Abstract
The relationship between market competition and network investment in the mobile telecommunications industry has always been one of the focuses for scholars and regulatory agencies. The conclusions of previous studies on this topic remain ambiguous. Infrastructure sharing has become a noticeable trend in the global mobile telecommunications industry, but its impact on operators’ investment and innovation behaviors is controversial. This paper uses fixed effects and dynamic panel data models to empirically examine the relationship among the market competition, infrastructure sharing, and network investment in China’s mobile telecommunications industry. The results show that market competition has a significant positive impact on the total industry network investment, but the interaction of market competition and infrastructure sharing has undermined network investment, which indicates that the competitive strategy of rational operators will shift from facility-based competition to service-based competition when both deep infrastructure sharing and fierce market competition appear at the same time, and this is likely to cause insufficient incentives for investment in advanced technology. This paper suggests that China’s regulators should improve the market structure, enhance market competitiveness continuously, and support infrastructure sharing, but at the same time they should exercise caution when conducting in-depth infrastructure sharing. In addition, they should accelerate the development of 5G vertical industry applications to expand the market space for industry development.
Highlights
Received: 7 February 2022Over the past three decades, the regulation of the global telecommunications industry has undergone a fundamental transformation
In light of the above discussion, this paper considers the characteristics of China’s mobile telecommunications industry, taking into account the impact of infrastructure sharing, and examines the relationship between market competition and industry network investment by using empirical methods
4G), so this factor is not considered in designing the empirical model of this paper), the geographical distribution of the population, and the infrastructure sharing will affect the cost of network deployment
Summary
Over the past three decades, the regulation of the global telecommunications industry has undergone a fundamental transformation. The Chinese government has proposed to speed up the construction of new infrastructure such as 5G networks and promote the deep integration of advanced information technology and the real economy In this context, can the reform further stimulate technological innovation and network investment in the industry? Under the joint leadership and coordination of the state-owned Assets Supervision and Administration Commission of the State Council (SASAC) and MIIT, China Tower was established to promote the telecommunications infrastructure sharing in 2014 These two reform events coincided with the introduction of CBN in the 5G era, and the regulator has encouraged operators to share the 5G networks. This paper plans to use industry-level data from 2010 to 2019 and adopt empirical analysis methods to examine the relationship among market competition, infrastructure sharing, and network investment.
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