Vertical Integration Of Value Chain Of Telecommunication Industry In China: An Analysis Based On Mobile Internet

In mobile internet age, with the constant innovation in information technology and thediversification and individualization of customer demands, the Internet serviceproviders(represented by Baidu, Alibaba, and Tencent) have made an tremendous impacton the three traditional telecommunication providers—China Mobile, China Unicom andChina Telecommuncations, as a result, the presence of the three traditionaltelecommunication providers has been dramatically reduced and they are facing thedanger of marginalization. In the face of ever increasing horizontal competition and alsocompression from both end of the industry chain, the competition betweentelecommunication providers has evolved from inter-enterprise competition to inter-systemcompetition. Therefore, it is critical to adjust the industry chain relationship, improve thevalue allocation and also aim for mutual benefit, which would increase the capacity oftelecommunication providers, handle the challenges from different parties, and also raisethe welfare of customers and promote the development of the whole telecommunicationindustry.Hence, this paper would build upon the existent research results from prior work andintegrate such theories as vertical relationship, vertical integration across industry valuechain and game theory, in order to analyze the impact of mobile internet on traditionaltelecommunication providers. Also, this thesis would construct a game theory model andinvestigate into real-life cases, in order to shed light on the issue of vertical integrationacross the industry value chain of telecommunication industry, and finally arrive at advicefor the relation management between telecommunication providers and content providers,end-use equipment providers.This thesis points out that in the backdrop of mobile internet, telecommunicationproviders should innovate on their management mechanism, introduce “Internet Gene”,and proactively wage an industry line integration. In addition, telecommunicationproviders should flexibly choose the integration mode according to the developmentsituation of industry value chain. Thirdly, they should open up, collaborate and start toshare their profits in order to build a more stable and more widespread unity. Last but notleast, they should always lay emphasis on customer needs, keep abreast to the technicaland demand trends, and actively configure their vertical integration scheme.