The Ministry of Information Industry (MII) has pledged to straighten up the telecom market by introducing a new inter-connection policy later this year so as to further standardize the country's telecom industry.

"To tackle the problem concerning network inter-connections is an urgent factor to ensure a fair, efficient and competitive environment for the whole industry," said Xi Guohua, vice-minister of the MII while addressing a nationwide video-conference in Beijing recently.

According to him, the new inter-connection policy will be based on the cost incurred by telecom operators to connect calls between networks.

"The first stage of testing of the new policy is completed and the second stage is underway right at the moment," said a knowledgeable source close to the MII.
"It is expected to be rolled out later this year."

Analysts said that old policy which started on March 21, 2001, and expired on March last year, which is still in use, is no longer fit for the development of the rapid development.

Besides, a batch of new regulations and standards will also be kicked off in the second half of the year, according to Xi.

"We will strengthen our punishment on destroying telecom utilities which leads to the suspension of inter-connections," he stressed.

According to him, the MII is working in hand with the Supreme Court to discuss related punishment on the violation of interconnections.

"We are doing the investigation works and soliciting suggestions from telecom insiders and experts now," he said.

Figures from the MII showed that since 1998, cases related to interconnections had topped more than 540, resulting in economic losses of about 3 billion yuan (US$360 million).

"It's a high time to regulate the market to ensure the healthy development of the industry," said Jiang Yaoping, director the Policy and Regulation Department of the MII.

In another development, sources said that the MII is speeding up the promulgation of telecom law and is expected to unveil it at the end of the year or early next year.

Sources also said in order to guarantee the smooth network inter-connections, the ministry is to build up a telecom network supervision system to supervise the network inter-connections among all telecom operators.

"The major problem concerning inter-connections lies in linking mobile and fixed-line networks," said Zhang Xinzhu, director of the Centre for Planning and Competition Studies under the Chinese Academy of Social Sciences, in an interview with China Daily.

Currently, inter-connections between mobile networks are free.

But transferring a mobile phone call to a fixed-line costs 0.06 yuan (US$0.007).

However, China Telecom and China Netcom calculate that it should cost 0.16 yuan (US$0.019).

"The disagreement on pricing is the main reason behind unsatisfactory development of inter-connections and rampant violations," Zhang said.

"However, it will take more time to set up network inter-connections among all the major telecom operators, given the complexity of inter-connection policy," he said.

Zhang is also a member of the expert panel founded by the MII early this year to work out inter-connection problems.

He said the expert panel is also trying to figure out new universal service and tariff policies for the sector.

(China Daily August 17, 2003)