Alfred Nobel University, Dnipropetrovs`k

Basis on economic theory

Topic: Competition

IE-1-13a group

Prepared by: Leonov Bohdan

April, 2014

Ukrtelecom Joint Stock Company is one of the largest companies in Ukraine which provides a full range of telecommunication services in all regions of the country.

The company holds particularly strong position in the Internet and fixed telephony market. Ukrtelecom JSC is the leader of the fixed high-speed Internet access market and is dominant in the fixed telephony market.

Ukrtelecom JSC created the highest-capacity national data trunk network in Ukraine on the basis of modern DWDM technology which allows providing its customers with modern telecommunication services in almost all residential areas of Ukraine.

Ukrtelecom provides all kinds of advanced telecommunication services throughout Ukraine, namely:

international, long-distance and local telephony;

data transfer and VPN construction services;

Internet services, including  OGO! service, high-speed Internet access for the fixed telephony subscribers;

permanent IP-connection via dedicated line;

hardware and virtual hosting;

rent of non-switched dedicated telecom channels;


video-conference communication;

wire communication;


UMTS/WCDMA mobile services (TriMob operator).

On results And half-year of 2010 profits from the grant of services of the fixed telephone connection diminished on 6 percents comparatively with an analogical period last year, to 5,6 milliards of hryvnyas. A monopolist in this segment of connection (with part 75 percents) is remained by «Ukrtelecom».

Advantages of competition:

It is functioning as self-regulating mechanism that through prices on the basis of demand creates reference-points for capital investments in a production;

It is effective allocation of resources — a market sends resources to producing goods, being in demand, high degree of adaptivity to the changing terms. So, a price increase on power mediums in the 70 in the western world caused introduction of resource reservation technologies, search of alternative energy sources;

It is possibility of the successful functioning in the conditions of a limit information (it is enough to have information about prices on goods and services, about the cost of economic resources for a normal management);

a market economy is a self-supporting economy. In any situations a market mechanism will provide equality demand and supplies;

It is creation by the market of the powerful system of stimuli;

It is deployment of achievements of scientific and technical revolution. In pursuit after an income commodity producers apply in industry the newest achievements of science both techniques and competition does this process continuous;

It is providing of freedom and independence, both customers and sales are people that independently make decision about the conclusion of transactions, найме of labour force and т. Of д.;

It is ability quickly and effectively to satisfy the various necessities of people;

It is the rational use of resources belonging to the firm.

To the indicated advantages, as their investigation, it is possible to add such extraordinarily important and positive fact, as price-cutting on goods and services. It is special characteristically for telecommunications, about what it will be said further.

Lacks of competition:

Automatism of market mechanism is arrived at not in itself, and by the method of tests and errors, as a result society can carry substantial losses;

a market does not create stimuli for producing goods and services of the collective use (health protection, culture, sport, public transport of and other);

It is inability of maintenance of the unreproduced resources belonging to all humanity, and defence of environment;

It is ignoring by the market of possible negative for society consequences made decision;

a market does not have the system of social defence. Profits in a market economy get only proprietors of economic resources. Invalids, children, pensioners, cannot have living, therefore the state must work out social problems;

It is absence of effective motivations for fundamental researches in science. A market will realize already present scientifically are technical achievements, but does not invest means in theoretical investigations

it is unstable development at that flights of the market state of affairs alternate with her falling (by crises). Inability of market mechanism to decide certain tasks require interference of the state with market relations, the state undertakes functions that a market mechanism cannot execute fundamentally.

Again nevertheless, unfortunately, this list is not exhaustive. At least, it touches industry of telecommunications.

Competition development of industry is marked considerable positive results among that it is possible to mark the following :

It is a price-cutting (tariffs) on services. Examples mobile communication, internet, can serve as;

It is expansion of nomenclature of the given services. For example, ip is telephony, ip is television and other;

It is stimulation of development of enterprises and use of new technologies;

It is creation for the users of possibility of choice of service provider;

It is upgrading of the given services;

It is an increase of efficiency of the use of own resources (channels, highways, etc.).

To the resources of telecommunications it is first of all possible to take network resources: primary (transport) network and networks of access. Just here and the hidden defects are covered. We will take for an example a primary network that in the near past was exclusive property of Ukrtelecom. As is generally known, without a primary network it is impossible to build no secondary network, including network the Internet. Therefore all new operators that arose up on territory of Ukraine forced to go to the bow to «Ukrtelecom«.

However, Ukrtelecom using the monopolistic position (at support of Administration of connection of Ukraine) sets discriminatory tariffs on the use by the highways of primary network. It restrained development of connection of operators and Ukraine on the whole. Therefore operators forced to build the individual primarynetworks.


It is a competition on markets including at the market of telecommunications plays a very important positive role, as assists a price-cutting on goods and services. For example, in a few last years tariffs on services of mobile communication went down in several times;

A problem of providing of the effective use of the combined resources (at maintenance of advantages of competition) is important not only for the sphere of telecommunications but also for other industries. And it promotes actuality of her permission.