Abstract

The network convergence industry is an ewindustry，which is integrated by the telecommunication，cable network and internet，and has been popularized worldwide.The author analyzed the multiple attributes of the network convergence industry，and did a research on the market structure，market behavior and market performancebased on the theory of industrial organization.Finally，the author put forward suggestions for the regulation and development of the industry.

In China，the industry organization of network convergence includes basic telecom enterprises，cable network enterprises，and internet enterprises that operating mobile resale，network video and broadband access.Under the socialist system，the networks convergence industry not only has the economic attributes of scale economy，scope economy，natural monopoly and network externality，but also has social attributes of cultural and technological.

It is showed that the market structure of business of the internet broadband access and voice communication is highly oligopolistic，while the audio-visual content is low oligopoly.Among the market of internet broadband access，as the latter，it is hard for the cable network enterprises and internet enterprises to compete with basic telecom companies，because their poor product quality and lesser core qualification.In terms of audio-visual content，the business of IPTV，OTT TV and cable TV is forming a close competition of homogenization，while the online video has developed rapidly because of the barrier of differentiation.In terms of voice communication，the service differentiation between enterprises is relatively small，and the market competition is still mainly monopolized by basic telecom enterprises.In addition，the network convergence industry has significant barriers to entry and exit，which is mainly manifested in the strict licensing system of market access，and the large amount of capital necessary for network construction and content construction.

The market behavior of networks integrationmainly includes the market competition of pricing and merger.In terms of network access pricing，as a vertically integrated backbone network provider，the basic telecom enterprises may set price discrimination for cable network and internet companies who access their backbone network resources，so as to consolidate and expand their market share.In terms of audio-visual content pricing，because of cable TV and IPTV，OTT TV being less differentiated，the pricing behaviors of three business are highly correlated，while network video pricing behavior is more independent.There were a number of merger cases in the network convergence industry，such as restructuring between the basic telecommunications enterprises，network integration among the cable television network enterprises and the merger between internet enterprises.It is proved that merger can enhance the scale economy and scope economy，strengthen the monopoly market power，and change the market entry barriers.

The empirical analysis showed that the market performance of the network convergence industry has not yet reached its ideal state.From the view of the efficiency of resource allocation，by network integration the consumer surplus has been promoted while the producer surplus reduced，and the total social surplus has been increased.However，it was also proved that the market performance has deviated from the complete competition，because of the differenc of the profit rate of various industries and enterprises.From the view of scale structure efficiency，only a small number of enterprises such as basic telecom enterprises have reached the state of scale economy.From the level of technological progress，the basic telecom enterprise is the main driving force of industrial technology progress，but its R＆D investment is not enough.

According to the principle of effective competition，the author constructed a tricho to my criterion for measuring effective competition based on market structure，market behavior，and market performance，and then proved that network convergence had not yet achieved effective competition.It was proved that the reasons for these problems were that the monopoly market structure and public property of the network convergence industry leading to a waste of resour ceelements and social welfare.Above all，the author put forward some suggestions on industrial regulation and development.In the aspect of economic regulation，it was advised to further relax the mutual entry of telecommunication and cable network business，and to push forward supply-side structural reform in cable network，and to carry out mixed ownership reform of state-owned enterprises.It is also advised to promote public service of broadcasting by industry，and to strengthen the security supervision of networks and audio-visual content to ensure the safety of information and culture.In accordance with national conditions，itis suggested to promotere form of regulatory institutions and management systems at the right time.

Keywords：Network Convergence；Market Structure；Market Behavior；Market Performance；Regulation