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In recent years, the new competition pattern and booming telecom technology have transformed the Chinese telecom market from a seller's to a buyer's market, telecom operators must transform their operation from production centered to custom service centered. The important issue those corporations are confronting is how to create new operation modes, lower operation costs and develop new business. In this paper we introduce the vertical chains of Chinese telecommunications service industry; analyze the motivation of the telecommunications enterprises' vertical integration based on transaction cost; and then discuss the efficient causes that lead to the telecommunications enterprises' execution of vertical integration strategy. The paper explains the features of telecommunications industry in terms of the evolutionary procedures for the telecommunications industry in China and the structure of Chinese telecommunications market. We also specifically discuss the organization boundary determination of Chinese telecommunications enterprise, tabling a proposal on tapered integration and strategic alliance between telecommunications operator and other enterprises.

Since China joined the WTO, the Chinese telecom market has been transformed from a seller's to a buyer's market due to the new competition pattern and booming telecom technology. Therefore, the telecom industry must transform their production centered operations to custom service centered operations. During this process, it is very important to develop new business models and lower operational costs. Facing such complexities both inside and outside day by day, the Chinese telecom operators must change to adapt to the business environment, whose change is even greater and faster than their own operational changes. In this paper, we discuss the impact of these changes on the Chinese telecommunications service industry, from value chain to value network; analyze the environmental changes for the telecom operators, from linearity to complexity; and lay out the procedures for the telecom organizational change. Based upon the statistical data collected in 1999-2008 with respect to the Chinese telecom industry, we perform analysis on the features of telecommunications industry, particularly in terms of the evolutionary procedures for the organizational change in the Chinese telecommunications industry, and the structural formation of the Chinese telecommunications market as well. Furthermore, we specifically study on the evolution of the complex adaptive organization and conclude that the telecom organizational change under the complex environment is overall well-regulated and continuous.Index Terms-complex adaptive organization, organization change, telecommunication service, value network 493 978-1-4244-3662-0/09/$25.00 ©2009 IEEE

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