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China Telecom promises 35% price drop, (no - see correction) tens of million fiber lines
Sunday, 04 December 2011 18:48
china_telecom_logochina_unicomCorrection 12/15 China Telecom promised a 35% increase in speed without raising prices, not a drop in price. Since speeds go up almost everywhere over time, this is a symbolic gesture, not a significant price drop. Facing $100’s of millions in antitrust fines. Monopoly fighter Li Qing of NDRC November 9 promised broadband prices would come down 38% if China Telecom and China Unicom/Netcom faced more competition. This was historic; Government agency NDRC had never before taken on major state owned companies
     The telcos have decided not to fight and offered intense self-criticism. Xinhua reports “China Unicom said that it found improper price charges from Internet service providers … [and] has submitted a plan to correct its practices to the NDRC. … China Telecom also said in an online statement that it found improper charges.” They probably will accept a fine at a level insignificant for companies with annual sales of $60B. China Telecom controls most of the southern two thirds of the nation and China Unicom/Netcom most of the northern third.
   China has 150M broadband subscribers and adds 30M or more per year. That’s 50M more than the U.S. and as many as the combined total of Japan, Germany, France, Britain, South Korea, Brazil and Italy, the next seven broadband leaders. Fiber home is now the standard for new buildings and the two companies are upgrading 10’s of millions more to fiber every year now. That’s a remarkable achievement for a country where even the most developed areas have family incomes less than half the U.S. or Western Europe.
     The press speculates that SARFT and China Mobile, working with selected academics, inspired the NDRC plan. Government at the Politburo level remains unsatisfied with broadband pricing, speeds, and growth. National policy is “convergence” on “tripleplay.” Cable competition led by SARFT would be the broadband driver while telcos would create television competition in turn. Cable could go from very few modems to 50M in a few years if unleashed. China Mobile has a broadband subsidiary, China Railcom/Tietong, which is a potential third player. SARFT just banned advertisements during prime time TV dramas, a very popular move that should give them some political leverage.
    If the 35% price cut comes through, Li Qing joins the short list of regulators who have made a difference.
    
(Thanks to Xinhua, Caixin, and People’s Daily/Global Time for reporting.)
Last Updated on Friday, 16 December 2011 15:17