Coevolution Of Technology,Market And Government Regulation In Basic Telecommunications Industry

The basic telecommunications industry is faced with the dual problems of "market failure" and "government failure".However,despite the problem of "double failure",as a basic and strategic industry in all countries,the basic telecommunications industry has experienced rapid development and tremendous changes in recent decades.Behind the rapid change of this industry is the shortage of telecommunications economic theory.Neither the classic free competition theory nor the existing telecommunications regulation theory can well explain and guide the profound changes that have taken place and are happening in the industry.The shortage of economic theory leads to the disorder of the target of telecommunications regulation in practice,laying a hidden danger for the healthy development of the basic telecommunications industry in the future.Therefore,exploring the inherent regularity of the development of the basic telecommunications industry,and thus clarifying the direction of telecommunications regulation reform in the future is the urgent task facing current telecommunications theoretical community and national regulatory agencies.The key point of exploring the evolution law of basic telecommunications industry is to grasp the core element of "Technology".Reviewing the history of the entire telecommunications industry,it can find that the key to the development of basic telecommunications industry lies in the driving of new technologies.Advances in technology will not only change the industry landscape and market pattern of the entire telecommunications system,but also influence and determine the revolution direction of the entire telecommunications regulatory system.Thus,what relations and interactions between the key element of technology,market,and government?This is the problem that this dissertation needs to focus on.Therefore,based on existing theories,this dissertation introduces "technology" into the system of telecommunications economic theory and tries to construct a telecommunications analysis framework with technology as the core element,hoping to provide theoretical support and practical guidance for the future development of China's telecommunications industry.Based on several basic theories(e.g.technological innovation theory,industrial organization theory,telecommunications regulation theory and evolutionary economics),this study uses historical case analysis,theoretical study and empirical research to analyze the role of technology in the development of basic telecommunications industry,investigate the interactions and general rules between technology,market and government regulation in basic telecommunications industry,then reveal the theoretical mechanisms and practical path of the evolution of this industry,and finally put forward some ideas and proposals for the future reform of China' s telecommunications regulation.To be specific,firstly,through the review of the development history of modern telecommunications technology,the analysis of the characteristic technical and economic characteristics of the telecommunications industry,the theoretical discussion and typical case analysis of market failure and government failure in telecommunications,it is pointed out that the technical factor is the "third hand" which promotes and coordinates the development of the basic telecommunications industry.Meanwhile,based on empirical data,the Malmquist Productivity Change Index Method based on Data Envelopment Analysis(DEA)is used to further examine the core driving role of technology in the development of China's telecommunications industry.Secondly,the relationships between the telecommunications "third hand" technology and the "invisible hand"market and the "visible hand" government are studied from the static and dynamic perspectives respectively.On one hand,the cost-benefit analysis,game theory,and information economics are used to construct theoretical models to examine the impacts of market structure,government behavior regulation,institution of state-owned property rights and regulatory agency independence on technological innovation incentives,which are also verified by dynamic panel regression model based on generalized moment estimation(GMM).At the same time,the reverse effects of technological innovation on the evolution of market structure and government regulation are also illustrated through model construction and typical case analysis.On the other hand,based on the research of relations between each pair,technology and government are introduced as independent elements into the traditional SCP(Market Structure—Market Conduct—Market Performance)industrial analysis paradigm,which is expanded into a new industry analysis framework TGM(SCP),namely Technology—Government—Market(Structure—Conduct—Performance).And based on this new analysis framework,this study further proposes the spiral coevolution model from the perspective of evolutionary economics,which depicts the internal mechanism and evolution law of technological innovation,government regulation and market factors in the basic telecommunications industry.Finally,according to the research outcomes,it is suggested to construct a telecommunications incentive regulation system with technological innovation as the leading goal,and the development direction and related policy implications for the reform of China's telecommunications industry regulation system are also provided.The main conclusions and viewpoints of this study are listed as follows:(1)Relative to the "invisible hand" market and the "visible hand"government,technology is the "third hand" in telecommunications.It is mainly manifested in two aspects:First,technological innovation is the essential driving force and root cause of the rapid development of the telecommunications industry;second,the contents and forms of market mechanism and government regulation are subject to technical factors,that is,the characteristics and development trend of telecommunications technological innovation have shaped the foundations and incentives for market mechanisms to play a role,and have also changed the way government intervene in telecommunications market.Only by grasping the relationship of the three hands of technology,market,and government,can we maintain the benign development of the telecommunications industry continuously and efficiently.(2)In telecommunications,there is an inverted U-type relationship between technological innovation and market competition:when the number of enterprises in the market is small,technological innovation is positively correlated with the degree of market competition,but when the number of enterprises exceeds a certain threshold,technological innovation is negatively correlated with the degree of market competition.This threshold level is the possibility border of competition and monopoly in telecommunications,it is dynamically determined by the current state of technological supply.Therefore,an oligopolistic market structure with desirable and appropriate concentration is most conducive to the development of telecommunications technological innovation.(3)The conclusions concerning the relationship between technological innovation and government regulation system:First,the direct impact of property rights structure on telecommunications technological innovation is not significant,that is,simply privatization reform of operators has no significant direct impact on market efficiency,and to achieve good performance,the reform of property rights structure needs to be accompanied by effective regulatory system reforms.Second,the independence of regulatory agency can be conducive to the development of telecommunications technological innovation,especially for the market environment where privatization reform is implemented.Third,the network neutrality regulation does not allow telecommunications operators to implement the differentiated charging method,which has hampered the enthusiasm of operators to invest in new technologies and hindered the development of telecommunications technological innovation.(4)From the perspective of industrial dynamic evolution,in telecommunications,the relationship of technology,market,and government regulation can be technology-led spiral coevolution.The mechanism of this coevolution can be illustrated as follows:in the development process of the basic telecommunications industry,technological innovation plays a leading role.Technological innovation affects the inherent attributes of the industry by changing the cost structure characteristics of the industry,providing new opportunities and needs for the market and driving the reform of the government regulation system.And next,the improved market performance and successful regulatory system reform,in turn,promote technological innovation to a higher level.The overall development process presents a spiraling coevolutionary situation.(5)The telecommunications regulatory system which regards technological innovation as the leading goal should be established.It is suggested to give full play to the driving and regulatory role of the "third hand" technology,insist on driving industrial development through technological innovation,and make more use of technical ways to promote effective competition and coordinate the development problems of the telecommunications industry.Government regulation is the institutional environment for technological innovation.Thus,the government must play an important role in facilitating telecommunications technological innovation and technology standardization,eliminating the institutional factors that hinder technological innovation and establishing a motivated regulation system that is conducive to technological innovation,in order to promote continuous and efficient development of telecommunications industry.