LONG criticized as holding a tight-fisted monopoly on the telecommunications industry in China,China Telecom and China Unicom are now under investigation by the the National Development and reform Commission (NDrC), China’s top economic planner.
　　The news was first released on November 9 on CCTV news, China’s state broadcaster.According to Li Qing, deputy head of NDrC’s price supervision and anti-monopoly department, NDrC is investigating China Telecom and China Unicom over suspected monopolistic practices.
　　“We have been investigating into the case since receiving a report against China Telecom and China Unicom at the first half of 2011,” said Li.
　　China Telecom is the nation’s largest broadband Internet supplier with 80.09 million subscribers as of the end of July 2011, compared with 52.99 million users at China Unicom, according to data the companies released.
　　Li said the two companies account for more than two-thirds share of the broadband Internet access market, which indicates dominant market positions. If market dominance is used to increase access costs and slows down Internet speeds for its competitors that would be considered price discrimination in accordance with the Anti-Monopoly Law.
　　If there were clear evidence for price discrimination, the two companies will face a fine of “1 percent to 10 percent of its annual turnover”, which means both telecommunication giants may end up paying millions in fines.
　　Good news for netizens
　　The investigation is music to the ears of Chinese netizens since Internet surfing fees may shrink.
　　Although the investigation is focusing on the supplier market rather than personal consumer market, a lower price could be expected if the monopoly is broken. It was estimated that an effective competitive market would make Internet surfing charges decrease by 27 percent to 38 percent in the next five years.
　　At the moment, according to a report from China Informatization Advisory Committee of Experts published in July 2011,China’s Internet speed is less than 10 percent of the average in WTo countries, yet it charges four times the average costs in comparison to other developed countries.
　　“our Internet surfing fee is even more expansive than those richer countries. Anti-monopoly is definitely necessary,” said a netizen named LiTT.
　　Many netizens take the investigation as an opportunity for justice to be done. “I would like to pay for what the service deserves, but I won’t give a cent more than that,” said a netizen named Chen Zhongxi.
　　Ground breaking
　　Media and experts are applauding the investigation for another reason. The probe into the two operators is the first anti-monopoly case involving large state-owned enterprises in China since the first Anti-Monopoly Law became effective in 2008.
　　“The Anti-Monopoly Law is an important basic law to establish a market economy system,”said Yang Dong, Deputy Director of Institute for Competition Law Studies of renmin University of China.
　　Yang told ChinAfrica that in the past three years, there was no case involving state-owned enterprises, which could imply that the AntiMonopoly Law only applied to foreign-funded enterprises and private enterprises. That could pose a negative impact on China’s development and international image.
　　“The investigation is timely,” said Yang. “It will contribute to the establishment of a fairer competitive environment.”
　　No easy way
　　China Unicom said on its online homepage that among 102 enterprises under the management of the Chinese Government, it’s on the bottom of last year’s profit list with a deficit of millions of dollars, indicating that it did not use its monopoly position to make huge profits.
　　The complaint of the two telecommunications companies is understandable, since they are the first to be investigated. A monopoly is nothing new when it comes to state-owned enterprises in China, especially in the sectors of finance, gas, electricity, railway and public transportation.
　　Li Chang’an, Professor of University of International Business and Economics, explained that most monopolistic enterprises in China are not chosen by the market economy but fostered under administrative protection and preferential policies. In China, most monopolistic enterprises are state owned.
　　Favored by policies and resources, stateowned enterprises with market dominance can suppress privately owned competitors.
　　“The state advances as the private sector goes backward, which is very harmful for the country’s development,” said Yang. “Anti-monopoly laws can help restrain the trend.”
　　It starts with telecommunications giants by chance, but to punish monopolistic enterprises is inevitable and necessary, he said.
　　Huge profits of state-owned enterprises enable employees to enjoy high benefits, which cause widespread discontent in society.
　　“The government should regulate the behavior of enterprises in the fields of telecommunications, petroleum and electricity, and even banks,” said Yuan Gangming, researcher with the Center for China in the World Economy of Tsinghua University.An anti-monopoly supporter,Yuan admitted the process would not be easy.
　　“It’s hard to completely separate government administration from enterprise management, and to set up a market operating mechanism; but we should at least access social supervision and allow public criticism,”he said
　　On the way
　　No matter whether people are confident about the results of the investigation or not, China’s anti-monopoly drive will continue on.
　　Yang said the Law of China Against Competition by Inappropriate Means was implemented in 1993, parts of which are related to anti-monopoly. But its efficacy cannot compare with the Anti-Monopoly Law.
　　“The Anti-Monopoly Law is the core of competition laws for the market economy,”said Yang. “only if we have the Anti-Monopoly Law, can we say China really set up a market economy system.”
　　China’s top legislature began to draft the Anti-Monopoly Law in 1994. After 13 years on the drawing board, the law was passed in 2007 and came into effect on August 1, 2008. But in the following three years, it seems that there has been no enforcement until now.
　　Why is this the case
　　According to Yang, the Anti-Monopoly Law has dealt with over 300 cases, but not many have been made public. Investigations take a long time to collect evidence.
　　“China’s national conditions determine that anti-monopoly work cannot proceed smoothly without a hitch, but there has been active law enforcement,” said Yang.
　　The tide of the anti-monopoly wave came early 2011. In February, NDrC promulgated two documents to regulate anti-monopoly work, and there was another one released in July to strengthen it.
　　Also in July, the Price Supervision Department of NDrC changed its name into Price Supervision and Anti-Monopoly Department. The anti-monopoly related divisions within the department were increased from one to three, and 20 more positions were added. All the moves were of great significance, according to Yang.
　　“It’s not only an investigation but also a declaration of war to state-owned enterprises,”said Yang. “NDrC must launch the investigation with the support of the State Council. It conveys a message that state-owned enterprises must discipline themselves. Any enterprise abuse of their power must be punished.”
　　It seems the pressure is working.
　　on December 2, in response to the probe, the two companies announced they would pledge to enhance broadband access speeds during the next five years and lower broadband service charges.