The new fixed-line operator was delayed from starting a nationwide operation, scheduled for July, as negotiations for network interconnection with the dominant China Telecom were unresolved.

The agreement between China Telecom and China Railcom was inked in June, when China Telecom guaranteed to connect the networks of the two carriers together, to ensure customers of different carriers could make phone calls to each other.

However, the agreement with China Telecom headquarters did not carry any weight with its 31 local branches, and, therefore, China Railcom had to negotiate with every branch of China Telecom for operating in that province and municipalities.

Beijing and Shanghai are not included in the first batch of 14 provinces, which includes Guangdong, Tianjin, Chongqing and Hunan.

Guangdong Railcom was the first one to start operating among the group. It started to provide a fixed-line telecom service on June 28.

According to company spokesman Dong Binfeng, China Railcom will push through the negotiations with the rest of the provinces, autonomous regions and municipalities to try to start a nationwide operation before the end of the month.

Network interconnection is the key barrier for new telecom carriers, as the old ones will be unwilling to connect their networks with the newcomers.

Interconnection is also the hardest step to break the monopoly in China's fixed-line telecom business.

That is why, according to the spokesman, the negotiations between China Railcom and China Telecom have been so difficult and lasted for months.

China Railcom set its target for the year to attract 12 million customers. It will control 5-10 percent of the fixed-line telephone market within three years, according to the company.

Under the preferential policies of the Ministry of Information Industry to the new telecom carriers, China Railcom's charge for long-distance calls will be 10 percent lower than China Telecom and 10-15 percent cheaper in local calls.

It may also provide a detailed dialing list for the customer, in a bid to attract potential users. At present, China Telecom does not have that service.

As China Railcom was spun off from the country's railway communications industry late last year, the customers of the railway sector will be its main priority, said the spokesman.

He said other institutional customers, new residential areas and the countryside's individual users are China Railcom's most possible potential users.

The State Council has decided to further reform the country's telecom sector to ensure a fair, competitive and highly efficient marketplace.

Breaking China Telecom's monopoly in the fixed-line business lifted the curtain on more restructuring. The Ministry of Information Industry has handed in several proposals for China Telecom's further reform, including several ideas to split the company.

The final deal on whether this telecom giant, which controls China's 160 million fixed-line telephone users and is the most powerful company in the country, would be split up or kept untouched will be made soon by the State Council, senior officials with the State Development Planning Commission told China Daily.

(China Daily 08/13/2001)