• Sat
  • Jul 12, 2014
  • Updated: 5:07am

State giants take sides in telecoms duopoly war

PUBLISHED : Saturday, 12 November, 2011, 12:00am
UPDATED : Saturday, 12 November, 2011, 12:00am

A newspaper under the Ministry of Industry and Information Technology (MIIT), the supervisor of the two state-owned telecoms giants at the centre of a duopoly scandal, has fired back at accusations aired by China Central Television this week.

In a sharply worded front-page article yesterday, the People's Posts and Telecommunications News criticised Wednesday's CCTV report - which led to a plunge in the two companies' share prices - for misleading the public and upsetting tens of thousands of staff at China Telecom and China Unicom.

The unusual article revealed a fight between the MIIT and the National Development and Reform Commission and cast doubt on where an NDRC anti-duopoly investigation was heading.

The article denounced the CCTV report as unprofessional in the way it explained how the companies were suspected of duopolistic practices; as groundless for not including enough statistical evidence; inaccurate in comparing the prices for telecoms services with other countries'; and lacking in journalistic ethics.

'The four-minute report had interviews with the NDRC alone. It didn't give a chance to the other parties involved in the case at all,' the article said. The CCTV report 'was filled with errors and seriously contradicted the facts', it said.

It also accused CCTV of 'asking a toddler to race with an adult' by comparing broadband internet service charges on the mainland with those in developed countries. CCTV said that last year the mainland's average broadband speed ranked 71st globally, but the average charge was more than triple that in developed countries.

Professor Sheng Jiemin, an anti-monopoly expert at Peking University, said that as an enforcer of the Anti-monopoly Law, the NDRC would be assumed to understand the law better than the MIIT.

'The MIIT is responsible for supervising whether the two companies have a duopoly or not; of course, it has the right to defend them, but the NDRC has the final say,' said Sheng, one of the legal experts and telecoms professionals consulted by the NDRC since it launched the investigation into the two companies at the beginning of the year.

He said that before CCTV blew the whistle this week, the NDRC had talked to the two companies, but they had not really accepted the need to rectify the situation.

Though the issue has now been made public, 'the NDRC is actually giving a chance to the two companies', he said. If they promised to make some compromises, it could end the investigation and save them from huge fines, he said.

According to the CCTV report, the companies could face fines of up to several billion yuan if the suspicions were confirmed. Together they account for more than two-thirds of the mainland's broadband internet service market, according to the NDRC's preliminary investigation, it said.

Sheng said the NDRC started investigating the two companies after complaints at the start of the year. 'Some said the complaints were filed by industry competitors, but the NDRC denied it,' he added.

In contrast to the MIIT mouthpiece, the People's Daily yesterday published a commentary applauding the anti-duopoly investigation into the big state-owned enterprises, the first since the Anti-monopoly Law came into effect three years ago.

'Despite poor services and high charges, abnormally, they keep growing ... This is typically a 'monopoly disease',' it said.

Liu Chunquan , senior partner of Panocean Law Firm Shanghai, said it was very rare for a ministry-owned newspaper to condemn CCTV.

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