Price Regulation In Telecom Industry And Application Research In Mobile Communication Industry

Since 1998, China has begun the reforms in natural monopoly network industry, so the price which reflects the supply and demand in market became the focus of the regulation. During the 90's, the quality and quantity of mobile communication service in China had been improved, the number of mobile telephone customers exceed the number of fixed telephone customers for the first time at the end of 2003, and the gap between them is extending continuously. Although compared with the fixed telephone network, the degree of the natural monopoly in the mobile telephone network is decreasing. Because the external effect existed in the telecom service and the market competition in the mobile communication industry don't reach the optimization, so the regulation to the mobile communication industry is still the one of the main tasks of the telecom regulation institution.The paper reviewed the history, the present situation and the direction of further development in the research of price regulation and summarized the price regulation based on pricing theory. Whereafter, the paper combined the characteristics of telecom industry and mainly analyzed and compared the two kinds of price regulation methods which were commonly adopted in international and domestic telecom regulation institution. Then the paper analyzed the history of telecom's fee regulation and the market structure characteristics in China, described the current price competition in Jiangsu Province and researched the game among the two competitors and the government. Subsequently the paper analyzed the relationship between the mobile communication service price, the number of competitor, the average GDP and the development of the mobile communication industryIt came to the conclusion that mobile communication industry should adopt price cap regulation to promote the development of industry and achieve to maximize the social welfare. Meanwhile, the government should encourage the enterprises to compete in reasonable prices and regulate their behaviors strictly to avoid the vicious price war with effective industry policies and punishment mechanism. At the same time, although the lower price could promote the development of mobile communication industry, the government should realize that it isn't enough efficient to promote the development of the whole industry by decreasing the price.