Tue June 10, 2003

BEIJING (Reuters) - China said on Tuesday it had given licenses to 10 local firms to open Internet cafe chains, a move analysts said was designed to squeeze out smaller players and tighten control of sensitive political information.

Most of the franchise licenses were given to state-owned companies such as China United Telecommunications Corp, parent of China Unicom Ltd, Great Wall Broadband Network Service Co Ltd or those affiliated with the Ministry of Culture.

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Analysts and operators said the licenses, in a country where information flow is a matter of national security, were intended to clamp down on information deemed harmful to the government.

CONTROL MEASURE

Internet watchers say China already filters text for controversial terms related to the banned Falun Gong spiritual movement or the 1989 Tiananmen Massacre as it passes routers at international gateways. It routinely blocks foreign news sites.

Last year, China briefly blocked access to the world's most-popular search engine, Google, and continues to block searches of politically taboo subjects.

But, tracking postings at the national Internet cafe level would be another way to stamp out information deemed subversive, they said.

"By setting up chains of Internet cafes, it will be easier to verify what is being looked at or posted over the Internet," said Nathan Midler, a senior analyst at IDC Asia Pacific.

He said licensed firms must enforce rules about registering user names and citizenship numbers, which can later be used to determine who posted a sensitive message on the Internet.

Internet cafes must also vow to follow regulations banning downloads of pornography and politically unsavory topics, operators said.

The approved firms include three affiliated with the Ministry of Culture: China Audio-Visual Publishing House, which plans to set up 50,000 cafes in 40 cities in three years, the China Cultural Relics Information Center and the China National Library.

A fourth operator, China Youth Net, is affiliated with the politically-powerful Central Committee of China Youth League.

The other six include telecoms operators or Internet service providers such as www.readchina.com, which plans to build 2,500 Internet cafes within a year and a half.

It belongs to the Read Investment Holdings Co, a high-tech conglomerate founded in 1988 which has annual revenues of 10 billion yuan.


http://asia.reuters.com/newsArticle.jhtml?type=internetNews&storyID=2905528