China Telecom Gets US License

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Last updated at: (Beijing Time) Friday, September 06, 2002

China Telecom Gets US License

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Major fixed-line telecommunications operator China Telecom has been granted a license by the United States telecom authorities to provide international telephone and Internet data services between the two countries.

China Telecom has thus become the first among its peers in the domestic market to obtain an operating license in the overseas market, it is learned Thursday.

The license will enable China Telecom to provide international telephone calls, Internet data communications and television transmission between China and the US.

"The license will significantly reduce China Telecom's operating costs in international business and consolidate their foothold in the overseas market," said a company spokesman.

The licence will mean that China Telecom will be in a better position when negotiating telephone charges with overseas partners.

The rental fee for transcontinental seabed trunk lines linking China and the US may drop by a considerable margin. And that in turn may lead to a drop in the cost of international telephone calls from China to the US.

People always complain that charges for calls from the Chinese mainland to the US, at 8 yuan (96 US cents) per minute, are too high. Particularly when the cost of calls from the US to China, provided by many small, long distance telecom companies, are much cheaper, sometimes half that figure.

Because of the high cost of calls, people living in China often turn to other methods to keep in touch with friends abroad. Instead they send emails, make Internet telephone calls or ask the person they want to speak with, to call them back.

According to figures from the Ministry of Information Industry (MII), the revenue from international telephone calls generated by domestic telecom providers, dropped 18 per cent year on year to 3.68 billion yuan (US$443 million) in the first six months.

The losses of revenue may ease now that China Telecom has the US licence, industry insiders suggest.

China Netcom, the major competitor of China Telecom, has no plans as yet to apply for an operating licence in the overseas market.

The company spokesman refused to comment on China Telecom's deal, but industry insiders said China Netcom was likely to focus more on internal structure adjustment and competing with China Telecom in the home market.

China Telecom's move into the US market will spell a more convenient service for customers that rely heavily on communications between the two countries, said Yang Peifang, of the China Academy of Telecommunications Research.

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