reform process and development situation of china telecom industry
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Reform Process and Development Situation of China Telecom Industry. Prof. Hao Weimin Vice President & Secretary General China Association of Communication Enterprises Vice Chairman, President China Orient Telecomm Satellite Company Ltd. Nov. 30, 2002 Hong Kong. - PowerPoint PPT PresentationTRANSCRIPT
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Reform Process and Development Reform Process and Development Situation of China Telecom IndustrySituation of China Telecom Industry
Prof. Hao WeiminVice President & Secretary General
China Association of Communication Enterprises
Vice Chairman, President
China Orient Telecomm Satellite Company Ltd.Nov. 30, 2002
Hong Kong
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OutlineOutlineSection 1. Reform process * Objective and Measures * Industry Reorganization * Open market Section 2. Development situation (1) * Rapid increase of Market Volume
( number of users ) * Market competition plays its role * Service quality improved * Service price reduced
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Section 2. Development Situation ( 2 ) * Revenue increase recovery
* Expanding of customers scale
* The situation of increase of customers in the
first half year
* Competition pattern changed
* Market share of operators
Outline
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1.1. Target and Measures1.1. Target and Measures
Objective
* Separating government and enterprises , ensuring the independent administrative supervision by government departments;
* Breaking monopoly, improve the engendered issue of low efficiency ;
* Protect competition, promote telecommunication enterprise to improve service, cut down price level and strengthen competition capacity ;
* Adapt to the development of market economy, establish modern enterprise system of clear legal rights and obligations
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1.1. Target and Measures1.1. Target and Measures
Measures * Introduce competition, reorganize China Telecom and
other telecommunication enterprises; * Support China Unicom and other newly risen
enterprises; * Open market : allow CNC and CRC etc. to enter
telecom operation market; * Fulfill the promise of entering WTO, allow foreign
investors to operate telecom business in China; * Refine market competition structure and promote the
forming of the effective competition..
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1.2.1.2.New Pattern in China Telecom New Pattern in China Telecom MarketMarket
DirectorateDirectorateGeneralGeneralininChina PostChina Postbefore before 1999.51999.5
1999.51999.5China TelecomChina Telecom
1999.51999.5China MobileChina Mobile
2001.122001.12China SatcomChina SatcomIn 2000In 2000
CRCCRC
1994.71994.7China UnicomChina Unicom
In 1999 Guoxin In 1999 Guoxin Paging was put Paging was put
under China under China UnicomUnicom 2002.52002.5
CNCCNC
2002.5 China 2002.5 China Telecom Group Telecom Group (Southern 21 (Southern 21 provinces)provinces)
In 2002 CNC and In 2002 CNC and Jitong merged Jitong merged
with Northern 10 with Northern 10 provincesprovinces
OtherOthersmallsmalland and
medium-medium-sizedsizedenter-enter-prisesprises
over over 40004000PagiPaging;ng;
1300 1300 ISP:ISP:15001500ICP:ICP:14001400
DirectorateDirectorateGeneral ofGeneral ofTelecomTelecomininMPT MPT beforebefore1995.4 1995.4
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1.3. Industry Reorganization1.3. Industry Reorganization * Government restructuring state-owned properties;
* Introduce new telecom operators such as CNC, CRC;
* Promote the rapid development of China Unicom,
CNC and other newly risen enterprises;
* Telecom charges tend to fall due to price adjustment
by government and market competition;
* Meanwhile, thousands of value-added services
providers entered into telecom market to develop
their business.
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1.4. Main features in China Telecom 1.4. Main features in China Telecom Market at present:Market at present:
* At the beginning stage of market competition;* Competition pattern formed of many operators
participating in the market;* Legal system gradually improved;* Plural investors;* Very fast development speed;* Relatively quick improvement of service quality;* Advanced technology;* Vast market potential and bright future
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1.5.China Telecom Industry 1.5.China Telecom Industry is in a Period of Transitionis in a Period of Transition
PastPast ::monopoly monopoly
periodperiod
PresentPresent(transitional(transitionalperiodperiod ):):limitedlimitedcompetitioncompetition
FutureFuture ::period of period of effectiveeffective
competitioncompetition
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1.6.Operators are changing1.6.Operators are changing
BeforeBeforereform:reform:
solesoleoperatoroperator
AfterAfterreform:reform:manymany
operatorsoperators
Problems in the new competing environment:Problems in the new competing environment:1. Disputes on network connection is apparent;1. Disputes on network connection is apparent;2. Price war in telecom service has become 2. Price war in telecom service has become violentviolent ;;3. Proper allocation of resources is the condition 3. Proper allocation of resources is the condition of fair competition.;of fair competition.;4. Enterprises tend to focus on improving services;4. Enterprises tend to focus on improving services;5. Overall coverage of service is facing new 5. Overall coverage of service is facing new difficultiesdifficulties
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1.7. Plural Investments1.7. Plural Investments
China telecom industryChina telecom industry
foreign foreign investmentinvestment
State-owned State-owned investmentinvestment
private private investmentinvestment
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1.8. Achievements and 1.8. Achievements and Defects of the Reform Defects of the Reform
Achievements:
* Market competition pattern
formed;
* Development trends maintained as rapid, stable and sustainable;
* Public satisfaction level improved on telecom service;
* Telecom industry plays prominent role in national economy and social informationalization
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1.8. Achievements and 1.8. Achievements and Defects of the Reform Defects of the Reform
Problem to be settled: * Unfair and ill-purposed competition occurred
sometimes; * Asymmetric rights and responsibilities of the
supervision bodies, resulting in their lack of capability in legally enforced administration;
* Enterprises’ comprehensive competitiveness need improvement;
* Overall coverage service mechanism wait to be established.
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2.1. Increasing Market Scale2.1. Increasing Market Scale
00
50005000
1000010000
1500015000
2000020000
4070407054945494
7031703184728472
1084010840
1440014400
1793317933
*fixed telephone users*fixed telephone users
19951995 19961996 19971997 19981998 19991999 20002000 20012001
1990019900
2002`6
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2.2. 2.2. Expanding Users GroupExpanding Users Group
00
55
1010
1515
2020
2525
3030
80`80` 85`85` 90`90` 95`95` 00`00` 02`302`3
Popularization Popularization rate of telephonerate of telephone
Popularization Popularization rate of main linesrate of main lines
02`6
Development of telephone
(( setset/100 people ))
( line/100 people ))
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2.3. Increasing Customers 2.3. Increasing Customers Increasing of the number of mobile phone Increasing of the number of mobile phone usersusers
(ten thousand )(ten thousand )
0020020000
40040000
60060000
80080000
1001000000
1201200000
1400140000
1601600000
1800018000
19951995 19961996 19971997 19981998 19991999 20002000 20012001 2002.62002.6
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2.4. Increasing Customers2.4. Increasing CustomersIncreasing of the number of Internet usersIncreasing of the number of Internet users (( ten ten thousandthousand ))
00500500
10001000
15001500
20002000
25002500
30003000
19941994 19951995 19961996 19971997 19981998 19991999 20002000 20012001 2002.62002.6
11 88 2020 6767 210210890890
22502250
29222922
37003700
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2.5. 2.5. Market Competition Played Its RoleMarket Competition Played Its Role
* Basic telecom service providers raised to 6 ; and value-added service providers reached to several thousand;
* Mobile telecommunication developed rapidly, playing a substitution effect in the fixed phone service market and took off a large market portion away;
• Role of enhanced competition : * The charges of service continued to go down in a
reasonable or unreasonable way : * To obtain competition advantage in the market,
enterprises notably raised their enthusiasm as well as the ability in developing new business.
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2.5. 2.5. Market Competition Played Its RoleMarket Competition Played Its Role
• Results of enhanced competition : * Enterprises’ market promotion awareness increased,
and the number of new customers keeps increasing; * Enterprises put more emphasis on improving service
quality and reduction of users’ complaints ; * Illegitimate competition occurred sometimes and
disputes on network connection increased, government supervision difficulty increased ;
* Business development plan displays importance, as its impact on market competition is obvious
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2.6. 2.6. Achievements and Defects of the Achievements and Defects of the Market DevelopmentMarket Development
• Achievements * The total number of users of fixed and
mobile telephone ranks No. 1 in the world and still keeps increasing;
* The technical performance of network keeps in line with the leading level in the world;
* The increase of the revenue is higher than that of GDP; market promising;
* The telecom market tends to see a stable expansion;
* Foreign and domestic investors keep
active investment activities.
• Insufficiency * The pattern of effective market competition
hasn’t been established. Government supervision capability limited and not efficient;
* Enterprises’ comprehensive competitiveness is limited and State-owned enterprises need further reform;
* Unbalanced development in various regions;Telecom service level in western region and rural areas is still low, which adds the pressure for overall coverage service;
* A few enterprises attempt to hold back rivals by using illegitimate ways;
* Pressure of regional over supply exists
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2.6. 2.6. Achievements and Defects of the Achievements and Defects of the Market DevelopmentMarket Development
* The pattern of effective market competition hasn’t been established. Government supervision capability limited and not efficient;
• Insufficiency * Enterprises’ comprehensive competitiveness is limited and State-o
wned enterprises need further reform; * Unbalanced development in various regions;Telecom service level
in western region and rural areas is still low, which adds the pressure for overall coverage service;
* A few enterprises attempt to hold back rivals by using illegitimate ways;
* Pressure of regional over supply exists
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3.1. 3.1. Recovery of the increase ofRecovery of the increase ofTelecom Business RevenueTelecom Business Revenue
Increase of telecom business revenue in the Increase of telecom business revenue in the first half in 2002first half in 2002
International International businessbusiness
Data Data communicaticommunicati
onon
Domestic long-Domestic long-distance calldistance call
Local network Local network communicationcommunication
Mobile Mobile communicaticommunicati
onon
00
200200
400400
600600
800800
10001000
UnitUnit :: 100 million 100 million yuanyuan
44.144.136.836.8 5050 8484
222.44222.44 222222
497.8497.8 565565724.41724.41
920.6920.6
First half in First half in 20012001
First half in First half in 20022002
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3.2. Business Income Distribution3.2. Business Income Distribution
The proportions of various business in total telecom The proportions of various business in total telecom income in the first half in 2002. Mobile communication income in the first half in 2002. Mobile communication
business became the largest business revenue sector in business became the largest business revenue sector in the whole industrythe whole industry
Mobile Mobile communicationcommunication
Data Data businessbusiness
OthersOthers
Domestic Domestic long-distance long-distance
callcall Local network Local network communicationcommunication
International International businessbusiness
48%48%
6%6% 2%2%4%4%
11%11%
29%29%
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3.3. Increase of users in the first half year3.3. Increase of users in the first half year
00
50005000
1000010000
1500015000
2000020000
Fixed Fixed phonephone
Urban Urban phonephone
Rural Rural phonephone
Mobile Mobile phonephone
Total Total number of number of
usersusersNew users in New users in the first half the first half
yearyear
1990019900
19001900
1250012500
13851385
74117411
605605
1760017600
31353135
Unit:ten thousand Unit:ten thousand
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3.4. Geographical Distribution of 3.4. Geographical Distribution of Telecom CustomersTelecom Customers
Western Western part part 1919%%
Middle Middle part part 2929%%
East East part part 5252%%
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3.5. Market Share of Operators in the First 3.5. Market Share of Operators in the First Half YearHalf Year
3838 %%
1111 %% 11%% 3333 %%
1717 %%
China China TelecomTelecom
CNCCNC
China MobileChina Mobile
China UnicomChina Unicom
CRCCRC
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