China Telecom and China Railcom finally signed the deal, the first between the two giants, after several months of negotiations.

It means that China Railcom will now be able to carry out business nationwide sharing the fixed-line telecom network with China Telecom.

Both companies will now be able to compete for more subscribers.

The deal is quite critical as the inter-connection forms the basis of nationwide telecoms operation in the country, and is considered to be the major feature in breaking the monopoly.

China Telecom, the country's dominant fixed-line telecom operator, owns controlling shares of the whole fixed-line telecom network. Its monopolized operation has ignited hot discussions and many complaints from customers.

China Railcom, which kicked off its operations earlier this year, plans to start nationwide services in July.

"Network inter-connection paves the way for our future operation,'' said Dong Binfeng, spokesman of China Railcom.

China Railcom is widely regarded as the only potential rival of China Telecom.

Once it starts providing services in July, its charging standard will be 10 to 20 percent lower than China Telecom's, according to the managing Ministry of Information Industry.

"China Telecom pledges to provide fair inter-connection services for China Railcom,'' said Zhou Deqiang, president of the telecom giant, which provides services to about 150 million customers.

The company also confirmed Tuesday that it held a discussion with Japan Telecom late last week.

Although China Telecom said the discussion had no commercial value, industry insiders said the move supported the general direction of both companies' strategic expansion.

China Telecom is rumored to be interested in a third mobile licence, and Japan Telecom seeks to expand its international contacts so as to promote its mobile services elsewhere in Asia.

(Chinadaily.com.cn 06/13/2001)