How much reduction of the Broadband tariff is reasonable?

Recently, the China Telecommunications made a commitment in a declaration that in five years, the price of the public users’ Internet bandwidth will be cut by 35%, and this measure will be immediately embarked. The China Unicom Company said nothing about the reduction in the fee. As to the issue that how much reduction of the Broadband tariff is reasonable, many people propose that there ought to be an open and transparent solution released to the public.

As to the commitment made by the China Telecom to cut the broadband fee by 35%, some telecommunication experts generally believe that if there is full competition in the market, the extent may be much larger than that. Gao Hongbing, Director of Academy of Social Sciences Information Research Centre believes that the decline of the broadband cost is not linear but exponential and the tariff price level of commitment made by the Telecom is too conservative. Professor Kan Kaili of Beijing University of Posts and Telecommunications points out that this price is nothing but a result of the bargaining  between the China Telecom and ChinaDevelopment and Reform Commission. If the monopoly is broken and market competition can be ushered in, the range of the cutting of price will be much greater than the price level committed.

It is also believed that there are institutional reasons behind monopoly. As to the commitments made by the two telecommunication Giants, telecom expert Xiang Ligang said both companies admitted their mistakes and promised to rectify and this meant that they have made promises to the China Development and Reform Commission, hoping to shake hands and settle the dispute. In the future there may be the high possibility that the China Development and Reform Commission and the two companies may reach. There monopoly position that the two companies take in  broadband access market can not even be affected by issuing fines. Therefore, a balancing market can not be constructed.

What behind the broadband access market are problems in mechanism and institutional dimension. Although, many telecommunications and television industry experts and academics called for breaking the monopoly of the China Telecom and China Unicom through the development of more broadband backbone network operators, however, the National Development and Reform Commission does not have this permission, and only the Ministry of Industry and Information of the People’s Republic of China has the right to issue the…

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