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China swaps out 'scum' telco bosses

Beijing has just swapped around its telco chiefs. Two have done a direct swap and the third has retired, replaced by a government official to take over the third operator.

As China’s economic management comes under global scrutiny, it’s a neat illustration of how it sees the game differently from the rest of the world.

Under the changes, Chang Xiaobing is the now chairman and party secretary at China Telecom, positions he previously held at China Unicom. Former China Telecom chief Wang Xiaochu replaces him at Unicom.

Over at China Mobile, the new man is Shang Bing, previously a vice-minister at MIIT. He replicates the path followed by retiring Xi Guohua, who moved to the operator from the MIIT in 2011, taking over as chairman in 2012.

The appointments were revealed in a series of announcements on Monday morning by the CCP Organisation Department – another key point: leadership posts in large and politically-sensitive SOEs are all CCP positions.

This isn't the first time the party has simultaneously rung the changes among the telco top tier. In 2004 it carried out a similar reshuffle in which, Unicom chairman Wang Jianzhou became China Mobile president, Shang Bing was promoted to Unicom president and China Telecom vice-president Chang Xiaobing became CU chairman and party secretary.

And why?

As a commentary in Sina Tech says, many analysts at that time thought the reshuffle would allow the chiefs to see the world through each other’s eyes and “avoid excessive competition.” Clearly the party bosses think it's been a success.

Punters think differently, however. The most popular comment under the most popular Sina story – focusing on China Mobile – declares: “You scum. All your packages are a fraud.”

The changes come on the heels of mediocre interim results. For all its dominance in 4G, China Mobile  earnings fell by nearly 1% and revenue rose just 4.9%. China Telecom’s net shrank 4% and only China Unicom showed improvement, with a 4.5% hike in income. No one is suggesting the leadership changes are intended to address any of the issues facing the three.

Final point: none of the new execs is female. All of the nine new appointees at China Mobile are male.

Cisco brings its biggest & best to Beijing

Two points of interest in this short C114 story on China Mobile showing off SDN at a Beijing industry event yesterday.

First, almost a quarter of the China Mobile booth is taken up with SDN – a sign of intent if nothing else. Staff on the stand cited a script that referred to SDN as a way for China to "solve network congestion.”

Second, prominent on the stand was Cisco, showing off its NCS 6000 router - reportedly the only one of its kind in Asia-Pacific.  Given that this is a high-profile event organised by China Mobile, the largest industry player, and the telecoms and IT ministry, this surely scotches the idea that Cisco has become persona non grata in China because of the Snowden disclosures.

Sure, the fact that it brought along its biggest and best new router shows it's working hard to impress. But that also reminds us that Cisco has gear that China needs, and as long as that's the case it will make sales.

Shanghai free trade zone will also open up to telcos

So, the daring plan to let Facebook into the Shanghai free trade zone (reported here, here and here) may also mean the embrace of foreign telcos.

Hong Kong’s scmp.com reported Tuesday that the FTZ would allow access to previously-blocked websites such as Facebook, Twitter and YouTube.

The story adds that the FTZ, the first in mainland China, “would also welcome bids from foreign telecommunications companies for licences to provide internet services within the new special economic zone.”

Given the role of FTZ as a business zone, this surely means some attractive enterprise contracts with MNCs and local firms. The three domestic operators, China Telecom, China Mobile and China Unicom, have all accepted the arrival of foreign competition, the SCMP says.

The 29 sq km zone, located next to the Pudong business district and covering the airport and the Yangshan port, is intended to attract foreign investment and to trial some liberalised financial services. It is being hailed within China as akin to the establishment of special economic zones 30 years ago.

In that optimistic vein, we might see the FTZ, along with the opening of the MVNO market and the continuing talk of economic reform as signs of cracks in the wall around China telecoms.

This Reuters story on the campaign against monopoly abuses by economic reform outfit NDRC points out that:

The agency is also investigating the pricing practices of 60 local and foreign pharmaceutical firms. Autos, telecoms and banks might come next, regulators have suggested.

However, those with longish memories of Chinese telecoms may recall similar excitement accompanied AT&T’s joint venture with China Telecom and the Shanghai city government back in 2000. To quote People’s Daily back in the day:

Analysts said the deal will serve as a role model for foreign investors in the State-gripped market and other foreign firms are expected to follow the AT&T example when China enters the World Trade Organization.

That hasn’t happened. Shanghai Symphony is still the only foreign-invested telco JV in China, and a frustrating exercise for AT&T. 

China’s WTO promise to open up the telecom services sector has been a hollow one, but no surprise. Direct control over telecoms is a sine qua non of party rule, guaranteeing direct control over the net and influence over the entire digital economy. China ranks 173^rd out of 179 countries in the Reporters Without Borders Press Freedom Index and is on the NGO’s list of Enemies of the Internet.

None of this has changed. Rather, the current heavy internet crackdown tells us that, even if foreign operators are admitted to the FTZ, they will go no further.