Regulation Research In Two-way Access Pricing Of Internet Interconnection In The View Of Regional Monopoly

For network industry with natural monopoly characteristics, the introduction of market competition mechanism and the implementation of regional monopoly regulation has become an important part of the national communications industry reform. Based on the inherent technical and economic characteristics of the communication network, the prerequisite of effective competition is equal access and achieving interconnection and interworking. The character of communications network industry, like "the whole process, the whole net","connection operation""service of society", determines the only way for the operators to achieve to maximization of network efficiency and social welfare is interconnection. In practice, due to the natural monopoly character of the industry, the leading operator often controlls bottleneck resources by virtue of the technical advantage, the historic opportunity or the policy permission, and hampers the efficiency of industry competiton. Therefore, from the perspective of resource allocation efficiency and social welfare maximization, how to establish the regulation mechanism, methods and measuresof access pricing that balance the interests of interconnection operators in communication network industry, has become a problem with important theoretical and practical value.Currently, the study at home and abroad in access pricing and regulation of interconnection in communication network industry is concentrated in telecommunications network and broadcast network. There is little literature research on regional monopoly regulation of two-way access pricing in Internet interconnection and interworking, and there is lack of systematic study in the choice of pricing methods and regulatory tools of Internet interconnection. Although with the same characteristics of natural monopolies like telecommunications networks and broadcast network industry, the Internet industry has inherent economic and technical characteristics. Especially in China, the practice and reform of two-way access pricing in Internet interconnection is so urgent, asking for guidance of theory and practical experience.Combined the historical evolution of Internet access market and based on the successful experience of pricing regulation on Internet or telecommunications industry interconnection of developed countries, this article researches in China’s two-way access pricing regulation of Internet interconnection regional monopoly. The basic framework of this paper is as follows:This article first defines the concept of regional monopoly, Internet interconnection access, price regulation, and reviewed the basic theory and models of economic regulation. In Chapter3, it makes comparative analysis in the main methods of access pricing in internet interconnection (non-settlement method, Tariff-based method of settlement, as well as cost-based method of settlement), and researches in the cost-benefit analysis, the impact factors of access pricing of internet interconnection. In chapter4, firstly there describes a dynamic game model to examine the choice of Internet interconnection access price regulation tools. Secongly studies the distinction of the three policy tools for deregulation, cost-based price regulation, as well as retail-minus regulation. In chapter5, it explores and analyses the realistic and theoretical basis of two-way access pricing regional monopoly in internet interconnection, and then explores the experience of internet interconnection monopoly pricing regulation in developed countries such as the United States, the United Kingdom and Germany. Combined with the reality of China’s Internet interconnection access market, in chapter6the paper analyses the analyses the regulation approaches and obstacles of regional monopoly in the Internet interconnection access pricing, then analyses the function of the regulatory agencies in the regional monopoly regulation of internet interconnection two-way access pricing. Finally, this paper concludes the policies and measures, including "clearing the purpose of interconnection regulation","establishing effective methods of identifying regulatory needs","establishing a periodic review regime","improving the evaluation mechanism of regulatory regime","reconstructing the settlement standards of networks interconnection","Speeding up the legislation of internet interconnection","establishing a third-party technical supervision platform" and as well as "make the Internet overall regional planning".For the research approaches, this paper uses the qualitative and quantitative research method, theory with practice research method, induction and deduction analysis method, comparative analysis method, and also theoretical model reseach method, to study the regional monopoly regulation of internet interconnection two-way access pricing in China. This study is an exploratory study. For less relevant information and literature in this regard, this is not only the difficulty of this study, but also the innovations. In addition, the establishment of an Internet interconnection access pricing dynamic game model, considered about the within and among game behavior of the operators which providing the Internet interconnection access,,and comparative analysis of the three types of regulatory tools in Internet interconnection access pricing, it provides an important theoretical support to regulatory agencies to choose the most effective price regulation tool.The innovations that may embodied in this article could be in the following: First, we established a dynamic game model of Internet interconnection access pricing to study the game behavior between operators, and to give a comparative analysis of different Internet interconnection interoperability access price regulation tools (based on the cost price regulation system, retail minus price regulation, relax regulatory system) which may be the most effective price regulation tool to provide the important theoretical support; Secondly, combined with our Internet industry practice, this article proposed the path of access pricing regulation, countermeasures and implementation measures, including to ensure interconnection regulatory purposes, to establish effective recognition control and to build regular review system, which may provide some Methodology or approaches for the perfection of the regulatory policies of China’s Interconnection of Internet Backbone; Finally, we gave an systematic and comprehensive review about Internet interconnection access regional historical evolution and current situation of China, and also the successful experience of developed countries on Internet interconnection of regional monopoly. Specially, the study on two-way access pricing regulation of interconnection between Internet Backbone under regional monopoly is still a blank currently aboard, and we wish that this article could provide some reference.Due to the study period, the survey data and the author’s academic ability, this article has some shortcomings:lack of sufficient data to measure the interconnection two-way access pricing and the pricing regulation, including the access costs, revenue, profits, and other information of the operators; lack of data to empirical test the theoretical model. But the shortcomings will be the follow-up in-depth study. Certainly, the development of two-way access pricing theory in the industries with regional natural monopoly character, and the formulation of relevant policies and methods in internet interconnection two-way access pricing in today’s China, is the purpose and meaning of this paper.