China aims to boost Internet speeds, cut prices

A man uses a computer inside an Internet cafe in Shanghai in this January 5, 2009 file photo. REUTERS/Aly Song/Files

SHANGHAI (Reuters) - China will accelerate development of its high-speed broadband networks to raise Internet speeds and cut prices, long bugbears in a country where many people still have no access to the web.

Telecoms firms should make rapid moves to cut prices and increase urban broadband speeds by around 40 percent, according to a statement issued late on Wednesday by China's State Council, the country's cabinet.

China's investment in broadband could benefit global network equipment makers such as Ericsson and Nokia Oyj's Alcatel-Lucent, as well as home-grown players like Huawei Technologies Co Ltd [HWT.UL] and ZTE Corp.

The statement did not say how much investment would be needed, but officials have previously earmarked around 2 trillion yuan ($322 billion) to improve China's broadband infrastructure by 2020.

The country's Internet penetration rate was only 47.9 percent last year, with connectivity especially low in smaller cities and rural areas. This compares to around three-quarters of people in the United States.

The cabinet statement added that China would look to open up the telecoms market and encourage increased competition, including through expanding a pilot scheme for broadband services this year.

"There is still not enough competition, which has led to telecoms fees being relatively high while there is still a lot of room to improve the quality of service," the statement said, citing an official at China's official State Information Centre.

(Reporting by Adam Jourdan; Editing by Kenneth Maxwell)