2/26/2007, According to local newspaper, before Chinese new year, the only two fixed line carriers in mainland China, China Telecom and China Netcom agreed to enter a "stop competiting" agreement. Both companies promise that they will not make new investment in other side's territory. That means China Telecom will not develope new business in northern China, and China Netcom will not build new fixed line in Southern China.
Since the old China Telecom was seperated into new China Telecom and China Netcom in year 2004, both carriers try to enter the other side's market. But because China does not have a local access network open policy, both carriers faced great difficulty to have success on this. What they only can do is make price war. Finally, China Telecom and China Netcom do not want to play this game again. They want a truce agreement.
If I am an emaploee of China Telecom or China Netcom, maybe I will think this kind of agreeement is very reasonable. But as an observer, I find this agreement isn't suitable, just because it stops the competition. China can not always have one or two monopolized carriers on basic telecom market, Chinese customer hope to have more benefits from competition.
With long time monopoly experience, Chinese state-hold carriers always want to continue their monopoly. And Chinese government is always short-sighted and they don't have any effective method to stop this kind of monopoly. Maybe we want to ask: Where is Chinese Vivene Reding?
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