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Telecom firms told to share networks 

By Wang Xing (China Daily)
Updated: 2008-10-11 09:26

A woman uses a China Telecom public phone in Guangzhou, Guangdong province. China's telecom operators are ordered to share part of their networks to avoid  possible duplication in investments. [Agencies]

                                                                                  

The authorities have ordered the country's telecom operators to share part of their networks to curb possible duplication in investments, even as industry analysts said the move depends heavily on relevant negotiations among companies affected.

Two government agencies released a new regulation early this week requiring China Mobile, China Telecom and China Unicom to open their existing telecom towers and lines to rivals.

The carriers were also told to jointly build new base stations and transmission lines, as well as share telecom facilities "if conditions are appropriate", the regulation released by the Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission stated.

The new measures came at a time when Chinese carriers were about to aggressively expand and upgrade their networks to gain a favorable position in the country's upcoming 3G (third-generation) market.

China Mobile said earlier it would spend 100 billion yuan ($14.62 billion) in expanding its GSM network. Fixed-line operator China Telecom also announced it would invest 80 billion yuan in the next three years to enlarge the CDMA network that it had acquired from China Unicom.

These expansions have reportedly raised concerns in the government, which worries that such investments may lead to significant duplication as telecom carriers often build their own towers at the same site.

A recent report from the National Audit Office stated that two-thirds of telecom cables in the country lie unused, which adds to the worries.

Jonathan Dharmapalan, a partner of Ernst & Young's global telecommunications center, said network sharing may help solve the problem as it gives telecom operators a better return on investment and enable them to focus their resources on improving services.

"We've seen many operators in other markets who have started to recognize that replicate network investment is not an advantage anymore," he said. "But, like other businesses, it depends on the negotiations among different companies."

Network sharing is said to save operators costs associated with setting up a mobile network and increase their asset efficiency.

But it may also reduce larger carriers' advantages in network coverage and give smaller challengers a shortcut to nationwide capability, with time and money.

Wang Yuquan, a senior consultant of research firm Frost & Sullivan China, said that although Chinese operators were ordered to share networks, the expected negotiations among them would be difficult and tedious.

"Network sharing is not free of charge and it requires a lot of discussion in detailed terms," Wang said. "I think it will take a long time before they can reach any agreement."

China is the world's largest mobile phone market by numbers of subscribers, with more than 590 million accounts.

The government launched earlier this year long-awaited telecom restructuring, in which six operators will be merged into three, and promised to issue 3G licenses as long as the restructuring is completed.

China Mobile has more than 400 million mobile phone users, more than triple that of China Unicom. China Telecom has about 43 million wireless subscribers after acquiring CDMA assets from China Unicom.