China Hopes To Spur Internet Use

Wednesday, December 27th 2000, 12:00 am

By: News On 6

BEIJING, China (AP) â€” Cutting long-distance phone rates by more than 50 percent will slash revenue for China's dominant state-owned carrier but spur new Internet and telecommunications industries, state media reported Tuesday.

The changes, which take effect Jan. 1, also cut charges for Internet access and leased lines.

State media described the cuts announced Monday as the biggest change for Chinese phone bills in 51 years of communist rule.

Internet and other firms that have struggled in the shadow of giant China Telecom could get an immediate profit boost from lower charges for access to its network.

The government said total charges should fall by some 30 billion yuan ($3.6 billion) a year.

State newspapers on Tuesday quoted the industry's chief regulator, Wu Jichuan, as saying the cuts were intended to spur growth in Internet and other telecoms technology.

China has one of the biggest telecom markets with 120 million phone lines. It is the second-biggest mobile phone market with some 70 million users.

Yet Beijing has had only limited success in its attempt to develop telecom services and technology while banning foreign investment.

Beijing has promised to let foreigners own up to 50 percent of Internet firms and other service ventures after it joins the World Trade Organization. It has so far authorized only one foreign investment â€” a minority stake in a Shanghai Internet venture.

Rate cuts could help China's No. 2 phone company, China Unicom, which has struggled since being created in the mid-1990s to compete with China Telecom.

Rates for mobile phones â€” a key Unicom business â€” will be unchanged, while charges the company pays for access to the China Telecom network are to fall.

China Telecom has said it expects revenues this year to total some 170 billion yuan ($20.5 billion). The company hopes to raise as much as $10 billion with a foreign stock offering next year.