Tencent Tech, 11/27/07
According to an informed source, the Ministry of Information Industry (MII) has recently made significant cuts to bandwidth charges for Internet access - meaning that China Unicom (NYSE: CHU; 0762.HK; 600050.SH) may again open Internet cafes.
In June 2003 the Ministry of Culture licensed ten firms, including China Unicom, Read Online and China Youth Network to run nationwide chains of Internet cafes. Two years later Unicom had a chain of 2,000 establishments, but in 2006 almost all operators of Internet cafe chains opted to shut down.
According to Unicom's head of data and fixed-line services Zhu Shijun, this was due to unreasonable charges from China Telecom (NYSE: CHA; 0728.HK) - RMB 2,200 per Mbps. Unicom was only charging franchisees RMB 500, meaning an RMB 1,700 loss per Mbps. At the same time Telecom was charging independent operators RMB 500 per Mbps and overseas operators only RMB 400.