China's Ministry of Industry and Information Technology (MIIT) vowed to improve the country's broadband speed and coverage, as well as lowering Internet prices on Friday.
By the end of 2015, the average broadband speed for users in major municipalities and provincial capitals will be increased to 20 megabytes per second (Mbps) from the current 9 Mbps, said Shang Bing, the MIIT vice minister, and in other urban areas will be improved to 10 Mbps from the current 7 Mbps.
More than 1.3 million 4G base stations will be built in urban and most of the rural areas by the year end.
Average charges for mobile phone Internet and fixed broadband should be sharply decreased by at least 30 percent from the previous year by the year end, Shang said.
China's three telecom operators, China Mobile, China Unicom and China Telecom, Friday also announced their plans to cut mobile data prices and boost data speeds this year.
"It will be positive for the market if the telecom operators reduce the cost of service after the government's suggestions," Fu Liang, a Beijing-based IT expert, told the Global Times Friday.
"Telecom operators will roll out more packages to offer more valuable and diversified services based on the current price level, rather than lowering the price directly," Fu said.
The MIIT's pledge came after Premier Li Keqiang's call on Wednesday, when he urged speeding up the construction of broadband networks and reducing fees and improving speed.
Li said at a State Council executive meeting that China has the largest number of mobile phone users, but its Internet speed ranking is below 80th place globally and its information infrastructure lags behind.
Li was responding to widespread complaints. Ding Lei, the CEO of Netease, said at a meeting on economic situation on the first quarter on April 14 presided over by Li that current mobile data fees are too high and may hinder the use of Internet platforms, as 1 gigabytes of data costs 70 yuan, the Beijing News reported on April 15.
According to a Reuters report on Wednesday, China's Internet penetration rate was only 47.9 percent in 2014, with connectivity especially low in smaller cities and rural areas. In the US, the figure is around 75 percent.
The MIIT said by the end of 2017, telecom companies will have invested more 1.1 trillion yuan ($179.74 billion) to upgrade China's Internet infrastructure, with 430 billion yuan being invested in 2015. Fiber optic broadband speeds of 100 Mbps will be available to almost all urban families, with average broadband speed reaching 30 Mbps in major cities.
However, there are also concerns that increased investment and lowered fees may affect telecom operators' profitability.
"The average revenue per user (ARPU) of Chinese telecom operators is quite low already. With increasing income, inflation, expanding broadband network, and exploding user base, the cost of telecom services for consumers has been on a declining curve," Ma Jihua, a telecom analyst with Beijing Daojing Consultant Co, told the Global Times Friday.
In April, China Mobile said in its quarterly report that its net profit for the first three months of 2015 dropped 5.6 percent with ARPU fell to 59 yuan from 62 yuan a year ago.
China Unicom said its first-quarter net income fell more than 4 percent from year ago while China Telecom's quarterly net profit fell 9 percent year-on-year to 5.05 billion yuan.
"China Mobile is traditionally strong in mobile services, but its broadband service is just a fledgling, trying to win the market with low prices. China Telecom is at the other end of the spectrum, so the maneuverability for telecom operators to implement these goals is different," Ma noted.
Accessibility issues should also be addressed, as many residential communities only allow one telecom operator to do business within its compound, greatly hampering competition from different enterprises, Ma said.
The MIIT demanded a more open market and stricter monitoring of the telecom market in an effort to offer consumers more services and cheaper prices, according to Shang. As of the end of March, China had 1.3 billion mobile subscribers, with half of those on 3G or 4G contracts. A total of 290 million families have access to optical broadband network and over 200 million users have fixed broadband networks, data from MIIT showed.
In the past three years, charges for mobile data prices and fixed broadband network have decreased by about 60 percent and 30 percent respectively, Shang said.