China s Telecommunications Universal Service in a Competitive Environment

Transcription

1 China s Telecommunications Universal Service in a Competitive Environment Mingzhi Li and Jin Wang School of Economics and Management, Tsinghua University August 2003

2 Outline of the paper Introduction History of Telecom Deregulation and Universal Service in China Provision of Universal Service in a Competitive Environment: Recipes from Economic Theory International experience in telecommunications universal service Conclusions: Steps for Providing China s Universal Services in Telecommunications

3 1. Introduction Why should we provide universal service in telecommunications

4 1. Introduction Reasons for Telecom Universal Service: Necessity/Merit Goods Network Externality the concern for economic development and spatial inequality

5 Table 2 The GDP per Capita in The Three Regions (RMB yuan) Eastern region Central region Western region

6 Table 3 Level of China s s Telecommunications Service in 2001 Telephone Penetration Rate Main Line Main Lines in City Household Penetration Rate Public Phone Per Hundred Citizens Cell Phone Penetration Rate The whole nation (per hundred people) (per hundred people) (per hundred people) (per hundred people) (per hundred people) 0.27 (per hundred people) Eastern Central Western

7 Table 1 Telephones per 100 people VS. GDP per capita in the year-end of 2001 GDP per capita (? ) Telephones lines per 100 people Western Middle Eastern

8 Figure 1 Telecommunications facilities per capita at the year-end of 2001 GDP per capital telephones/people Source: <china statistical yearbook 2002>

9 2. History of Telecom Deregualation and Universal Service in China History of Universal Service in China Regional Disparity in Economic Development and Universal Service in China

10 History of Universal Service in China In the early 1990s, the monopoly provider of China s telecommunications industry China Telecom initiated the massive project telephone connection to every administrative village in the rural districts.

11 Percentage of Villages with Telephone Connection % 80.00% 79.80% 67.10% 60.00% 53.50% 55.60% 40.00% 20.00% 0.00%

12 History of Universal Service in China In 1999, China Telecom was broken up. The entire telecommunication industry was made up of seven operating companies China Telecom, China Unicom, China Netcom, China Jitong, China Railcom and China Satellite. However, the universal service was still born by China Telecom.

13 History of Universal Service In 2002, china s telecommunications industry experienced a second round of reform. The market of telecommunication is now made up of six operating companies China Telecom, China Netcom, China Mobile, China Unicom, China Satellite and China Railcom. in China Figure 2 the market share of china's telecommunication industry in % 11.30% 1.10% 33.80% china mobile china telecom china netcom china unicom china sat and chinarailcom 36.60%

14 Universal Service Process Slowed down after Deregulation Increase of Telephone Connection in China's Rural Areas 10 thousand

15 Percentage of Villiages with Telephone Connection % % 50.00% 0.00% 85.30% 96% Whole nation East 73% 40% West Qinghai Province 55% Gansu Province

16 History of Universal Service in China Market Monopoly Competition Universal Service China telecom???? Provider

17 3. Provision of Universal Service in a Competitive Environment: Recipes from Economic Theory

18 Monopoly: Cross-Subsidy

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20 In a Competitive Environment Case 1: Symmetric Entrance

21 In a Competitive Environment Case 1: Asymmetric Entrance

22 Provision of Universal Service in a Competitive Environment: Recipes from Economic Theory monopoly competition Funding: cross-subsidy general tax system universal service fund Provision: the monopoly the winner in auction

23 4. International Experience in Telecommunications Universal Service the United States Peru

24 5. Conclusions: Steps for Providing China s s Universal Services in Telecommunications First, setting the goals and scopes of universal service in telecommunications

25 Table 4: Five Stages of Universal Service in Telecommunications

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27 Second, determining quality requirement and pricing policy

28 Third, choose the source of funding for universal service.

29 Fourth, choosing the provider of universal service