Anti-trust: another round in cable v telecom

The great thing about the Chinese system is that just by an inquiry starting, you already know the outcome.

So when the NDRC makes it known that it will see whether operators have jacked up interconnection prices, you don’t have to guess the result.

The operators and their sponsor, the MIIT, know that too, which is why MIIT media made ill-judged attacks on the inquiry and CCTV, which had broadcast the original interview with NDRC’s anti-trust honcho.

Earlier this week the People’s Daily weighed in on the side of the NDRC, putting the matter pretty much beyond doubt.

Now the question is where did this come from? China Times has aired the two most popular theories.

One is that it follows a cleanup of some China Telecom arbitrage, where a team within the company was caught selling bandwidth to the China Mobile’s subsidiary, Tietong, at below the official price.

But the more favoured assumption is that is being driven by SARFT. The cable and TV ministry has been trying to check the dominance of China Telecom and Unicom in the backbone as it sets up a national digital TV network. It was recently knocked back by the central government for a loan to set up its own backbone network – so it’s stuck with the two incumbents. Adding juice to this theory is the fact that SARFT is CCTV’s parent.

Beyond the speculation, the point of the anti-trust probe is surely to jumpstart the stalled cable-telecom integration exercise. With FTTH being rolled out big-time nationwide, now is the time to spark up competition in the local loop.

Barring a miracle, the telcos will have to accept lower broadband interconnection fees and most likely a national cable competitor.  In return they should be seeking help in breaking down SARFT’s resistance to IPTV and access to SARFT’s content trove.