China Telecom Companies Pledge To Stop Monopolistic Practices

hackingbear writes "China's two telecommunications giants, China Telecom and China Unicom, announced Friday they will substantially raise their broadband speeds while further lowering broadband costs by 35% over the next five years. They also acknowledge the existence of monopolistic practices in reply to a recently launched investigation, which is the first of its kind against major Chinese state-owned enterprises. Being state-owned companies, their profits supposedly belong to the nation, but they have also become 'golden rice bowls' for their management and employees, and their supervising departments and officials." If the Chinese government would like to investigate these companies' monopolistic behavior, I have a suggestion on where to start looking.

Comments

We Americans can show the Chinese Telcos

[captainkoloth]

We can show you how to have a duopoly instead!

Re:We Americans can show the Chinese Telcos

[fuzzyfuzzyfungus]

Architecturally, there isn't anything requiring a communist government to not pit multiple state-owned enterprises against one another in an attempt to make them more efficient(in fact, a communist government might actually be the shareholder most willing to do so; because it can maximize its effective 'value' by making the enterprises it owns more efficient, rather than by making them more effective rent-seekers, as an owner who can profit only by collecting rents and not by collecting taxes would have to...).

There is absolutely no assurance that they would actually be thus motivated, and, in practice, you'd probably see roughly the same level of monopolistic behavior and general rent-seeking obstructionism from a state-owned corporation as you would from an ostensibly-private 'regulated monopoly', like old-school Ma Bell; but there isn't any theoretical problem preventing it from happening...

Pitting individuals, departments, project development teams, etc. against each other in order to induce greater effort is hardly unknown among organizations that 'own' both sides of the competition they set up. Sometimes it's a good idea, sometimes it is a terrible idea; but it is empirically undeniable that (if they think that the benefits of internal competition will be greater than the waste of internal duplication of effort) people will sometimes pit their assets against one another.

After all, if it were necessary that state-owned telcos be a monopoly, why would there be more than one?

"China Unicom" is an awesome name

[Anonymous Coward]

in fonts where m looks like rn.

There's a lot more to this than meets the eye

[LS]

As an internet developer in China, I can tell you that the duopoly posed by these two companies is wrecking havoc on the Chinese internet. First, a bit of history:

Around 2001, there was only one company controlling most of China's internet access, and that was China Telecom. Jiang Mianheng, the eldest son of the Chinese President at the time, Jiang Zemin, took in hundred of millions in investment to start a new telecommunications company, China Netcom. They struggled for a while trying to compete, but China Telecom's dominance prevented them from getting much headway in the market. Jiang Zemin then used his massive leverage to break up China Telecom, and give 1/3 of its business, all in northern China, to China Netcom. This caused serious enmity between the two entities. Eventually China Netcom was purchased by China Unicom, the second largest mobile provider in China. So now you have China Telecom and China Unicom as the two major telecommunications entities in China.

Do to the bad blood between the two, the connectivity between the Unicom and Telecom backbones is utter shit. International lines are connected through Telecom's backbone through Shanghai and other hubs further south, so if you are on Unicom, expect international connections to be utter shit. I'm in Beijing, and most home and small business connections are on Unicom. 90% of the time international connectivity is slow or non-existent.

We have clients in Shanghai, which is mostly Telecom, our server is on Unicom here in Beijing, and they get dropped connections 1 out of every 5 or 6 requests. We had to set up a proxy in Shanghai to get around this. If you do a traceroute from a Unicom ADSL connection to a Telecom server, you can see response times jump to 300-400ms where the hand-off occurs.

It's fucking infuriating. You basically have to either build a convoluted topology and set up some serious monitoring, or pay exorbitant extortion fees and get on a BGP network to have solid nation-wide service for your customers. As a small start-up we are opting for the first for now.

Hopefully this government probe will also deal with these sorts of deeper issues as well, because these problems are seriously crippling the Chinese internet as a good place to do business.

LS