys strong backing from its former owner, the Ministry of Information Industry, which regulates the sector.
China Telecom has used those ties to try to keep China Unicom from developing into a competitor. Last week, Information Industry Minister Wu Jichuan again reminded foreign firms that a loophole China Unicom used to raise funds was illegal. Mr Wu, who only reluctantly agreed to reforms of China Telecom earlier this year, re-stated the government's ban on foreign investment in Internet or other telecoms services. CNC would use existing optical fibre networks of the railway ministry and the General Administration of Broadcasting, Films and Television, but would also build some of the network and lease some optical fibre from China Telecom, it said. CNC would provide network access and carrier-to-carrier services for China's Internet service providers and large companies. The newspaper also quoted Mr Wu as saying that foreign telecoms firms involved in the so-called China-China-Foreign joint ventures with Unicom would be given a warning if any disputes were not settled promptly by them.
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Sunday, September 19, 1999 6:28 PM
Third telecom operator starts next month
Shanghai - China will have next month its third domestic telecommunication company after China Telecom and China Unicom, called China Netcom corporation (CNC). It combines four major outsiders in the telecommunication into a powerful alliance, offering mainly Internet Protocol (IP) services. In the new company the Chinese Academy of Sciences, the State Administration of Radio, Film and Television, the Ministry of Railways and the Shanghai Municipality each participate for one quarter. Some of the partners have brought in their existing network of optical fibre cables. They will mainly offer Internet Protocol (IP) backbone services and international integrated data services for multinationals and other big businesses in China, writes the Business Weekly today. Their 15-cities network will offer a capacity of 20 gigabits, the largest network in the world until now. CNC will mainly offer wholesale services in the telecommunication and does not target specifically the private consumer market. "We are not the third telecom company," says Edward Tian, CEO of CNC in Business Weekly. "China Telecom and China Unicom expect to be present in many, if not all areas. But we are a very focused company; our core competence is based on IP technology and the IP-based backbone." Business Weekly notes that CNC operates like a market-oriented company, while top officials of China Telecom and China Unicom are appointed by the State.