Chinese regulatory body set to rule on broadband monopoly

The two companies could face fines of up to 10 percent of their annual revenues from Internet services.

China’s top economic planning agency is set to give a ruling in monopoly case involving two large telecom companies including China Telecom soon, Xinhua Net reported.

According to the report, China’s top economic planning agency National Development and Reform Commission (NDRC) has been investigating the suspected monopoly of China Telecom and China Unicom in the broadband business for last two years.

The head of the NDRC's bureau of price supervision and anti-monopoly Xu Kunlin said that they have been assessing whether the measures taken by two companies had eliminated the questionable practices and resolve their disputes.

The commission would make its ruling based on the assessment in due course, Xu added.

At the launch of the probe in 2011, NDRC had warned that the two companies, who account for the 90 per cent of the China’s broadband business, could face fines of up to 10 per cent of their annual revenues from Internet services.

A year later, the commission found that both companies had failed to fully integrate their networks, causing a lack of competition, increased access costs and slow Internet for customers.

This is the first case on this scale since anti-monopoly laws came into force in 2008.

The two operators have made significant improvement in network integration, said Xu. He added that they have also extended direct-link bandwidth of their backbone networks, increased broadband speeds and lowered prices.

The average broadband speed for China Telecom customers has increased to more than 6 megabytes. For China Unicom users it has risen to more than 5.1 megabytes, according to the NDRC.

Although the two companies have lowered their prices of broadband significantly, but NDRC is assessing whether they have fulfilled their promise of bringing down the prices by 40 to 50 per cent.