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China Telecom officially gave up its monopoly of China's
fixed-line phone service market when it inked a deal yesterday with
its new rival, China Railcom.
The two agreed to link their networks and develop an integrated
charging system that will allow customers of one service to call
customers of the other service.
According to China Railcom spokesman Dong Binfeng, the deal was
the final hurdle before the company begins phone operations in
mid-July.
The two companies actually signed a structural agreement on
network and charge integration a month ago, but the final signing
was postponed until yesterday. The delay was evidence of
China Telecom's hesitation to loosen its grip on the nation's
phone lines, said sources close to the two companies.
China Railcom proposes to charge local phone call prices that
are 10 percent lower than those of
China Telecom. Long distance calls will cost 20 per cent less,
the company has claimed.
China Telecom presently charges 0.18-0.22 yuan (2-3 US cents)
for the first three minutes of a local call and 0.09-0.11 yuan (1-2
US cents) per minute from the fourth minute. It charges 0.07 yuan
(less than 1 US cent) per six seconds for long distance calls
inside the country.
The new standard was adopted in late March and rapidly met with
complaints from customers living in cities, many of whom found
their monthly phone bills had risen 20 to 30 per cent.
Although it seems poised to enjoy an advantage in rates, China
Railcom recently lost another competitive edge because of
government policy.
Last Sunday, the government cancelled installation fees for
telephone lines, voiding a China Railcom plan to charge half as
much as
China Telecom for installations. The move has made things
difficult for Railcom as it approaches the launch date for its
fixed-line operations. A number of price sensitive customers who
originally planned to wait for Railcom before installing a phone
decided not to wait after the government's announcement.
The number of new customers
China Telecom has attracted since the announcement has been
several times higher than average.
(China Daily 07/07/2001)
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