From Monopoly to Competition: Lessons from Western Competitive Telecom Markets

Since the beginning of this year, telecom regulatory authorities such as the Ministry of Information Industry and the National Development and Reform Commission have repeatedly criticized domestic mobile communications operators for the industry malpractice of "excessive tariff packages," and explicitly required lowering tariff standards represented by roaming fees, so that mobile phone users can talk more and listen more freely. Although this is what the people desire, what the policy directs, and what the regulatory authorities expect, whether it is reducing tariff packages or lowering roaming fees, the reforms have proven exceptionally tortuous. (Xinhua News Agency, May 6)

When will the chronic ills of the mobile communications industry—excessive tariff packages and high roaming fees—finally come to an end? The Ministry of Information Industry has issued repeated "golden decrees," yet only the "dual-to-single" billing reform has become clear, while roaming fee reductions remain hesitant and tariff packages remain chaotic. What exactly prevents these issues from being resolved in one package? Why do the Ministry's repeated "golden decrees" fail to break the ice? The key issue is likely one of vested interests. As an industry insider put it, the artificially inflated "zero-cost" roaming fees best exemplify how domestic telecom operators have transformed from "competitors" into "price allies." The price padding in long-distance and roaming fees has remained stubbornly resistant to reduction for years, revealing telecom enterprises' disregard for the regulatory authorities' guiding policies under the drive of excessive profits. Monopoly only reduces efficiency; wherever possible, monopoly should be broken so that prices can be formed in a free market, thereby promoting competition and improving efficiency.

The history of the global telecom industry demonstrates that moving from monopoly to competition is the inevitable direction of telecom management system reform in all countries. Reviewing the formation process of Western competitive telecom markets offers positive reference value for China's telecom industry in further breaking down monopoly, encouraging competition, and promoting healthy development. Consider Germany first: telecommunications was once Germany's most prominent monopoly industry. The marketization of Germany's telecom sector began with the separation of government functions from enterprise functions. Second, deregulation was implemented, with no restrictions on foreign shareholding ratios for companies seeking to enter the market. In terms of regulatory procedures, no complex entry barriers were established—applications were quickly approved and operations could commence promptly. Overall, deregulation led to a significant increase in telecom operators, and in emerging telecom markets, monopoly was broken and competition became relatively robust. The United States, by contrast, used legal means to restrict the development of monopoly enterprises. During the transition of the U.S. domestic telecom market from monopoly to competition, the Department of Justice and the courts played a crucial role. The U.S. judicial authorities' restrictions on monopoly power and support for new entrants effectively promoted the formation and development of a competitive telecom market. The United Kingdom's telecom management system reform, centered on improving enterprise efficiency, achieved notably significant results. The UK's telecom reform faced the dual tasks of pushing the state-owned monopoly telecom system toward competition and privatization. Starting in 1969, the UK took 20 years to complete the entire process—privatizing state-owned telecom enterprises, introducing competition into the duopoly system, and fully opening the market to participate in international competition—following a step-by-step, orderly, and gradual reform path.

At present, although China's telecom market has preliminarily formed a competitive market structure, various anti-competitive behaviors still exist to varying degrees, hindering the further development of China's telecom industry. The pathways by which Western competitive telecom markets were formed offer important lessons for advancing China's telecom reform, further breaking down monopoly, and promoting competition. Creating a fair and reasonable competitive environment, maintaining the operational efficiency of dominant telecom enterprises, and preventing inefficient competition are the primary means by which Western countries successfully transformed their telecom markets from monopoly to competition. To melt the ice of excessive profit pricing, China's current telecom reform should focus on fostering a fair and reasonable competitive environment—taking measures to both restrict the monopoly power of dominant telecom enterprises and maintain their operational efficiency, enhance their market competitiveness and international competitiveness, and prevent excessive and inefficient competition.

There is no such thing as a free lunch. For every day that a monopoly industry continues to exist, public interests continue to be harmed, and true social justice remains elusive. Monopoly pricing must be exposed to the sunlight of market-oriented reform. Government macro-control and regulation are merely stopgap measures for breaking industry monopoly; the fundamental solution lies in introducing competition. Only through competition—allowing the sunlight of marketization to eliminate industry monopoly—can rigorous cost-benefit accounting be achieved. The economic characteristic of competitive enterprises is that their products must accept the prices set by the market, whereas the characteristic of monopoly enterprises is that they set prices for their own products and make the market accept them. Breaking monopoly, fully opening up, encouraging competition, and liberalizing prices will help improve the quality of industry services; at the same time, market competition mechanisms can reduce service costs, providing strong institutional safeguards for the sustainable development of infrastructure and public utilities and for fair competition among all investors.