China's continuing telecom investment causes waste Sunday, August 31, 2008

Continuing investment was a major problem in the nation's telecom sector as much waste had been caused by under-utilized cables and other infrastructure, China Times reported on Saturday.

The Beijing-based newspaper cited auditor-general Liu Jiayi reporting on Wednesday to the fourth session of the Standing Committee of the 11th National People's Congress, the country's top legislature.

He said the telecom sector had experienced huge growth in both network scale and capacity since the industry's reform and restructuring that started in 2002; repeated investment had dragged down performance.

According to the National Audit Office (NAO), more than 1.12 trillion yuan (about 164 billion U.S. dollars) was spent on the construction of basic facilities between 2002 and 2006. However, only one-third of the telecom cables were used.

In addition, more money was required to maintain all the cables, whether it was those being used at present or those getting laid.

Amid increasing mobile users and dropping fixed-line subscribers, China Telecom and China Netcom, the country's main fixed-line service providers, spent a total of 50.8 billion yuan in expanding the fixed-line network in the same period, according to the NAO.

"The wasted investment in telecommunications could have built several Three Gorges Dams," said Yang Xianzu, the former chairman of the board of China Unicom, the country's distant number two mobile service provider to China Mobile.

The country is in the process of an industry-wide restructuring in which China Telecom, China Mobile and New Unicom (a proposed merger between China Unicom and China Netcom) would compete against each other, each with fixed line and mobile services.

But some experts warned repeated investment was not less likely to happen as statistics showed the restructured China Mobile and China Telecom would each spend between 50 billion yuan to 60 billion yuan in infrastructure building in the next three years.

In answer to such a problem, some experts suggested the country should separate the network and infrastructure building and as sign it to an independent organization, while telecom services would be open for competition.  

Editor: An Lu
Source: Xinhua