Over the past two decennaries, the telecommunication industry has undergone important technological alterations and has experienced ferocious competition. China has become the largest telecommunication market in the universe, with 300 million endorsers but merely 20.1 % incursion ( 2005 ) . The immense market chance attracts foreign investors every bit good as local companies. However the telecommunication industry in China is still under stiff control of authorities, although it has undergone several reforms, altering from wholly monopoly to full service competition among three major operators. Since the 3G licences were issued to China Telecom, China Mobile and China Unicom in 2008, Chinese telecommunication industry has entered a trade name new epoch. The three major bearers, China Mobile, China Telecom and China Unicom all have the substructure and web to run in fixed-line-telecom, Mobile and cyberspace services. China Mobile has emerged as the biggest participant in nomadic web, but it has no experience in the fix-line telephone web ( FTN ) . With the 3G licence and the acquisition of China Unicom ‘s CDMA cyberspace, China Telecom non merely occupies the dominate place in FTN, but besides joins the competition in nomadic industry. China Unicom has taken a considerable per centum of market portion in nomadic market, nevertheless it lacks the fiscal and proficient resources as its rivals. But the merge with China Netcom, which has 30 % of FTN in the northern China, brought significant advantages. This research focuses on the history of restructuring in Chinese telecommunication industry, the current competition among three major operators, and the possible hereafter in the 3G epoch. How does the telecommunication industry develop under the policy of state-owned and foreign-investment restricted? Make the bing companies satisfy market demand? Will China follow the way of liberalisation and denationalization or will the firedrake open up a new way? These are the inquiries that this research is seeking to decide.
III. Brief Literature Review
There is intensive literature about revolutions in telecommunication policies. And there is some literature on the public presentation of major participants before the important reform in 2008. Some peculiar documents compare the efficiency of Chinese telecommunication industry with other developing states. But there is a spread since the 3G licences were issued to China Telecom, China Mobile and China Unicom. The industry has entered the epoch of full service competition, which means all three companies can vie in FTN, Mobile services and internet informations communicating. This state of affairs has ne’er happened before and there are few researches concentrating on it. The hereafter development is full of uncertainnesss.
3.1 History of Chinese Telecommunication Development
3.1.1 Phase 1 Pre-1994
In 1949, the Minister of Post & A ; Telecommunication ( MPT ) was established. Until 1994, MPT enjoyed sole monopoly in offering public telecommunications services. There were less than 700,000 nomadic phone endorsers in China ( Yu & A ; Tan, 2005 ) . And the phone incursion was merely 3.2 % ( MPT, 1997 ) .
3.1.2 Phase 2 1994-1998
By the 1990s, “the cardinal authorities came to recognize that the liberalisation of telecommunications industry was inevitable” ( Holman, 1994 ) . In 1994, the monopoly of the MPT was broken by authorities in the manner of set uping new state-owned endeavors. China United Telecommunications ( China Unicom ) was set up to advance domestic competition. It is a joint venture of the Minister of Electronics and Information ( MEI ) , Minister of Railways ( MOR ) and 13 big state-owned endeavors. However China Telecom still controlled the lone public Fixed Telephone Network ( FTN ) in China and all support and forces of China Telecom came straight from the MPT. China Unicom was at a serious competitory disadvantage, and was chiefly restricted to the nomadic sector ( Yan & A ; Pitt, 1999 ) . The market portion of China Unicom in the nomadic phone service was less than 2 % by the terminal of 1997 ( China Daily 15 January 1999 ) . In 1996, Jitong Network Communications Company ( Jitong ) , originally set up to supervise the Golden Bridge Project, became the 3rd telecommunications operator in China.
The first important reform happened in March 1998, the MPT and the MEI were merged to organize the Ministry of Information Industry ( MII ) , which oversees the telecommunications, multimedia, broadcast medium, orbiters and the Internet of China. As opposed to MPT ‘s negative attitude towards China Unicom, MII did immense part to the development of China Unicom. MII derived Guoxin Paging from China Telecom, which was a really profitable concern, to unify with China Unicom. This restructure laid the land for the public listing of China Unicom in the undermentioned twelvemonth. China Netcom was established as the 4th commercial operator in this restructuring.
3.1.3 Phase 3 1999-2002
In 2000, the China Mobile Communications Group ( China Mobile ) and China Satellite Communications Group ( China Satellite ) broke off from China Telecom in order to further domestic competition and facilitate efficiency. China Railway Communications Corporation ( China Railcom ) was set up to be China ‘s 7th major telecommunication bearer.
To further interrupt the power of China Telecom, which still owns 80 % of the FTN market, the MII announced another unit of ammunition of organisational restructuring in 2002. China Telecom was reorganized geographically. It retained merely 70 % of its anchor web in South China. The other 30 % of the web was handed over to the new China Netcom Group, formed by the meeting of China Netcom and Jitong ( B.P.Y. Loo, 2004 ) . This reform resolves the unfavorable judgment that the liberalisation of the telecommunications sector ne’er touched on the FTNs ( Zhang, 2001 ) . By the terminal of 2002, there are 6 major operators: China Telecom ( FTN and informations connexion ) , China Unicom ( FTN, Mobile and informations connexion ) , China Mobile ( nomadic service ) , China Netcom ( informations connexion ) , China Railcom ( FTN and informations connexions ) , and China Satellite ( satellite communicating ) . This construction ensures that there are at least two rivals in each major field of telecommunication service. The state of affairs of competition is ab initio established.
3.1.4 Phase 4 2008-present
On 23 May 2008, in order to do full usage of the telecommunication resource and promote healthy competition in telecommunication markets, six operators were merged into three. China Mobile and China Railcom were merged into the new China Mobile. The G-net ( GSM ) of China Unicom and China Netcom were merged into the new China Unicom. The C-net ( CDMA ) of China Unicom, China Satellite and China Telecom were merged into the new China Telecom. They are allowed to offer the full scope of FTN, Mobile, informations connexion and other basic telecommunications services. And they are issued 3G ( the 3rd coevals engineerings ) licences, which were predicted to increase the competition within telecommunication industry well. This policy was highly different from the old policy under which most operators could offer either mobile or fixed-line services. Therefore, China Telecom, China Mobile and China Unicom become the three major operators in Chinese telecommunication market.
3.2 Chinese features compared with other states
Liao C. and Gonzalez D.B. ( 2009 ) analyzed the operational efficiency of Mobile operators in Brazil, Russia, India and China by utilizing three indexs: gross per employee, gross per entire plus and gross per capital outgo. Common market characteristics among these four markets are low incursion rates for Mobile, Internet, and fixed-line services, no 3G licences were issued in any of these four markets until 2007, and Brazil, Russia and India merely privatized their telecommunications sectors in the 1990s.
From the figure above, we can see that China Mobile and China Unicom rank before the operators in Russia and India, but slowdown behind those in Brazil, particularly in the index of gross per employee, which means the productiveness per employee remains to be improved. But China Unicom has the highest gross per capital outgo among the 10 operators, twice higher than its domestic rival China Mobile. However these figures are based on gross instead than net income or operating net income borders, therefore the costs efficiency are neglected.
Different from other developing states, China did non fall back to liberalisation or denationalization to work out its funding jobs in the period of rapid web enlargement ( Zhang B. 2002 ) . The Chinese authorities insists that its intercession in puting criterions for operators accelerates the realisation of web outwardnesss and reduces technological or economic uncertainness ( Yu J. and Tan K.H. 2005 ) . Foreign investors could lend merely money and engineering, but have small influence in determination devising. But Chinese authorities is taking stairss to let foreign companies to play a greater function in furthering a more efficient communicating web, which can be seen in China Unicom ‘s joint venture with SK Telecom, the largest Mobile bearer in South Korea, and the Spanish telecommunications operator Telefonica.
A assorted methods attack is adopted in this research. Both qualitative and quantitative methods, such as interviews, questionnaires and secondary informations analysis, are used in order to reply different facets of the research inquiry.
4.1 Secondary and official informations analysis
Analyze the public presentation of three major players—China Telecom, China Mobile, China Unicom in the recent 5 old ages, including fiscal public presentation ( gross, net income border, plus use, etc. ) , substructure efficiency, market portion, endorsers and ARPU ( Average Revenue per User ) . This is the major portion of quantitative research.
Interview 1-3 mid-level directors in each of the three companies, who should hold worked in telecommunication industry for at least 10 old ages. The interviews are semi-structured ( Bryman & A ; Bell, 2007 ) , which means the interviewer has a series of inquiries that are in the general signifier of an interview agenda, but is able to change the sequence of inquiries. And farther inquiries may be asked depending on the reply given by the interviewees. The aims of the interviews are to further understand the response to each reform in the past 20 old ages, what are the schemes towards current 3G epoch competition and what do they fix for the following 10 old ages, what are their sentiment on liberalisation and denationalization of telecommunication industry. All interviewees will be informed of the intent of the research, and given the pick of whether to be anon. . The information and sentiments given in the interviews will non function any commercial intent, strictly for academic usage. The interviews will be recorded and transcribed for reexamining by the interviewer and the University of Edinburgh, and will non be passed on to any other organisations without the permission of interviewees. Public available information is besides analyzed. This is the major portion of qualitative research.
The questionnaires are designed for telecom clients across China.The sample size is planned to be 300, and the method is snowball sampling ( Bryman & A ; Bell, 2007 ) . The research worker makes contact with a group of people who are active telecommunication users, and so uses these to set up contacts with others. The sweet sand verbena sampling is non wholly random ; it is really improbable that the sample will be representative of the population. However this is non a chance research, the aims are to understand the consumer satisfaction, to cognize which trade name they have been utilizing, whether they are satisfied with the telecommunication service, what are their sentiments of 3G communicating, what takes them to exchange to another trade name, and if they are looking for more picks in the hereafter. The get downing point of this snowball sample is a group of immature, knowing, new engineering followings, who are the chief mark of future telecommunication services.
4.4 Datas to be collected
Fiscal statements of China Mobile, China Telecom and China Unicom from 2005 to 2009
Market portion, endorser Numberss, ARPU ( Average Revenue per User ) and proficient efficiency of developed states ( such as UK ) and developing states ( such as India, Brazil )
Datas from interviews and questionnaires
4.5 Statistical techniques
SPSS and Excel spreadsheet will be used to analyse questionnaires and fiscal informations.
V. Context, time-frame and feasibleness
The sum-up of history is chiefly solved by literature reappraisal, which is a really of import portion of this thesis. Therefore the first few months ( from February to May ) is spent on roll uping and reexamining literature. Merely when the development history of Chinese telecommunication industry is clarified, can the research on current competition state of affairs and future tendencies be conducted.
The 2nd portion is the analysis of present competition among the three major operators. In order to measure each company ‘s public presentation, fiscal and market public presentation informations are collected. Main focal point is the gross and net income growing, market capitalisation, plus use, consumer satisfaction and efficiency. If clip permitted, informations of other states ( both development and developed states ) will be compared. This portion is done by secondary informations and questionnaire analysis. The research worker has gained informations analysis ability in Msc in Management plan.
The 3rd portion is to foretell future tendency and give suggestions based on above analysis. The research worker ‘s female parent has been working in China Telecom since 1980s, hence she has experienced all those reforms and has established relationship with forces in China Telecom, China Mobile and China Unicom. The research worker will be able to question with mid-level directors in the three large companies, either in face or by telephone. The aim of the interviews is to better understand the scheme of those companies towards the 3G epoch and full service competition.
5.1 Proposed Research Time-Table
Literature reappraisal and methodological analysis
Obtain relevant published statistics and get down analysing
Conduct interviews and questionnaires
Collect and sum up the information
Analyze the statistics and information
Work on treatment and decision
Review and amend the paper
VI. Likely jobs to be addressed
The first job may be the acquisition of the information. The fiscal statements of three companies are available online, but the substructure efficiency, market portion, endorsers and ARPU ( Average Revenue per User ) are non straight available. There are researches about it, but different research workers use different methodological analysis and make different consequences. And the clip differences should besides be taken into consideration. The consequences that are available are non so up to day of the month. Therefore the research worker should utilize a proper method to cipher the secondary informations in order to do them comparable.
The 2nd job is questioning with directors. It is non likely to interview top-level directors such as CEO. However mid-level directors may non be concerned about company scheme and future development ; their sentiments are subjective and may non be consistent with the parent company. This job is addressed by other public information.
The 3rd job is the sample of the questionnaires. The attack of the questionnaires is snowball trying. Therefore it is non wholly random, the age and part may fall in a similar range. And the questionnaires are carried out in a 2nd linguistic communication of the chief respondents, the effectivity may be affected.
VII. Potential part to theory, cognition and pattern
China is the biggest telecommunication market in the universe, with a population of 1.3 billion but merely 20.1 % telephone incursion. The immense market chance attracts both foreign investors and local companies. However this industry is under rigorous control of halfway authorities, although it underwent several major reforms, altering from wholly monopoly to full service competition among three state-owned companies. The development form of Chinese telecommunication industry is alone and is studied by many research workers. By understanding the history and analysing current state of affairs, we will be able to supply suggestions for future development, and predict possible alterations in progress. This research fills the spread since the chief restructure in 2008, and offers a trade name new position towards 3G epoch. This will be improbably valuable to current participants, possible entries and foreign investors.
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