Competiton And Development Strategies For Chinese Telecomunication Operators

Telecommunication industry is one of the national basic industries. Competition between telecommunication operators is related to not only the profits of the operators, but also the welfare of the people. Like the histories in the other countries, Chinese telecommunication industry also experienced monopolization by China Telecom (originally, National Post Office) before the reform and opening up, and then competition introduced from China Unicom since 1994, and further "5+1" competition pattern after the second restructure in May, 2002, and now competition among China Telecom, China Unicom, and China Mobile since "six-into-three" restructure.This thesis will consider the Chinese telecommunication market. First, this thesis will analyze competition strategies between the telecommunication operators based on product differentiation and network externality. And then, this thesis will, with regard to the 3G telecommunication technology, discuss the development strategies of the operators. The main contents are as follows:(1) Review the history of the competition pattern in Chinese telecommunication market since the foundation of P.R.C. The whole process is divided into perfect monopolization period, competition-introducing period, and competition period. Features of each period are analyzed, and the importance incidents are presented. And then, review the history of the regulation policies in Chinese telecommunication market. The history is divided into three periods: the period of combination of government and enterprise, the period of initially separating enterprise from government, and the period of completely separating enterprise from government. Regulation policies in each period are analyzed.(2) After presenting the definition of product differentiation in telecommunication market, we highlight the important role of differentiation. The ways to implement product differentiation are discussed, and take China Mobile and China Unicom as examples to illustrate the competition strategies based on brand differentiation. And then, we develop a pricing model based on brand differentiation and give the game equilibrium. Equilibrium analysis shows that the dominant operator can obtain more profit than the weak operator and its price is more steady.Further, we establish a location model to analyze the long-run competition between the operators. We assume that the strategic location decisions are made simultaneously, and the tactical price decision can be made simultaneously or sequentially. We present the equilibrium price and location decisions. Results show that in both price competition games, the operators will be located at the endpoints of the Hotelling line.(3) After presenting the definition of network externality, we analyze the network externality in telecommunication products. Based on this, we assume that the entrant firm can improve the utility of his products, and then establish a two-stage game model to analyze the entry-deterrence strategies of the firms. Equilibrium analysis shows that the incumbent firm can take the setup base as a deterrence strategy, but the entrant firm can enter the market by improving the quality and compatibility of his products. The impact of network externality on competition strategies is also discussed.(4) Discuss the current situation of 3G technology in Chinese telecommunication market, and show that mobile commerce will be the key business of the operators in the near future. To analyze the factors that drive the mobile phone users to adopt mobile commerce, we establish a revised TAM model. Assumptions are developed and tested by empirical data. Results show that personal characteristics are significantly related to the perceived usefulness and easiness of mobile commerce, which can affect the users' attitude towards mobile commerce.(5) Review the history of the three main operators: China Telecom, China Mobile and China Unicom, and compare their strengths after "six-into-three" restructure. The development strategies for the operators are analyzed by concluding services in the ear of mobile commerce.