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China Opens Broadband Market To Private Enterprises

December 1, 2014

China's Ministry of Industry and Information Technology has announced that it will be sponsoring a trial to open up the broadband provider market to private enterprises.

With an aim to stimulate healthy competition within the market and improve services, the three-year trial will allow private enterprises to sell broadband in 16 cities across the country. This includes Taiyuan, Shenyang, Harbin, Shanghai, Nanjing, Hangzhou, Ningbo, Xiamen, Qingdao, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Chongqing, and Chengdu.

Although the country has 632 million internet users—the largest population of internet users in the world—there still remains a large percentage of Chinese people who are yet to get online, particularly in rural areas.

China is also behind many countries when it comes to internet speeds. The average speed in Shanghai hit 5.4 Mbps earlier this year but only manages 3.7 Mbps nationally. This is compared to an average speed of 11.4 Mbps in the US. China has now set a target in cities of 50 Mbps by 2020.

All three of the country's mobile carriers (which also supply broadband internet services) are controlled by the government. Two of which, China Unicom and China Telecom, hold 81 per cent of the broadband market.

In 2011, China opened an anti-monopoly investigation against the two companies, insisting they bring down prices for their Internet services.

According to the new draft, China will open the broadband market by letting the state-controlled network providers loan internet services to private enterprises, allowing them to build an access network and source bandwidth capacity so they can be repackaged under their own brands for sale to customers.

The draft further stipulates that the network providers must not rent out sub-standard broadband services, and they need to be offered to private enterprises at a fair price. The Ministry will be soliciting public opinions until December 16.

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