A Study On The Effect Of The Competitive Reform Of China Telecom Industry

The telecommunications industry,which has gradually lost its "natural monopoly property",is still a typical representative of Chinese administrative monopoly industry.In the past 20 years,the Chinese government has made a series of adjustments to the telecommunications industry,making it not only a representative case in the reform of state-owned enterprises,but also the focus of academic research.In 2008,the Chinese government adopted the reform strategy of the merger and reorganization of the telecommunications industry,which was contrary to the previous.By encouraging China Mobile,China Telecom and China Unicom,China Netcom,China Tietong Telecom and so on,reintegrating telecommunications companies,improved the market concentration of the telecommunications industry.This time the telecom reform enhanced the telecom market concentration,but through the merger,China Mobile acquired the solid net service market access qualification,the same as Chinese Unicom and China Telecom also got the mobile communication market entry qualification.The increase in market concentration is contrary to the reforms before 2008,but through the merger to allow the three telecom operators to obtain full business license.At the same time,the regional limit exists originally have been broken by the merger,China Telecom,China Mobile and China Unicom have Chinese line layout.The three can also compete in the north and south of the Yangtze River.Due to the business barriers between enterprises is broken,although the industry's overall market concentration increased,the mobile communications services and fixed line services market concentration decreased.Since this reform also includes two different reform measures,and the impact of different measures on the performance of the telecommunications industry is contradictory,so this reform is worthy of attention.In theory,this paper is based on the theory of Workable competition.Specifically,this paper' theory analyses is based on ISCP which proposed to Liangchun Yu.This paper constructs a framework between performance reform measures and telecom industry relationship paradigm,the influence path between reform measures and the establishment of performance based on ISCP.Combined with the actual situation of the China Telecom,according to the reform objective and the performance concept on industrial economics,in this paper telecom industry performance is divided into two levels and four indicators,namely:the profitability of the telecommunications industry,the telecommunications industry revenue consumer welfare and social service ability,the telecommunications industry(based on the total factor productivity of different definition as index),then rely on the different impact on the telecommunications market concertation accordance with the merger and the measures of the reform package,it can be divided into two categories and three indicators which are the entry permit(including mobile communication market access and fixed services market access)and merger.A license to enter will lead to the market concentration decline,and the merger will lead to market concentration increased.Finally,on the basis of the above analysis,this paper constructs a theoretical analysis framework which can uses empirical test to analyze the impact of the reform.In the empirical analysis,this paper uses industry data and panel data,using counterfactual framework,GMM,dynamic equations,DEA,random effect panel model and so on to do the empirical test,and with the multi-dimensional empirical results as robustness test,improve results persuasion.Specifically,this paper first uses the matching method to construct the counterfactual framework,and analyzes the comprehensive effect of telecom reform in 2008.Then this paper with the industry data and panel data,using dynamic distance estimation(GMM)method to analyze the influence of various reform measures to the telecommunications industry,telecommunications industry revenue,followed by the use of the new industrial organization economics method(NEIO)to analyze the impact of the reform of the telecommunications industry on the telecommunications industry in 2008.Then study the influence of the 2008 telecommunications industry reform on the average price to get what will happen.Finally study the influence of 2008 reform on the dynamic efficiency.In this part,calculate TFP of the telecom industry by DEA,and then calculate the treatment effect of reform in the telecommunications industry on TFP,finally analyzes the effect of different reform measures of TFP.By defining the total factor productivity in different perspectives,we can know the impact of the reform measures on both the profitability and social service capability of the telecommunications industry.This paper includes seven chapters.The first chapter is introduction.This part introduces the research background,the question,the research goal,the research significance,the research method,the research mentality,the main content,the main innovation and the insufficiency.The second chapter is literature review.This part includes the theory of industrial economics,which the monopoly of the telecommunications industry,how to evaluate the telecommunications industry performance,the relation between the telecommunications industry reform measures and the telecommunications industry's performance,and then made a brief comment.The third chapter is the theoretical analysis of the competitive reform of China Telecom.This part first discusses why the 2008 reform on telecommunications industry is a competition change.Secondly,we decompose the multi-level performance indicators of telecom industry and the competitive reform measures of the telecommunications industry in 2008,and analyze the impact of different reform measures on the profitability of the telecommunications industry,consumer welfare and total factor productivity.Finally,a framework of the validity analysis of competition policy can be used to provide a theoretical basis for the theoretical analysis.The fourth chapter is about the impact of telecom industry's competitive reform on the profit of telecommunication industry.This part begins with the analysis of the "counterfactual framework for policy intervention",a direct impact on the telecommunications industry revenue,then study the effects of two measures of the telecommunications industry reform on telecom industry revenue.This paper analyzes the contradiction between the different measures,and tries to answer the reasons why the competition reform of the 2008 telecommunication industry has no significant influence on the income of the telecommunication(?)industry.The fifth chapter is the impact of competition reform on the consumer welfare.This part,based on the new industrial organization economics method(NEIO)to build a "policy intervention" analysis of the treatment effect model,then directly estimate the treatment effects of the reform.Based on the model,the paper analyzes the impact of different reform measures on the average price of the telecom industry,and explains the reasons why the 2008 telecom industry competitive reform has no significant impact on the telecom industry.The sixth chapter is the impact of the telecom industry competitive reform on the total factor productivity of telecommunication industry.In this part,firstly,the total factor productivity of telecom industry is calculated based on DEA,which is decomposed into technical progress,allocative efficiency,scale efficiency and pure technical efficiency.Then use the matching method to construct the framework of rebellion,and analyzes the effect of the reform on telecommunication industry in 2008.At last,the paper analyzes the influence of different measures of Telecom Competition reform in 2008 on the total factor productivity and its decomposition.Finally get a conclusion compared with the conclusion of the fifth chapter and the conclusion of the sixth chapter,and summarizes the final results of the telecom industry in 2008.The seventh chapter,summary and policy recommendation.This part summarizes the full paper and gives policy recommendations.The main conclusions:Firstly,it is improved the performance of the telecommunications industry that the permit to enter the mobile communication service market,and it is reduced the performance that the fixed network business market access and merger.The three cancel each other and lead the 2008 reform in the telecommunications industry reform has no significant effect on the performance.According to the actual situation of the China Telecom for the development of the industry,the introduction of new competitors in the absence of competition in the mobile communication market can correct the market failure caused by monopoly,reduce the deadweight loss,and improve the performance of the telecommunications industry.In the competitive fixed line business market,to strengthen competition maybe leads to an excessive competition".Because and technology there is no essential difference in telecom operators' fixed network services,so the "excessive competition" will cause the repeat construction and excessive investment,resulting in a decline in the performance.The government can choose the market lack of competition to intervene,strengthen competition to increase the overall industry revenue.Secondly,the telecom business permit to enter the mobile communication service market reduce the average price,and the solid net service market access and Enterprise merger and acquisition rise the business telecommunications industry average price,finally they make the reform in 2008 in the telecommunications industry has no significant impact on the telecommunications industry business average price.Because the core of this paper is the welfare of consumers and non-monopoly loss,therefore did not estimate the welfare of consumer specific values,but the average price of telecom business customs show the influence of the 2008 telecommunications industry reform on consumer welfare.Importantly the factors that can cause the rise of the performance of the telecommunications industry will lead to price decline,while the factors that cause the price increase will reduce the performance of the telecommunications industry.This phenomenon is that the telecommunications industry is lack of competition,the telecom operators are in a monopoly position,and the average price of telecommunication services is in the equilibrium price under the condition of effective competition for a long time.Telecom operators to obtain high prices do not rely on technical superiority,two is to rely on the monopoly position,this high price will reduce the total surplus of the whole society,resulting in a large number of deadweight loss,thus strengthen the competition will reduce the price,reduce unnecessary losses,increasing the total social surplus.Thirdly,the total factor productivity of China's telecom industry is mainly due to the contribution of technological progress,and the change of the allocation efficiency is very small.In 2008 the competitive reform measures of telecom industry had an impact on the scale efficiency of telecommunication industry,but had no significant effect on the technical efficiency and technological progress.Which improves the scale efficiency of Telecom mobile(?)communication services market access,and fixed network business market access and Enterprise merger and acquisition on the reduced scale efficiency of telecommunication industry,and improve the late cancellation,eventually led to the decline of scale efficiency of telecommunication industry.As the telecommunications industry has been protected by policy,the market cannot play a role in optimizing the allocation of resources,resulting in pure technical efficiency is always at a low level,and there is no change.Although the competitive reform of the telecommunications industry in 2008 has a certain impact on both the performance of the telecommunications industry and the price of the telecommunications business,but these effects are bound to offset each other,resulting in the overall effect is not obvious.And this is not obvious effect can be confirmed in the efficiency analysis.The change of total factor productivity is still affected by the market demand,and the effect of government intervention is not obvious.Thus,the telecommunications reform in 2008 did not play a strong role in promoting the development of the telecommunications industry,through the integration of telecom operators in the industry,did not achieve the effect of resource optimization,economies of scale and technical improvements.Fourthly,the telecommunications industry mergers and acquisitions reform in 2008 promotes the development of the telecommunications industry when the dividend is more inclined to consumers.Through the comparison of the direction and the magnitude of a multiple impact on the telecommunications industry reform measures of social service ability and profit ability,it showed that the reform increasing the social service ability,but have no significant effect on the profitability of the telecommunications industry.This shows that the reform in the telecommunications industry has not weakened the profitability of the telecommunications industry,while promoted the social service capabilities.In the long run,this reform promoted the development of the telecommunications industry.Fifthly,taking into account the direct impact and long-term impact of the reform in 2008,we can see that this reform is an effective competitive reform.The direct impact of the reform to maintain the welfare of consumers to a certain extent unchanged,and a substantial increase in the income of the telecommunications industry.In the context of the whole society,the reform is successful,increasing the total surplus of the whole society,so this reform is effective.On the other hand,in the long-term,it improve the social service ability but not affect the profitability of the telecommunications industry at the same time,the total number of instructions for the telecommunications industry development dividend increase,rising proportion of the society.So it can be said that in the long run,the reform is effective.Combined with short-term direct impact and long-term development of the results,you can determine the reform will cook a bigger cake,and promote the telecommunications industry to give back to the community more generally.