• December 5th, 2011
  • Dafiq Hussein

China Telecom and China Unicom, two of the largest fixed-line telecoms operators in, believe it or not, China, have pledged to overhaul their broadband businesses as a response to an antitrust probe into services that cost three times more in the west but run at a tenth of the speed. It is worth noting that the probe will not make a difference to any cheap calls abroad, if you are indeed looking to call China.

The companies have been accused of price discrimination against competitors by the price supervision and anti-monopoly bureau at the National Development and Reform Commission (NDRC).

The two companies have promised to address the concerns and have requested for the investigation to be suspended.

The actions now being taken by the two telecoms operators are symbolic of the first time that the duopoly has looked into the complaints that have circulated for a while now regarding the low efficiency and high price of internet access in China.

The two companies now endeavour to overhaul and standardise their management of tariffs for lines leased to internet service providers and they will also lower prices in existing agreements if they deem it appropriate.

China Telecom Corporation, the carrier’s Hong Kong-listed unit, has said the following in a statement: “With regard to the internet-dedicated leased line access services offered to internet service providers, there is relatively wide pricing variation and room for improvement in pricing management.”

Meanwhile, China Unicom has suggested that they have found some flaws in their price management.

The NDRC claimed towards the end of last week that it had received the applications and was to deal with them according to the law. However, back in early November, the NDRC stated that if the investigation happened to confirm their suspicions, that the carriers were using their dominant positions in the market in a manner deemed unfair, then they could face fines of up to 10% the 2010 annual turnover of their broadband internet units.

Furthermore, legal experts have said that it is solely at the discretion of the NDRC to mitigate such penalties or completely exempt the companies if the issues that have been raised are quickly addressed. We suspect the latter is most likely.