Telecom infrastructure firm raises concerns

A new mega-telecom infrastructure corporation that the State is mulling to set up for mobile networks has triggered market concerns of surging fees due to a possible monopoly of resources, according to media reports over the weekend.

A State-owned telecom facilities builder may result in resource monopoly forcing telecom fees to be hiked, Zhang Xinzhu, director of Research Center for Regulation and Competition under the Chinese Academy of Social Sciences, was reported as saying by Nandu Daily on Friday.

"If the upstream base stations resource is monopolized, the downstream fees will be raised," he was quoted as saying.

China's telecom regulator said on Wednesday that the top three State-owned telecom operators - China Mobile, China Unicom and China Telecom - are in discussions to invest in an infrastructure company, responsible for building telecom towers so as to improve the telecom infrastructure sharing.

The share prices of Hong Kong-listed China Telecom and China Unicom hiked 3.11 and 5.87 percent respectively on Wednesday compared with previous trading day, while the China Mobile stock price also saw a slight edging up of 0.75 percent from Tuesday.

The new infrastructure company cannot be just a telecom tower builder but is expected to gradually cover a larger scope of facilities including base stations, Zhai Peng, a telecom analyst of consulting firm Frost & Sullivan, told the Global Times.

China is witnessing a new surge in base station construction because of the fourth-generation (4G) network rollout, which will create problems of overlapping investment, misuse of lands and waste in energy consumption.

Telecom infrastructure sharing will benefit smaller market players China Unicom and China Telecom rather than China Mobile which has dominant network penetration, according to media report.

China Mobile reportedly plans to build 500,000 4G TD-LTE stations in 2014, and once the mega-corporation is set up, all of China Mobile's 4G networks are said to be available for its two smaller rivals.

Many netizens commented on Weibo that the new telecom infrastructure company will further consolidate telecom resources and fear the monopoly will push mobile fees higher.

Yet the infrastructure company may make it easier for smaller private virtual telecom operators to gain access to the market, Frost & Sullivan's Zhai said.

"More market players will provide the users more options," he said.

One thing for sure is that the telecom infrastructure giant will consolidate resources and lower the telecom operation cost, but whether the lowered cost will be passed onto end users remains unknown, Ji Chendong, a Shanghai-based technology, media and telecom expert, told the Global Times on Saturday.

"A mechanism is needed to ensure this sector's reliable and safe service while introducing market competition," Ji said.

China's telecom regulator issued 4G mobile licenses to the top three telecom operators in early December 2013, and has so far granted virtual telecom service licenses to 19 private companies including jd.com, Alibaba Group and Suning to offer mobile telecom businesses by leasing services from the State-run carriers.

Analysts said that licensing private virtual telecom service providers could be a first step in breaking up the monopoly held by the State-run telecom service providers.

Still analysts are concerned that the State-owned giants could limit competition by leasing limited bandwidth and also could charge high rates to the private telecom service providers.