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China Telecom and China Netcom, the two fixed-line telephone operators in the country, have reportedly signed a deal under which they will stop treading on each other's turf, beginning this month.

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Some media have called it a "gentlemen's agreement" as it could lead to so-called "rational competition". It is, in fact, a shameful and woeful deal.

Since May 17, 2002, when the former fixed-line monopoly China Telecom was formally split geographically into two firms, China Telecom and China Netcom, the much-hyped restructuring has been almost doomed to failure.

After the split, China Telecom operates mainly in the southern part of China, while Netcom operates in the northern region. Regulators had hoped that China Telecom would head north and Netcom would expand to the south, which could spur competition.

But for more than four years things have been going in the opposite direction. Where can you find China Telecom's services if you are living in North China's Beijing? Consumers realistically do not have more than one choice when choosing fixed-line services.

China Telecom and China Netcom are struggling with saturation in fixed-line services at the same time voice goes mobile. And worse, given the rising mobile lifestyle in China, fixed-line carriers are seeing some of their customers switch entirely to cellular operators China Mobile and China Unicom.

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