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The erosion caused by mobile services is serious. Dominant China Mobile controlled 70 to 80 percent of new revenue in the entire telecom industry nationwide last year. As caller-pays mobile charging is introduced, fixed-line carriers are having an even tougher time.

Behind the truce between China Telecom and China Netcom is a rationale that expansion hardly enables an operator to challenge its rival and investment on the rival's turf could see "losses of State-owned assets".

The awful truth is that the reshuffle in 2002 truly broke a national monopoly but created regional monopolies. And when a cease-fire deal is inked, it seems the national monopoly is coming back to life. The only difference is that the new national monopoly is a collaborative act.

Now the best solution to the paradox might be industry deregulation with the awarding of "full-service" licenses to all major operators. These companies can choose what to do and what not to do after the licensing.

(China Daily 03/01/2007 page13) 

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