China's Telecom Industry Price Cap Regulation

In the national economy, the telecommunications industry plays a vital role, but its process of the development in the industry has demonstrated strong natural monopoly characteristics, and how to regulate it has focused the attention of national experts for the telecom industry strategic, fundamental and guiding. States early in the telecommunications industry usually use cost involved in return on investment regulation, but along with the economic development of the telecommunications industry, governments change the regulation in price regulation, price cap regulation began to replace the investment rate of return regulation. Price cap regulation has a stronger incentive than the rate of return regulation for investments. Scholars from various countries compared and analyzed the price cap regulation and the rate of return regulation after the price cap regulation replaced the rate of return regulation, the majority concludes that price cap regulation is more conducive to improve efficiency, reduce costs, improve social welfare than the investment rate of return regulation. Split the U.S. government forced AT&T, imposed a price cap regulation, many American scholars have concluded that contrast, the implementation of price cap regulation, the decline in telecom tariffs, consumer welfare is improved.Combined with China's national conditions, We concluded that:price regulation of China in telecom industry in the past makes China's telecom industry has a monopoly profits which is higher than foreign counterparts and lower productivity, especially after China's telecom industry reform. China's telecommunications industry for the problems,from October 2005, the Chinese telecommunications sector began to use the fixed-line telecommunications business operating range of local network call charges, mobile phone roaming calls, domestic long-distance telephone calls, international long distance calls telephone calls, Macao and Taiwan areas subject to price cap regulation, designed to stimulate enterprises to reduce costs, improve efficiency and promote competition in the telecommunications industry to form a reasonable price, to improve social welfare. However, in the process of the price of the implementation, there are many problems, such as in price cap regulation, how to determine the efficiency factor X, regulatory capture problems in the price cap regulation process, the quality and efficiency of alternative problems, and telecommunications industries that the over competitive sectors of the competitive issues. This article offers some solutions for these questions in the development of China's telecommunications industry,and hope it can play a little role.This article is divided into five parts, the first chapter is to introduced the significance of topics, background, and further explained several related economic definition used in this article, content and writing of this article ideas, and research is carried out at home and abroad the analysis of consolidation; The second section describes the price regulation of the telecommunications industry, the two models commonly used in the investment rate of return regulation and price cap regulation model model, introduced the model and the way they are, their advantages and disadvantages, the applicable period, the comparative analysis of them that more suitable for the telecommunications industry now, and price cap regulation because of its flexibility and low cost pricing as a more appropriate way to regulate; the third part of the introduction about the characteristics of the telecommunications industry, development and countries at different stages of the telecommunications industry pricing in a manner, and introduced 80 years after the 20th century, the introduction of competition in the telecommunications industry after the country's pricing strategy; the forth section, the first foreign telecom industry to price regulation summary manner obtained, price cap regulation than the return on investment regulations have a greater advantage, but to make it better to maximize the social welfare, there are still many problems to note. Followed by the Chinese telecommunications industry to adopt price cap regulation in the domestic long distance and roaming charges, compared before and after practice, and found that after the implementation of price cap rates decline, increase social welfare, but because of China's telecom industry started late, in the the course of implementation there are many problems need to pay attention; the fifth part is the conclusion, the overall conclusions reached, and that price cap regulation to give greater benefits of Chinese society. This conclusion can be summarized as:compared to the rate of return regulation, the price cap regulation can reduce the charges the telecommunications industry and promote the development of the telecommunications industry in some extent, there is a Pareto improvement. But the price cap regulation implemented in the process of China's telecommunications industry, there are still some problems, we propose to solve their own opinions. For the price cap regulation in the X factor to determine the problem, they should be regulated baseline method, the need for regulatory agencies jointly a technical, financial and other experts, taking full account of China's economic growth, production methods and efficiency of enterprise management, the She Given a reasonable X factor value; and for the quality and efficiency of the substitution, it is recommended in which the introduction of a factor Q, so that the quality and price that corresponds to that with the rise with the fall; and for the existence of regulatory capture problem, recommendations to regulatory functions and regulatory supervision department separated from each other; China's telecommunications sector part of the business competition is very motivated, and even the existence of vicious competition, should be subject to price are limited to the price floor regulation combination of policies to achieve China's telecom industry to better development.