China Telecom May Face Antitrust Investigation On Broadband Access

China Telecom is China's largest provider of broadband access and IDC. If China Telecom's own strategy adjusts as a result of an antitrust investigation, it will have a tremendous impact on the pattern of China's Internet industry.

Will China's largest basic network operator China Telecom receive the first ticket after China's "Anti-Monopoly Law" has been published for three years? The relevant ministries have launched an antitrust investigation to China Telecom on broadband access problem. It may carry out possible anti-trust penalties.

If the penalty eventually introduced, it will cause a stir in the public utilities in China and the Internet industry. Prior to this, transportation, telecommunications, oil, water, electric, Internet and other public utilities have been the focus of antitrust concern. But so far there are no penalty cases.

According to sources, the relevant departments in the survey have already started investigation in the first half of this year. The relevant ministries carried out many rounds of communication evidence with China Telecom. The research institutions and experts also asked Unicom, China Railcom and a number of access enterprises to verify.

The main survey content is in the broadband access and interconnection in the field, whether China Telecom used its dominant market position to hinder other operators to enter the market. "By the early investigation, authorities believe that the basically think that China telecommunications has monopoly behavior. The punishment may be1% to 10% of the illegal income.

According to China Telecom's earnings announced on on August 24, the company's revenues in the first half are 120.208 billion yuan. The net profit is 9.808 billion yuan. The total number of broadband users is 70.09 million. The wired broadband access revenues are 29.755 billion yuan, accounting for 24.8% of the operating income. According to the previous financial report, China Telecom's net profit in 2010 was 15.759 billion yuan.

An operator insider said that China Telecom attaches great importance to the issue. The company deployed special troops from the provinces and set up a dedicated team to deal with the matter. Informed sources, the relevant departments focus on China Telecom monopoly, is derived from part of the business sector's report of "off network" incident in the second half of 2010. The evidence has come from the business organizations.

In the early August of 2010, China Telecom issued an internal document to require the provincial companies clean the high bandwidth and leased line access, in addition to the normal core backbone interconnection points, clearing all the "through traffic" access of other carriers and Internet units.