On July 7th, hundreds of “resident network” contractors from various counties and cities gathered in front of the Henan Telecom Provincial Telecom Branch of China Telecom Group in Zhengzhou, Henan Province, protesting against the company’s monopolistic terms and conditions, only to be suppressed by the police.
According to Gu Yong, a contractor in Kaifeng, Henan, who spoke to a reporter from Dajiyuan, the rights-defending contractors came from different counties and cities, totaling three to four hundred people. However, due to their dispersed gathering, it was not immediately apparent how many people were present. The contractors chanted slogans of “Telecom fraud” on-site, prompting the local government to deploy dozens of police officers, who surrounded the contractors. A physical altercation broke out between the two sides, resulting in some contractors being injured and taken away.
The spark for the contractors’ rights-defending actions was Henan Telecom’s decision to no longer cooperate with them. The company introduced a new “store package (town)” contract, which, according to Gu Yong, was essentially a form of expropriation. He stated, “The key issue is our personal assets, which a state-owned enterprise cannot forcibly seize. Many people have not even recouped their costs, and now you are confiscating from them. This is unreasonable and a blatant case of monopolistic terms.”
In a bid to quickly dominate the broadband market, Henan Telecom has widely implemented the “resident network” cooperation model across the province. Gu Yong explained that he signed a contracting agreement with the telecom company in 2014, where they painted a rosy picture for contractors, claiming monthly earnings could reach tens of thousands or even millions.
However, Gu Yong found himself falling into a “trap.” Initially, the telecom company only provided signal resources, and he had to invest in building network lines, dealing with various procedures with town communication operating departments, power departments, etc., and being solely responsible for construction and maintenance of the network infrastructure.
He revealed that in the initial year, the profit sharing was on a fifty-fifty basis, but from the second year onwards, the telecom company changed the port agency fee to 18 yuan per household. Five years later, it was reduced to 12 yuan per household, and after another five years, it was further slashed to the current 6 yuan per household, significantly diminishing the contractors’ profit margins.
Having invested two to three hundred thousand yuan and developed nearly 500 users, Gu Yong’s monthly income was only a few thousand yuan. With such slim profit margins, almost all contractors had to operate by themselves without the ability to hire staff. Gu Yong described the work as strenuous, dirty, and exhausting, eventually passing the project to his father for operation and maintenance.
“Many of us may not even have recouped our costs. Some have just invested money, with the top contractors investing millions. According to the new policy, it is simply impossible to survive,” Gu Yong remarked.
Reportedly, Henan Telecom’s new store package (town) model stipulates that contractors must bear the maintenance of town network assets, installation and maintenance labor costs (mandatory allocation of 3 employees), and cooperation hall construction costs. Monthly assessment criteria include maintenance fees halving if the monthly points fall below 1000, ceasing fee payment if broadband user net additions are negative, and after three consecutive months of negative growth, direct termination of the contract. In essence, a series of regulations not only restrict the contractors’ rights but also impose a slew of obligations on them.
Gu Yong believes that Henan Telecom’s aim is to forcibly take over the mature end network that contractors have built and grown, after contractors have established and expanded a user base for broadband networks, which he likened to a form of “robbery.”
“Internal staff of the telecom company are well aware of this. Why did this document come out? It is likely an instruction from higher authorities,” Gu Yong said.
When Dajiyuan reporters called Henan Telecom, no one answered the phone. The reporters then sent an email requesting comment on the matter; as of the press time, there had been no response.