Transcript Reform Process and Development Situation of China Telecom Industry

Asia Telecom Industry Forum
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
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Outline
Section 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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Outline
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
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1.1. 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 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.New Pattern in China Telecom
Market
1994.7
China Unicom
In 2002 CNC and Jitong
merged with Northern
10 provinces
In 1999 Guoxin
Paging was put under
China Unicom
2002.5
CNC
Directorate
General of
Telecom
in
MPT
before
1995.4
Directorate
General
in
China Post
before
1999.5
1999.5
China Telecom
1999.5
China Mobile
In 2000
CRC
2002.5 China
Telecom Group
(Southern 21
provinces)
2001.12
China Satcom
Other
small
and
mediumsized
over
enter4000
prises
Paging;
1300
ISP:
1500
ICP:
1400
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1.3. 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
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
is in a Period of Transition
Past：
monopoly
period
Present
(transitional
period）：
limited
competition
Future：
period of
effective
competition
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1.6.Operators are changing
Before
After
reform: reform:
sole
many
operator operators
Problems in the new competing environment:
1. Disputes on network connection is apparent;
2. Price war in telecom service has become violent；
3. Proper allocation of resources is the condition
of fair competition.;
4. Enterprises tend to focus on improving services;
5. Overall coverage of service is facing new
difficulties
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1.7. Plural Investments
foreign
investment
State-owned
investment
private
investment
China telecom industry
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1.8. Achievements and
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
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 Scale
*fixed telephone users
19900
20000
17933
15000
14400
10000
5000
4070
5494
7031
8472
10840
0
1995 1996 1997
1998 1999
2000
2001 2002`6
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2.2. Expanding Users Group
Development of telephone
30
Popularization
rate of telephone
（set/100 people）
25
20
15
10
5
0
80`
85`
90`
95`
00` 02`3
02`6
Popularization
rate of main lines
（line/100
people）
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2.3. Increasing Customers
Increasing of the number of mobile phone users
(ten thousand )
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
1995 1996 1997
1998
1999
2000
2001 2002.6
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2.4. Increasing Customers
Increasing of the number of Internet users（ten thousand）
3700
2922
3000
2500
2250
2000
1500
1000
500
0
890
1
8
20
67
210
1994 1995 1996 1997 1998 1999 2000 2001 2002.6
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2.5. Market Competition Played Its Role
* Basic telecom service providers raised to 6；and valueadded 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. Market 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. Achievements and Defects of the
Market 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
•
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;
active investment activities.
* Pressure of regional over supply exists
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2.6. Achievements and Defects of the
Market 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 Stateowned 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. Recovery of the increase of
Telecom Business Revenue
Unit：100 million
yuan
920.6
1000
800
497.8
600
222.44 222
400
200
724.41
565
44.136.8
50
84
0
International
business
Data
Domestic long- Local network
Mobile
communicati distance call communication communicati
Increase of telecom
on business revenue in the first
on
First half in
2001
half in 2002
First half in
2002
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3.2. Business Income Distribution
6% 2%
4%
11%
48%
International
business
Data
business
29%
Domestic
long-distance
call
Local network
communication
Mobile
communication
Others
The proportions of various business in total telecom income in
the first half in 2002. Mobile communication business became the
largest business revenue sector in the whole industry
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3.3. Increase of users in the first half year
Unit:ten thousand
19900
17600
20000
12500
15000
7411
10000
5000
3135
1900
1385
605
0
Fixed
phone
Urban
phone
Rural
phone
Mobile
phone
Total
number of
users
New users
in the first
half year
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3.4. Geographical Distribution of
Telecom Customers
Western
part 19％
East part
52％
Middle
part 29％
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3.5. Market Share of Operators in the First
Half Year
11％
1％
33％
China
Telecom
CNC
China Mobile
38％
China Unicom
CRC
17％
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Thanks