Anti-monopoly probe may nail 2 big telecoms
(11.10.2011)

Two of China’s largest telecommunications operators may face a combined fine of up to 8 billion yuan (US$1.27 billion) as the country’s top economic planner launched a rare probe for alleged monopoly in the firms’ Internet access segment.

The state-owned China Telecom and China Unicom are likely to see a total fine ranging from 800 million yuan to 8 billion yuan if evidence against the duo found by the National Development and Reform Commission are true, China Central Television reported yesterday, quoting Li Qing, an official with the NDRC.

The commission started the investigation after receiving complaints, said Li, a deputy head of the NDRC’s anti-monopoly bureau. The investigation marks a rare case of antitrust laws being targeted at state-run companies.

The two companies, accounting for 85 percent of market share in the broadband access segment in China, were blocking other corporations from entering the broadband market with their dominance, the complaints alleged.

The probe so far has showed that the two have taken advantage of their dominance by charging full price to market rivals while offering discounts to others if they are not threatening to their businesses, Li said.

He called that price discrimination, an illegal practice.

To save on costs, the two also declined to connect up to 75 percent of their broadband network capabilities, which has slowed down Internet speed for users in China.

The companies may face fine equivalent to 1 percent to 10 percent of their revenue. China Telecom’s 2010 revenue from the Internet access business sat at 50 billion yuan, while that from China Unicom was close to 30 billion yuan, Li said. 

China’s Internet speed is much lower than the world average and Shanghai has the slowest speed nationwide, a report published by the China Internet Network Information Center said in January.

In 2010, the country’s Internet speed averaged 100.9 kilobits per second (kbs), less than half of the world’s level of 230.4 kbs. Henan Province ranked best with a speed of 131.2 kbs while Shanghai ranked the last with a speed of 73.9 kbs, the report said.

The report, based on a survey of 60,000 people nationwide, showed Henan, Hunan and Hebei provinces were the top three in Internet speed while Shanghai, Jiangsu and Tibet were the last three. Beijing was in 13th place.

China Unicom said in a statement to the Shanghai Stock Exchange yesteray that it has always provided broadband services strictly “in accordance with the relevant laws and regulations.”

The company is cooperating with the NDRC and will provide the data it needs, according to the statement.

China Telecom’s Shanghai spokeswoman declined to comment. China Telecom is China’s largest broadband Internet supplier, with 73.7 million subscribers by the end of September, while China Unicom has 54.5 million users, according to data the firms released last month.