A Study Of IM’s Influence On Traditional Telecommunications Industry

With the government guidance price, telecom is an industry of natural monopoly, and has a low level of competition, whose output is lower than the market competition level. The international practice is to set regulations on such natural monopoly industries such as telecommunications. Market regulation of telecom has a long history in China. By the way of introducing competition and incentive policy, telecommunications industry’s performance improved in a certain extent, but various measures have different disadvantages, the asymmetric oligopolistic market structure still exists, output and price still have a long way to go compared with international level. Web-based Instant Messagings(IMs) realizing the real-time transmission and video calls, is developing rapidly, meet people’s daily communication and work requirement, and have alternative aspects with traditional calls and text messages profoundly, which causes great threat to the telecom operators.Competing regulation lets the telecom operators formed present patterns of competitions in all areas of business, output and production rate develop a lot, but there is still a big gap compared with international level. CMCC’s income accounts for about half of the market revenue. By the way of property regulation, the manufacturers can expand the capital and improve R&D capabilities, and realize scientific decision-making. On the other hand, exit barriers caused by giant suck costs and specifity of capital, lessen the possibilities of entering, and produce entrust- agent behavior. Rent-seeking behavior and time-lag effect the results of law regulation. As a result, the internal regulations have certain limitations, which needs to use other approaches to improve the efficiency of regulation. Elaborating the theory of differentiation competition, this paper analyzes competition modes between IMs and the telecom operators in three ways, including product differentiation, service differentiation and price competition, which IMs effect the regulators a lot. Firstly, IMs provide consumers with more variety of communication methods, meet more needs than the telecom. Secondly, based on the network economy and bilateral market characteristics, IMs provide services free, which is cheaper than the tele. Thirdly, IMs put more attention on the user’s experience and products’ R&D. In conclusion, IMs influence the telecom operators profoundly.Via establishing regression equation, this paper calculates the influence of IMs’ differentiation competition to telecoms’ performance, and all the differentiations show significantly effects. Grey correlation measures which has the highest correlation. By the means of impulse response and variance decomposition, it explores the short-term and long-term effects of differentiated competition. The result displays price competition has a positive effect on telecom portfolio and a negative effect on ARPU, and service differentiation has a positive effect on labor productivity, but the effects will be limited in a long run. On the basis of theoretical and empirical analysis, this paper puts forward suggestions to the regulation of telecom. According to the theory and empirical analysis, it proposes countermeasures of telecom regulation. First of all, the IMs and virtual operators’ development should be encouraged, and private capital is allowed to enter the basic telecommunications which is protected by policies. Then, the prices can be freely flexible, telecom’s R&D activities are encouraged, and to reducing the state-owned shareholding proportion continuously. Last but not the least, focusing on the policies’ order are approved, and all the regulatory organizations set policies independently.