With the hope of terminating an ongoing government probe into pricing practices that could leave them liable for fines of up to ten percent of their operating revenues, China Telecom (CT) and China Unicom (CU) pledged improvements last Friday to the quality of network interconnection as well as price reductions for competitors that seek access to the CT and CU broadband networks. The companies’ commitments respond to an investigation that was launched last month by China’s National Development and Reform Commission (NDRC) to assess allegations that CT and CU abused their dominant market positions by engaging in price discrimination against rivals that sought wholesale access to the carriers’ broadband networks. In a press statement accompanying its submission to the NDRC, CT acknowledged that, “with regard to the Internet-dedicated leased line access services offered to Internet service providers, there is relatively wide pricing variation and room for improvement in pricing management.” Asking the NDRC to suspend its investigation, CT and CU informed the agency that they would (1) overhaul and standardize their price structures for landlines leased to ISPs, (2) improve network interconnection in an effort to boost broadband speeds, and (3) reduce rates in existing interconnection agreements where applicable. CT also told the NDRC that it aims to cut its bandwidth unit price by 35% over the next five years. Confirming receipt of the companies’ requests, the NDRC said it would review and rule upon the documents in accordance with China’s four-year-old antitrust law.
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China Telecom, China Unicom promise reforms in response to government probe
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