On The Price Regulation Of China Telecom Industry Facing Effective Competition

With the constant deepening of Chinese Telecom Regulation, the competition has taken shape in Telecom Industry. The current market structure of Chinese Telecom Industry forms the situation of the "5+1" Oligopoly Monopolization. The main characteristics of this situation are structural imbalance, vertically integrated operations, market blocks among different enterprises and higher entry barriers set by government. From the point of view that market structure influences market behaviors, the market competition behaviors of Chinese Telecom Industry is now in a condition of low efficient competition, focusing on price wars and interconnectivity barriers. So the market needs to strengthen its regulatory system. The dissertation has conducted a study on the structure and price regulation of telecom industry facing on effective competition under regulation.First, in order to demonstrate the necessity of regulation the dissertation analyzies the characteristics of Telecom Industry and the regulation experience of telecom industry in different countries. Furthermore, the reasons of regulating the Chinese telecom industry are listed and the aim of regulation especially the price regulation is explained.Second, the dissertation analyzies the market structure of telecom industry from effective competion boundary, diversity of area and centralization level, and gets conclusions about competition pattern. Based on these, the magnitude of enterprises managing the same operation should be more than six and not less than four.Third, the dissertation builds a Hotelling Price Competition Model of two enterprises with unequal strength in unsaturated telecom market,assuming no price regulation. Through the analysis of two cases, interconnect or not, the disseration comes to a preliminary conclusion for the effectiveness of Telecom Regulation. Based on the price competition model, some suggestions to Chinese telecom regulatory are made.Last, based on the classical price regulation models a Historical Cost-plus Model of Price Regulation is built which can make it easy to affirm the cost. Besides this the dissertation chooses rural area as the representative to do empirical research. A market investigation in XinYang of Henan Province is carried out and the development of telecom industry in rural area is analyzed. Moreover, the expectations of telecom price of potential clients are compared with the regular prices which are based on the Historical Cost-plus Model of Price Regulation. The result shows that the telecom enterprises still can obtain enough profit even when the regular prices are put in practice. The study can offer a reference for price regulation of rural market. And some suggestions in pricing in rural telecom market are given.