Ex-post Assessment For Platformized Merger Between Telecom Operators And Internet Content Providers

With the rapid development of information technology and the expansion of the Internet,the telecommunications industry is experiencing shocks and challenges.Consumers can transmit voice and other contents with lower costs via the Internet,and traditional services in the telecommunications industry are being replaced by Internet technologies.The popularity of fixed communications,mobile communications and broadband networks has also led to a gradual saturation of the number of telecommunications subscribers and a slowdown in user size growth.Revenues in telecommunications industry are declining as the number of users is saturated and telecommunications services are substituted by internet services.It is urgent for the telecommunications industry to discover new revenue growth points.Telecom operators with essential facilities are under reform and transformation.Nowadays,Internet content providers are able to earn substantial revenues because of the increasing demand of internet contents whilst telecom operators cannot gain the value from the internet contents.Thus,telecom operators are seeking cooperation with internet companies.The mergers between telecom operators and internet content providers have become the important trends.This type of merger is not vertical merger as the relationship between operators and consumers is essentially changed.Before the merger,the telecom operator as an unilateral vendor provides network infrastructure for Internet content providers;after the merger,the telecom operator can contact users on both sides of the platform and becomes a platform The telecom operator and Internet content provider are integrated into a platform.This article refers to such a merger as a "platformized" merger.The purpose of this dissertation is to explore the impact of platformized mergers on the competition,and further analyze the implications of the merger on the reform of the telecommunications industry.Based on the framework of the two-sided markets,I first clarified the characteristics of the two-sided markets of platformized merger,elaborating the difference between platformized merger and vertical merger,and theoretically explored the efficiency effects and market foreclosure effects of platformized integration.Secondly,I analyzed the economics of network neutrality and the application of network neutrality in the antitrust scrutiny.Thirdly,using the event study approach,then empirical analysis was implemented based on the merger between Verizon and AOL.Finally,I investigated the implication efficiency effects from platformized merger on the reform of the telecommunications industry.The results show that the platformized merger results in a negative effect on rivals;Network Neutrality is the critical factor to judge whether a platformized merger will result in market foreclosure effects.If integrated firm has the ability to discriminate non-integrated ICPs,this may be harmful to competition;Efficiency effects promote competition in telecommunications industry and the platformized merger has a positive effect on the reform of the industry.What's more,the principle of network neutrality can effectively constrain the potential market foreclosure effects.Therefore,the regulatory authorities should regulate the market foreclosure behaviors beforehand while encouraging mergers between telecommunications operators and ICPs.They should also attach importance to network neutral legislation,thus providing a virtuous competitive environment for the development of the network industry.