Research Of Telecom Network Neutrality Based On Two-Sided Markets

With the rapid development of mobile Internet and mobile applications especially the OTT application such as Wechat, Skype, the telecom operators’ existing mobile data business model is facing big challenges, its’ control position in the telecom value chain is gradually weakened, more and more OTT applications are to seize the traditional telecom voice and SMS revenue.From the angle of government regulation, FCC (Federal Communications Commission of USA) is making network legislation; In China, the government and relevant agencies are to explore the possibility of charging the content service. From a global perspective, telecom operators in Amercian, Europe, Japan, South Korea and China, telecom operators are stepping up the implementation of PCC and DPI network, to enhance the management and control the applications and contents.The dissertation researched telecom network neutrality based on two-sided markets theory, established the model of telecom network neutrality, including the monopoly network platform and duopoly platform, studied and analysed different operation business model, including unconstrained pricing model, differential charging mode and network neutral business model, the main innovations are as following:(1) Based on two-sided market and external network theory, established the model of telecom network neutrality, including telecom network neutrality model under monopoly and duopoly network platform neutrality, introduces different charging model (based on application and content), unconstrained pricing model and network neutrality analysis.(2) Researched the neutrality of monopoly telecom network. Through the research and analysis of different charging model, we got the conclusions that for different network externalities parameter, the profit and social welfare has different manifestations.(3) Researched the neutrality of duopoly telecom competition network. Different network architecture are discussed, subscriber’s single and multi homing, CP’s single and multi homing and their combination. For every network architecture, studied and analysed the income and social welfare of different models of unconstrained pricing, different charging and network neutrality.In the study of neutral monopoly telecom network, following conclusions are given in the dissertation:(1) For all pricing models, the social welfare is closely related with network externalities. When the network externality of content providers (CP) side is large enough (vs. subscriber side), the pricing strategy of the four models tends to be the same, i.e. free access strategy for CP;(2) If the network externality of content providers (CP) side is large enough, then the pricing modelof network neutrality has the biggest social welfare, for unconstrained pricing mode and differential pricing strategy model, depends on the price difference method (the average price is higher or lower average price);(3) From the point of network platform profit, the unconstrained pricing model provides higher platform profit than the platform profit of net neutrality, it is uncertain for differential pricing model.In the study of duopoly competition network, following conclusions are obtained:(1) Under the same network structure, for the three pricing models (different pricing, unconstrained pricing and network neutrality), the social welfare is closely related with network externalities and the user scale of the two-sided market. If CP side’s network externality is large enough, the social welfare of three pricing models tends to be the same, otherwise social welfare of the network neutrality is the biggest, for unconstrained pricing model, the network platform will get the biggest profit but the social welfare is poor. For different pricing model, the platform profit and social welfare are complex and uncertain.(2) The comparison and analysis of all pricing mdoel under different network structure,(Subsribers’single or multi-homing combined with CP single or multi-homing), multi-homing subscriber and network interconnection can improve the social welfare.The dissertation also gives following suggestions to the telecoms regulator: (1) From the overall regulatory policy, the telecom regulator should encourage the telecom operators to develop more users of the two-sided market, because more users will bring more social welfare, and telecom operators also get the maximum profit.(2) From the overall social welfare, network with competitions could create more social welfare than monopoly network, so the telecom regulator should introduce effective completion mechanism into telecom networks.(3)In the comparison of social welfare under different network structure (double Single-homing, single multi-homing and double multi-homing) platforms, the result is that double multi-homing platform will create the higgnest welfare.So the telecom regulator should break the teleocm operator’s barrier in subcriber’s multi-homg and roaming in different network platforms, both subscribers and CPs could access the network freely.