In a step that promises to boost competition dramatically in Chinese telecommunications, the government has repealed a rule that bars the cable television(coverage) and telephone industries from each other's businesses, a senior regulator said on Wednesday.

"They are allowed to compete," Liu Cai, director general of policy and planning at the Ministry of Information Industry, was quoted by Reuters as speaking to reporters at a reception for U.S. and Chinese officials.

China erected a regulatory wall between the industries a year ago after competition in the southern province of Hunan led to deadly battles between cable TV executives and phone officials who waded into one another's turf.

Despite the ban, however, provincial branches of state phone giant China Telecom have continued to pipe television service to their customers, and many of the country's 2,000 cable TV stations have carried Internet and data over their networks.

By blessing such activities, Beijing appears to be trying to spur competition to build up the industry ahead of China's entry to the World Trade Organisation, after which foreign firms will be allowed into the sector.

"Of course they can provide Internet services," Liu said of cable TV companies. "But they must have a licence."

Cable companies that already provide or hope to provide Internet access and data services can apply for licences with the ministry, he said. The same goes for phone companies seeking to provide video services over their networks.

The two industries would not be allowed to produce video programming, however, he said. The creation of content would be left to China Central Television and local state-controlled broadcasters, he said.

The opportunity to sell Internet access could be a watershed for cable TV stations, which lose viewers to pirate cable operators and have trouble raising advertisement revenue with the stodgy state-produced programmes they are required to broadcast.

(Muzi News)