Structural Reform And Performance Assessment Of Telecommunication Industry In China

As one of the basic industries, the telecommunication industry occupies an important position in the national economy. Telecom industry is traditionally considered to be a natural monopoly industry. However, along with technological progress and market condition changing in telecommunication industry, the natural monopoly property in telecom industry is gradually weakened. Under this condition, developed countries like the United Kingdom and the United States have conducted telecom reform characterized by the introduction of competition and relaxing regulation. Since the1990s, China’s telecom industry has experienced four major changes to the initial formation of a competitive market structure. There is controversy about the effect of the telecom reform. By sorting out the process of telecom reform, in this article, we attempt to evaluate the impact of telecom reform on market structure and development of telecom industry.In chapter2this paper introduces the SCP analytical framework which is widely used in industrial organization, the technical characteristics of telecom industry, research on regulation and competition in telecom industry. Chapter3reviews telecom reform in U.K. and U.S., then we analyze the process of China’s telecom reform and market structure of telecom industry using Concentration Ratio and Herfindahl-Hirschman Index. Chapter4introduces development in telecom industry and calculates the changes of Total Factor Productivity and Market Power. Analysis indicates that the reform has a strong impetus to the development of telecom industry. Also it shows strong effects on Total Factor Productivity and Market Power. Then we indicate the disadvantage of reform. At last, Chapter5summarizes this article and proposes suggestion on further reforms.