The Analysis Of The Effects On Market Power In Telecommunication Industry Influenced By Network Convergence

With the development and the application of information technology, network convergence based on IP technology becomes inevitable trend. The telecom operators provide the new service and the new experience in order to meets consumer's diverse need, and the government release regulation to impel network convergence development. The network convergence can bring various services to anybody from fixed to mobile, from voice to data and image at any time in any place. The tendency of network convergence convert the telecommunication market from single and multi service into full-service competition, thus market competition become more complex more than ever and the telecommunication market power has been undergoing spontaneous change.This article deployed the industrial organization and the network economic theories. Based on the present development situation of network industry, this article analyses the classification of network convergence and the impetus factors of network convergence by use of the methods of the theoretical and the comparative analysis. We modified Hotelling model to establish an adaptive model that can analyze the telecom market power suitably, and we give an empirical testing the model to analyze the effects of the telecommunication market power which influenced by network convergence.Network convergence has been classified into two categories according to its concept: the first is the convergence within telecommunication industry and the second is the cross industrial. The scopes of convergences in the telecommunication industry include these convergences between the fixed and the mobile network, the voice and the data network and different mobile networks. While Convergence crossing industry is "Triple Play"—-the convergence among the Telecommunication, Internet and Cable television networks. The network convergence has been impelled by three main factors: the technical progress, the market demand and the government releasing regulation. The technology progress is its foundation, the market demand including the operator market development and the user diverse services demand promote combined the development of convergence. Moreover, the government regulation is key factor to impulse the network convergence.The telecommunication market power is influenced by five basic factors that are entry barriers, economies of scale, product differentiation, customer inertia, and brand effect respectively. On the base of Hotelling linear model, this article builds model combined with the network externality and customer transfer cost variables in order to analyze the effects of power in telecommunication market under the network convergence tendency. We can draw some reasonable conclusions. Firstly, with the development of network convergence, the big operator's market power becomes weaken along with the small operator's market power gets strengthening. The telecommunication market concentration degree reduces so that all operators' market power tends to be balanced. Secondly, the change of transfer cost leads entry barriers reduced. The potential competitor may enter the market to compete with leading operator for the market share. So, the leading operator's market power will gradually fall down. Under the tendency of network convergence, the operators who want to strengthen their market power intend to enhance brand, service and the product differentiation to without expanding their market scale. Thirdly, with the service mutual convergence across industry, the telecommunication market competitions intensity will reduce the power of telecommunication enterprise.Finally, the empirical test based on the six telecom operator's data reflecting their revenue, users and voice traffic volume confirms these three conclusions rationally.