Broadband Speed-up Rather Than Price Cut

In December, China Telecom and China Unicom simultaneously issued statements on their official websites stating that they had submitted applications to the NDRC to suspend the anti-monopoly investigation. The contest among various parties over this incident has basically come to an end. It is too difficult to take on the two operators, and it is no longer likely that the NDRC will be used to perform major surgery on the two powerful operators, or even to redistribute fixed-line licenses. The broadcasting system can only wait for a new opportunity. However, broadband operators can expect a reduction in the inter-network access fees charged by China Telecom and China Unicom.

In December, China Telecom admitted that in providing dedicated line access services to Internet service providers, its price management was not in place and price differences were large. It promised to rectify this and to conduct full interconnection and interworking with backbone network operators such as China Unicom and China Tiecom as soon as possible, "lowering the direct connection price with China Tiecom... and appropriately reducing the tariff standard." China Unicom also made similar statements.

Next, the NDRC and the MIIT should issue new rules on inter-network settlement prices between operators. For small and medium-sized broadband operators, high prices mean they cannot win customers, while low prices mean loss-making business. They expect the NDRC's anti-monopoly measures to bring about a reduction in broadband access tariffs charged by the two powerful operators, China Telecom and China Unicom.

But expectations should not be too high. An industry insider said yesterday that a reduction in Internet access tariffs for third parties is certain, but the extent of the reduction is hard to say. Something is better than nothing.

The fact is that after the anti-monopoly investigation was exposed, China Telecom launched free broadband speed-up plans in Shanghai, Zhejiang, Jiangsu, Guangdong and other places. After the speed-up, unit tariffs fell by more than 35% within one year in basically all cases. Therefore, the commitment made this time by China Telecom headquarters is not very attractive.

In short, as listed companies, they face operating pressure and assessment pressure from the SASAC. It is unlikely that China Telecom and China Unicom will significantly reduce tariffs for public users. The operators' strategy is still to increase speed without raising prices, achieving a reduction in unit tariffs.

Source: Oriental Morning Post