Inevitably – because of its size, its rapid growth and its strategic positioning in the global economy – China will come to play an important role in the global new ICT ecosystem. In appendix 8, China's position in layer 1, the networked elements layer, was considered. In this appendix some tentative comments are offered regarding the Chinese approach in layer 2, the network operation layer.

Is there a distinctive Chinese model for telecoms services in layer 2?

History of the Chinese telecoms services industry

A brief history of the Chinese telecoms services industry is provided in exhibit A9.1.

Competition in the Chinese telecoms services industry

On the face of it, there is little competition in the Chinese telecoms services industry. In the fixed area, the two major companies – China Telecom and China Netcom – are separated geographically and have limited competitive relationships with one another. Furthermore, although China Unicom is the only operator to be licensed to deliver both fixed and mobile services (both CDMA and GSM, though it concentrates on the former), its competition in fixed services with the two main fixed operators is limited in extent. However, this account is misleading since it ignores the extent of competitive forces in the Chinese telecoms services industry.