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March 19, 2012

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Hotel sues China Unicom over pricing

A local four-star hotel is suing China Unicom, accusing the telecommunications giant of violating the Chinese Antimonopoly Law by forcing the hotel to pay for a bundled broadband service at a price much higher than the market price, the Shanghai No. 2 Intermediate People's Court said yesterday.

Shanghai Kingtown Hotel, on Tianshan Road in Changning District, said it signed a contract with China Netcom in July 2007 in which the hotel was allowed to use 10 fixed-line telephone numbers with a minimum monthly call charge of 12,500 yuan (US$1,975).

Kingtown also agreed to pay 9,000 yuan per month to rent an exclusive broadband with a LAN bandwidth of 6 Mbps (megabytes per second). The contract was for eight years.

Kingtown said it had tried to negotiate a lower service fee after the hotel discovered its actual monthly telephone expense was only 3,000 yuan and the price of broadband services was cut greatly a few years after the contract was signed. But China Netcom, which merged with China Unicom in 2008, did not agree.

Last August, Kingtown sent a letter to China Unicom, saying it would stop using the current broadband starting last September 1 and asked the company to return the rest of the broadband fees it had already paid.

The hotel brought the case to court after China Unicom refused the request on September 7. China Unicom is arguing that the contract is binding because it was signed before the law came into effect in 2008.

The court did not reach a verdict yesterday.


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