Triple Play in the Chinese Telecommunications Sector

Much like the United Stated, China's telecommunications industry was once a monopoly dominated by China Telecom. In 1994, the Chinese government intervened, allowing a second telecommunications company to compete with China Telecom. Although it took quite some time for this second company to really be competitive against China Telecom, eventually the sector became a duopoly. China's telecommunications industry has not been able to restructure itself as quickly as the U.S. due to governmental and political red tape. Presently, the market structure of the telecommunication industry can be described as a state run oligopoly with China Telecom, China Unicom, and China Mobile as the only three players in the game. The industry has been hampered by the Chinese government which issues licenses for communication companies and censors content.

The Chinese government has recognized the economic benefits of deregulating the communication sectors including improved economic efficiency, increased competition, and the lower prices for the consumer (Saez & Yang, 2001). They have responded to this by beginning a government funded initiative to allow television, broadband, and voice companies to combine their efforts and offer "triple play" packages or to converge their media offering. This greatly improves the industries as the cable TV market consists of thousands of local operators, the telecommunications sector is three big players, and China Telecom remains the market leader for telephone land lines. The government gave China Mobile a tremendous upper hand last year when they handed out 3G licenses allowing mobile phones to dominate.

The ability to offer more than just one service will allow these businesses to be competitive as land lines are losing market share to China Mobile and China Unicom as mobile phones are more convenient. Only 4% of Chinese households have premium cable TV packages (Tiltman, 2010). Younger and more affluent city dwellers are watching their television on an Internet protocol television (IPTV), allowing consumers to watch content over a broadband line. Not only will prices lower when more companies enter the market, but new content providers will be willing to sell or contract the rights of movies, sports, and other content. Another goal of this initiative is to penetrate more of the market and increase subscriptions. Operators stand to gain additional revenue through advertising, particularly on IPTV.

The control that the Chinese government has over the regulation of these industries has made it slow to respond to the global market. The telecommunications and wireless sectors are governed by two regulators. As one regulator pushes for innovation and efficiency in technology the other maintains the need to censor and manages content. Some experts believe that this media convergence may lead to more foreign content available to China and possibly, the government to relax their censorship, although this remains to be seen.Sources:

References

Hille, K. (2010, March 10). Beijing faces 'triple play' rivalries. FinancialTimes.com. Retrieved March 24, 2010, from http://www.ft.com/cms/s/0/681dd682-2c73-11df-be45-00144feabdc0.html

Saez, L. & Yang, J. (2001). The Deregulating of State-owned Enterprises in India and China. Comparative Economic Studies, XLIII (3), 67-68.

Tiltman, D. (2010, March 2). All about triple play in China: Combining voice, broadband & TV services. . Media Asia. Retrieved March 24, 2010, from http://www.media.asia/searcharticle/2010_03/All-about-triple-play-in-China-Combining-voice-broadband--TV-services/39014?src=mostpop