Development and Regulatory System Reform of Telecommunication Industry in China

The paper reviews achievements and history of telecommunications development and regulatory system reform in China, discusses the evolution of reform, analyses influence of regulatory system reform to chinese telecommunication industry, and finally makes some suggestions on the development of China Telecom. 1. Development of Telecommunications in China Achievements China has got significant achievement in telecommunications over last about 50 years. In 1999, the switching capacity of the central office exchanges reached 158.53 million main lines. About 21.39 million new telephone subscribers got access to the PSTN network, so that telephone subscribers in the whole country totaled 108.81 million. Mobile subscribers got to some 43.24 million, increased by 17.96 million over the year 1998. The telephone density of the whole country was raised to 13%, and that for the urban areas to 28.4%. The growth curve of the telephone density of the whole country, shown in Fig.1, can be used to indicate the development of telecommunications in China. From Fig.1, it is found that telecommunications in China has been developing very quickly since 1990. The developing curve of total turnover of telecommunications services is shown in Fig.2. The total turnover of telecommunications reached 311.2 billion RMB in 1999, increasing by 27 times more than 10.95 billion RMB in 1990. The proportion of whole-national total turnover of telecommunications in total turnover of posts and telecommunications has risen from 67.5% in 1990 to 94% in 1999. The total turnover of telecommunications has been developing in an exponential curve. Table 1 shows the development of some telecommunications services and capacity in China. It is also found that subscribers of telecommunications services and telecommunications capacity have been increasing with a high rate since 1990. At the same time, with the development of traditional services and the enlarging of the network size, many new value-added services, such as E-mail, facsimile store and forward, and Internet service, are introduced to subscribers. These new services are welcomed by subscribers and also get a high growth rate. Since 1994, most of new data services have been developing fast. Especially, Internet subscribers have been increasing at the annual rate of 319.6%, from 7 thousand in 1995 to 5500 thousand in 2002. It makes the telecommunications service market developing in a diversified way. Review In the early days after the People’s Republic of China was just set up in 1949, it only held the capacity of switch system with over 310 thousand lines, and 208,750 telephones subscribers. The telephone density is only 0.05%. So Telecommunications, as a foundational industry, was very unstable at that time. But from 1949 to 1977, telecommunications developed very slowly in China because the role of telecommunications in national economy couldn’t be recognized correctly. By the end of 1977, the telephone density was only 0.36%, increasing less 0.02% every year.