The telecommunications industry in China is dominated by three state-run businesses: China Telecom, China Unicom and China Mobile. The three companies were formed by restructuring launched in May 2008, directed by the Ministry of Information Industry (MII), National Development and Reform Commission (NDRC) and the Minister of Finance. Since then, all three companies gained nationwide fixed-line and cellular mobile telecom licenses in China. In 2019, all three telecoms were issued 5G national licenses. As a result of China's entry to the World Trade Organization (WTO) in 2001, a new regulatory regime was established and foreign firms were allowed to access the market under restrictions. In 2012, Huawei Technologies overtook Sweden's Ericsson to become the world's largest telecom equipment vendor. In that same year, there were over 284.3 million fixed-line telephone subscribers and 1.01 billion mobile phone subscribers in China. As of 2021, China is the only country known to work towards a single-stack IPv6 network. The country announced plans in 2017 to lead globally in IPV6 adoption by 2025, and achieve full nationwide rollout by 2030. Experts believe that such a plan to widely adopt IPv6 for the country's internet infrastructure, can help China to increase its leadership in 5G and Internet of Things across multiple varying industries.
Historical overview Before 1994, the Ministry of Posts and Telecommunications (MTP) provided telecom services through its operational arm, China Telecom. Pressured by other ministries and dissenting customers, the Chinese government officially started the telecom industry reforms in 1994 by introducing a new competitor: China Unicom. China Unicom could hardly compete with the giant China Telecom. In 1998, due to a ministerial reorganization, the MTP was replaced by the new Ministry of Information Industry (MII). The MII took two large scale reshuffling actions targeting the inefficient state-monopoly. In 1999 the first restructuring split China Telecom's business into three parts (fixed-line, mobile and satellite). China Mobile and China Satcom were created to run, respectively, the mobile and satellite sectors but China Telecom continued to be a monopoly of fixed-line services. The second restructuring in 2002 split China Telecom geographically into north and south: China Telecom - North kept 30% of the network resources and formed China Netcom (CNC) and 70% of the resources were retained by China Telecom - South or simply the new China Telecom. Parallel to this double fission, the telecommunications division of the Ministry of Railways (MOR) established a new actor in 2000: China TieTong. These resources consisted of a 2,200,000 km long nationwide optical network, based on Asynchronous Transfer Mode (ATM), Synchronous Digital Hierarchy (SDH) and Dense Wavelength Division Multiplexing (DWDM) technologies and several submarine cables, in particular with the US, Japan, Germany, and Russia. To sum up, the Chinese telecom industry has changed from a state-run monopolistic structure to a state-run oligopolistic structure. In May 2008, MII, NDRC and Minister of Finance announced the third restructuring proposal and also launched three 3G licenses. With the rapid development and serious competition, Chinese telecom operators face challenges on shrinking landline users, too rapid of a growth in mobile businesses, low profit services and great gaps among the carriers. The third revolution was to combine six main telecom operators into three, aiming to develop 3G businesses and full telecom services, and avoiding monopolistic and over competition.
Regulatory environment The MII is responsible, among other duties, for elaborating regulations, allocating resources, granting licenses, supervising the competition, promoting research and development and service quality as well as for developing tariff rates. The MII has built up a nationwide regulatory system composed of Provincial Telecommunications Administrations (PTA) with regulatory functions within their respective provinces. A number of other significant institutions also influence the industry, such as the State Development and Reform Commission (SDRC). Since 2014, the Cyberspace Administration of China is responsible for setting policy and the regulatory framework for user content generated in online social activities on Internet portals.
Foreign participation Before China's membership of the WTO in 2001, China protected its emerging national telecom industry which was and still is regarded as a national priority sector. Only foreign equipment vendors were allowed to invest in China. Authorization for the investments was conditioned on technology transfer. International telecom carriers were banned from accessing the market. As part of its commitments to the WTO, the Chinese government is gradually opening the carrier market to foreign investors. There are some geographical limits to this opening which will be progressively relaxed. In 2005, foreign investors were authorized to form joint ventures, investing up to 50% in Internet services in the whole country, up to 49% in the mobile sector in 17 major Chinese cities and up to 25% in fixed-line basic services in Beijing, Shanghai, and Guangzhou (Canton). Finding a Chinese partner to form a joint venture with, preferably a major carrier, is mandatory for a foreign company wishing to access the Chinese market. Foreign investments have come, in order of importance, from the United States, Canada, Sweden, Finland, Germany, France, Japan, and South Korea. Many companies from these countries have established one or more joint ventures, not all of which have been successful.
Market overview
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