China Unicom, China Telecom Ask Regulator to Halt Prob

By OWEN FLETCHER

BEIJING—China's two major fixed-line network operators, China Telecom Corp. and China Unicom [Hong Kong] Ltd., separately said Friday that they asked Chinese regulators to suspend an investigation of their pricing practices, and pledged to address problems they found in internal evaluations.

The moves appear aimed at defusing the concerns of China's top economic planner, the National Development and Reform Commission, whose probe of the companies is a big test of China's three-year-old antitrust law. The probe, which is aimed at the companies' pricing of Internet-dedicated leased-line access services, marks the highest-profile domestic monopoly case yet against major state-controlled companies.

China Telecom and China Unicom Friday each said they submitted to the NDRC plans to address problems found in their evaluations. Each company pledged to improve the quality of its interconnection with other backbone network operators, to improve its pricing management for the access services and to cut bandwidth-unit fees for public Internet access. China Telecom will aim to lower its bandwidth-unit price by about 35% within five years, it said.

The companies also pledged to increase broadband speed and to make optic-fiber access more widespread in the period through 2015.

It isn't clear how the NDRC will respond. The agency received the requests to suspend the probe and is addressing them, China's state-run Xinhua news agency said.

State-run CCTV reported in early November that the NDRC was investigating alleged monopolistic policies in the broadband-Internet market by China Telecom and China Unicom. CCTV at the time said that if the allegations were proven, the companies could be fined 1% to 10% of their 2010 operating revenue.

Li Qing, deputy director of the NDRC's price supervision and antimonopoly department, at the time said the agency believed the two operators were using what she said was a roughly two-thirds market share to charge rivals higher fees for broadband access while failing to optimize network speed.

The China Internet Network Information Center, a government researcher, in January said China's average Internet access speed was about 100 kilobytes per second, compared with what it said was a global average of about 230 kilobytes per second.

In the past, major state-owned companies have been largely exempt from China's antimonopoly enforcement efforts. The highest-profile cases under the antitrust law so far have been aimed at foreign companies, such as Coca-Cola Co.'s failed $2.4 billion bid for China Huiyuan Juice Group Ltd. in 2009.