China's top economic planning agency is investigating China Unicom (Hong Kong) Ltd and China Telecom Corp Ltd for monopoly violations, the first such probe since it implemented its anti-monopoly law in 2008. The National Development and Reform Commission confirmed it was investigating the two Chinese telecom giants for suspected monopoly violations in the broadband internet access business, state media CCTV and Xinhua news agency said.
Both carriers failed to fully integrate their networks and therefore increased access costs and slowed down internet speeds in China, Xinhua quoted Li Qing, deputy head of the NDRC's price supervision and anti-monopoly department as saying. China has the world's highest number of Internet users totalling 485 million by mid-2011, but Internet speeds are notoriously slow, with the average broadband speeds ranking 71th globally while expenses are several times more than mature markets, Xinhua said. The probe marks the first anti-monopoly case involving large enterprises since China implemented its first anti-monopoly law in August 2008, following 10 years of drafting, according to law firms.
"Everyone is waiting for the result of this investigation. This will be a milestone and will serve as a precedent case," said Jenny Sheng, a senior associate at law firm Paul Hastings in China. But Kan Kaili, a professor with the Beijing University of Posts and Telecommunications said the crackdown on the telecommunications carriers reflected bureaucratic infighting rather than any basic policy shift by Beijing.
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