China Railcom takes on China Telecom

China Railcom will use the Ministry of Railways network to offer fixed-line services

By Kristie Lu Stout
CNN.com Writer

HONG KONG, China (CNN) -- China Railcom has kicked off operations by introducing fees 10 to 20 percent lower than China Telecom.

When it began operations on Thursday, the country's seventh telecom operator, China Railcom, immediately became the second largest fixed-line telecom network in China.

Industry watchers say Railcom's debut puts pressure on state giant China Telecom, introducing a level of competition to the industry that will ultimately improve China's telecom services.

Covering a lot of ground

Railcom plans to use the Ministry of Railways network to offer domestic long-distance and local calls, fax, data transmission and Internet services.

"Railcom has an excellent network that covers a lot of ground," says ABN Amro telecom analyst Joe Locke.

Industry insiders are already lauding Railcom's entry to a telecom market that up to now has been dominated by China Telecom's fixed services arm.

"We'll see a lot more competition now. Already, they are a big player," says one Western diplomat in Beijing.

"They are the number two after China Fixed right off the bat whereas Unicom has been struggling to be a player since 1994."

"This will push prices down and improve China's telecom services," he added.

According to official media outlet China Daily, China Railcom's total equity is $1.6 billion. The Ministry of Railways holds 51 percent of the total equity, while the other 13 local railway companies hold the remaining portion.

The telecom operator covers 500 cities and will provide Internet phone services in 28 cities as well as Internet access services in 35 cities.

Most Railcom services will start later this year.

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China Unicom Profile
China Ministry of Railways

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