A Study On The Efficiency Of Telecom Operator's Network Investment Based On DEA

As the investment subject in telecom sector, telecom service providers gradually refine their management toward network investment from extensive to fine type, facing with such market environment as intense competition and such objective condition as an annual decline in profits. The basis of the operation of telecom sector is network. Telecom service providers mainly focus their investment on special networks of telecommunications. Therefore, the efficiency of telecom service providers'network investment directly related to their overall economic benefits and competitive strength. Thus, the issue of raising the efficiency of network investment, reducing cost of that, and enhancing competitiveness of the cooperation has become a major concern of telecom service providers.To raise telecom service providers' investment efficiency, an objective evaluation of that should be conducted in the first place. Since the production process of telecom service is complex, and coordination among special networks of the providers is needed to fulfil the procedure of service provision, the existing production fuction is not applicable. Traditional method couldn't give an effective evaluation for the efficiency of investment. For this reason, the DEA method is introduced into this paper. DEA model can evaluate efficiency of investment without establishing the fuction of input and output. Therefore, it makes the evaluation of multi-input and output issue more scientific and reasonable. In this paper, an index system applicable to the evaluation of telecom operators' efficiency of network investment is set up, combined with an empirical analysis which bases on the input and output data on special networks from a telecom service provider in China. Last but not least, according to the result of the analysis, targeted suggestions are proposed from two aspects-- the optimization of investment structure among special netwoks and that within a special network, to achieve the optimum matching for the efficiency of network investment in all subsidary companies of the regarding telecom service provider.