| (Many fixed line communication assets worldwide are | | | | IT&T consulting firm NDC Consulting has |
| owned by government enterprises. Amid the trend for | | | | commented that "structural imbalance of the market is |
| the decline of fixed line communications, governments | | | | not conducive to the telco market efficiency, nor is it |
| are in a dilemma on how to keep these assets | | | | conducive to state-owned asset value preservation |
| competitive against mobile or internet based | | | | and adding". |
| communications. The Chinese telco industry is fairly | | | | Thus, the imbalance in the market directly related to |
| representative of the situation. But is "preserving value" | | | | the health of the telecommunications industry continued |
| implying "protecting monopoly"?) | | | | development of the telecommunications industry and |
| Preserving and adding value in telco industry important | | | | even affected the economic and social services and |
| to national economy | | | | the basis for the leading role to play and lead the |
| As a pillar industry in national economy, telcos play an | | | | telecommunications preserve and increase the value |
| utmost important role in the Chinese market. The | | | | of state-owned assets of the difficulties. |
| severe market imbalance situation, due to issues like | | | | Optimal allocation of resources the top priority |
| fragmented operations and technical developments, | | | | Prof Zheng Pengfei from Nanjing University of Posts |
| have created difficulties in preserving and adding value | | | | and Telecommunications pointed out that based on the |
| to state-owned telco assets. | | | | foundation of users and social interest, the government |
| The telco industry in China is a foundation, strategic | | | | should apply relevant means to achieve the optimal |
| and leading industry in Chinese economy, so it is an | | | | allocation of resources. |
| important part of preserving the overall state-owned | | | | As an important part of state-owned assets, the |
| assets. Industry experts have pointed out that "the | | | | government should fully utilise and optimally allocate |
| contribution by telco industry cannot be | | | | telco resources, hence value preservation and adding. |
| underestimated. From a supply point of view, the telco | | | | An imbalanced telco market could only lead to erosion |
| industry directly contributes to GDP growth; from a | | | | of state-owned telco assets. Therefore in the current |
| demand point of view, it is an infrastructure to improve | | | | telco industry in China, optimal resources allocation is |
| other industries efficiencies, which in turn also contribute | | | | the top priority. |
| to GDP growth in general." | | | | So, how can we optimize the allocation of resources? |
| Market imbalance challenging value preserving and | | | | First of all, the objective of optimizing allocation of |
| adding | | | | resources is to achieve begin developments of telco |
| According to statistics, from 1991 to 2000, the telco | | | | carriers, and 3G is exactly providing such an |
| industry in China had been growing average 41% pa, | | | | opportunity. Therefore issuing 3G licenses as soon as |
| five times the GDP growth rate in the same period. | | | | possible could help adjusting the market structure. |
| However, telco business income growth in first quarter | | | | Secondly, to optimize overall allocation of resources, |
| of 2007 slowed down to 8.4% on pcp, lower than the | | | | we must also optimize 2G resources. Through the |
| GDP growth of 11.1% in the same period. | | | | re-allocation of 2G network resources, future 3G |
| Obviously, Chinese telco industry is now showing a | | | | carriers can be supported by incumbent 2G networks. |
| trend of slower growth, which will create negative | | | | This could reduce the risk of 3G operations and |
| impact on overall economy. Market imbalance has | | | | enhance 3G developments. |
| become the major problem for slowing telco industry | | | | At the same time, optimizing the allocation of |
| growth and even sustainable health of the telco | | | | resources requires changes in industry supervision and |
| industry. | | | | monitoring. Through regulating network access and |
| Between Jan and May 2007, there were 33.5 million | | | | pricing, the government should apply an asymmetrical |
| new mobile phone users added nationally, while new | | | | regulating regime on new carrier monopolies, in order |
| fixed line phone users amounted to 4.4 million, only | | | | to give sufficient room for the development of fixed |
| 13.1% of its mobile counterpart. Market imbalance | | | | line carriers. |
| continues to accelerate, as fixed line communications is | | | | In short, a serious imbalance in the current market has |
| in a disadvantaged position when competing with | | | | called for the need to optimize the allocation of |
| mobile communications, hence the concern over the | | | | resources in China's telco industry, so that the telco |
| benign development of the telco industry in China. | | | | industry can achieve sustainable developments and |
| Senior consultant Mr Zhou Liansheng from Chinese | | | | state-owned asset value preservation and adding. |