China Calling

Beijing is ordering six Chinese telecom companies to join forces to create three giant cellular phone companies. While this move may seem to be limiting competition in the booming cellular phone industry in China, it is actually intended to level the playing field. It is meant to foster "healthy market competition and prevent a monopoly by any," according to a joint statement, issued by the Ministry of Industry and Information, Ministry of Finance, and the National Development and Reform Commission. Chinese officials say they want to boost the competitiveness of fixed line operators before the nation rolls out 3G high-speed wireless services. The network will require billions of dollars in investments for infrastructure.

China Telecom Corporation will acquire China Unicom Ltd's mobile-phone network and then merge with the company that controls China Netcom Corporation. That will help them survive against industry leader China Mobile Ltd. China Mobile already boasts two thirds of the cellular phone users in China. China Mobile Communications Corp., the state-owned parent of China Mobile Ltd, will take over fixed-line operator China Tietong Telecommunications Corpration. China Telecom is China's biggest fixed-line company. It will absorb Unicom's smaller mobile-phone network. China Telecom will also get China Satellite Communications Corporation's phone assets.

China already has more mobile phone and Internet users than any other country on Earth. The $105 billion industry has 583.5 million cellular phone subscribers. That's more than the combined populations of the US and Japan. There is also plenty of room for expansion. China is a country of 1.3 billion people. 6 out of 10 of them still don't have cell phones and 82 percent of the population still doesn't have the internet.