China opens fixed broadband market to private firms

China is opening up its booming fixed broadband market to private firms in an attempt to increase competition in a market that has been dominated by China Telecom and China Unicom.

The Ministry of Industry and Information Technology (MIIT) on Wednesday launched public consultations on a proposal to allow private enterprises to provide fixed broadband services in the country during a three-year trial period.

Under the proposal, privately owned Chinese enterprises with a minimum market capitalization of 20 million yuan ($3.2 million) and more than three years of experience in the telecom industry would be able to apply to participate in the trial to provide fixed broadband services including FTTH to consumers .

Private companies, when their applications are approved, could either directly build broadband infrastructure, or lease network infrastructure via the three stated-owned incumbents – China Telecom, China Unicom and China Mobile – to operate as service providers.

Currently, China's broadband market is dominated by China Telecom and China Unicom. In 2011, China Unicom and China Telecom were embroiled in antitrust investigations for alleged abuse of dominance in the broadband market.

Earlier this year the country's anti-monopoly regulator, the National Development and Reform Commission (NDRC), said it is evaluating an anti-monopoly case against the duo and will make a ruling soon.

The plan will be tested in 16 major cities – Taiyuan, Shenyang, Ha'erbin, Shanghai, Nanjing, Hangzhou, Ningbo, Xiamen, Qingdao, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Chongqing and Chengdu.

Interested parties will have until December 16 to participate in the MIIT's consultation period for the proposal, according to an announcement posted on the regulator's website.

The trial is the MIIT's latest attempts to further liberalize the telecom sector. The Chinese government first announced in June 2012 that it plans to progressively open the telecom sector up to private investment.

The MIIT has since given out MVNO licenses to 33 privately-owned companies to resell mobile services with the incumbent carriers under a two-year trial, in a move to bring more competition to the country's mobile market.

In January, the ministry also announced plans to allow foreign investment in seven telecom VAS segments within the Shanghai Free Trade Zone.

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