June 4 matters, even for telcos

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People all over the world will today mark the 20th anniversary of the brutal events of 1989 in open and peaceful ways – except of course in China, where those who wish to remember the night of June 4 will do so privately.

In recent days we’ve seen anxious Communist Party officials go to extraordinary lengths – even by their own standards – to ensure that their handiwork around Tiananmen passes unremembered.

In addition to the intensive routine censorship of the net, blogging and user-driven sites such as Twitter and Flickr, and even Microsoft’s new search engine, have been cut off. YouTube has been out of bounds for weeks.

In case any discomforting information threatened to sneak in via print, China-based readers of the Economist and the South China Morning Post have found pages torn out.

All of this matters to the telecom and internet industries – not just because they are central to the whole system of censorship. They are – and direct control over them is crucial to the survival of one-party rule.

But it also means that China cannot permit the growth of an open and competitive telecom industry. It refuses to allow private or – in breach of its WTO commitments - foreign players into the market.

The only period of telecom reform in the past 20 years was during Zhu Rongji’s period of high office, when the old MPT was restructured and China Mobile and China Unicom were formed.

The only recent reform was the panicky reshuffle of carrier assets last year to counter the dominance of China Mobile – itself a result of the refusal to widen competition.

Compare China’s system of state-controlled quasi-monopolies with India’s open telecom sector, which has allowed private businesses to nurture world-class telcos such as Bharti and Tata Communications.

China Mobile’s sole foray abroad has been to buy the smallest and weakest player in Pakistan. Its political stunt in trying to buy into Taiwan is now an embarrassment.

Seven years after 3G was launched worldwide, Chinese consumers are today only just getting access to high-speed mobile services, while their government has spent billions on the TD-SCDMA boondoggle.

Of course, state-driven, taxpayer-funded industry policy is not unique to China or to communists. But 1989 confirmed not only the political status quo, but also a mindset of government-knows best and a way of governing that is secretive and unaccountable.

And if nothing else, China’s second-rate telecom sector gives the lie to the claim that the 1989 crackdown was necessary for the country’s economic development. A freer, more democratic China would have nothing to fear from a telecom sector open to all.