China Telecom (CHA) and China Netcom (CN), the two fixed telecom service providers in China, have signed an agreement to limit competition between them.

China Telecom and China Netcom have probably inked this deal to better meet challenges from the mobile operators like China Mobile and China Unicom. But they might also want to seize more power in the amalgamation of the telecom network, broadcasting network and Internet network.

According to the central government's plan, the three networks' amalgamation is the final goal of China's telecom reforms.

Interestingly, this means that after the reform, China's State Administration of Radio, Film and Television (which controls the content) and the telecom operators (which control the networks), which have opposed each other for years, will be in similar positions with similar assets.