Bundling, Differentiation, Alliances and Mergers: Convergence Strategies in U.S. Communication Markets

Convergence is a multi-facetted phenomenon affecting the technological basis of information and communication industries, the boundaries of existing and new markets, and the organization of service providers. Convergence in substitutes will tend to increase the intensity of competition but convergence in complements may have the opposite effect. Given the economics of advanced communication industries, convergence necessitates strategies to overcome the risk of commodification at the level of networks, applications, and services. The paper examines bundling, differentiation, alliances, and merger strategies adopted by North American service providers in response to convergence. Service providers'opportunities and risks in the emerging environment differ considerably, with cable and telephone service providers presently in stronger positions than wireless service providers, broadcasters, and satellite service providers. New entrants such as Vonage, Skype, Google, and Yahoo have high disruptive potential but remain disadvantaged without their own access networks.convergence; bundling; differentiation; alliances; mergers

An Economist's Guide to Local Loop Unbundling

This guide provides a critical review of the economics literature on the desirability and the effects of unbundling the local loop. Firstly, we discuss recent contributions, which aim to quantify the effect of unbundling regulations on the development of broadband services. Secondly, we review the literature on the potential impact of unbundling on investment and innovation incentives. Finally, we conclude this paper by offering some suggestions for further research.Unbundling; broadband diffusion; investment and innovation

An Economist's Guide to Local Loop Unbundling

This guide provides a critical review of the economics literature on the desirability and the effects of unbundling the local loop. Firstly, we discuss recent contributions, which aim to quantify the effect of unbundling regulations on the development of broadband services. Secondly, we review the literature on the potential impact of unbundling on investment and innovation incentives. Finally, we conclude this paper by offering some suggestions for further research.Unbundling; broadband diffusion; investment and innovation

Structural Separation Models and the Provision of ‘Dark Fibre’ for Broadband Networks: The Case of CityLink

Fibre broadband networks are widely presumed to become the dominant form of fixed-line broadband access. However, the spectre of fibre firms gaining market power, such has been evidenced in legacy copper-based telecommunications networks, has led some policy-makers to suggest imposing separation mandates (either functional or structural) on the owners of fibre networks yet to be built, in order to militate against the creation of a new set of firms with market power. Whilst conceptually separation of the „dark fibre? data transportation core from network intelligence and retail functions echoes the computer technology-centric view of the internet as a „dumb core? and an „intelligent fringe?, and replicates the separation mandates currently proposed as a means of preventing integrated legacy copper-based providers from foreclosing retail competition, the ensuing structures likely exacerbate the chilling effect of access regulation on network investment observed in most markets where it has been applied. The chilling effects arise because of an investment horizon mismatch (hold-up) between infrastructure operators with large fixed and sunk costs, and retailers (and arguably even end consumers) with freedom to switch between retailers and network infrastructures. The usual resolution to such problems requires customers to make a credible commitment to purchase services via relationship-specific investments or contractual commitments. Whereas access regulation precludes the contractual resolution of the hold-up problem, separation mandates preclude their resolution by consumer-owners vertically integrating upsteam into elements of infrastructure ownership. Consequently, it appears unlikely that the level of investment in separated fibre networks providing dark fibre connections will be optimal. Indeed, under competitive circumstances and high levels of demand uncertainty, there may be no private sector investment forthcoming for dark fibre infrastructures. By examining the business model of CityLink, a firm that since 1995 has been successfully supplying dark fibre in a highly competitive broadband market segment, it is confirmed that long-term financial viability of dark fibre-producing firms is feasible when utilising a mix of both contractual and asset ownership mechanisms that bind end consumers into credible commitments sufficient to justify the firm?s deployment of new network infrastructure capacity. The institutional arrangements that led to the development of this firm?s successful business model draw their inspiration more from the flexible and collaborative commercial interaction of the information technology community rather than the adversarial and prescriptive regulatory environment of the telecommunications industry. It is concluded that if policy-makers wish to encourage the creation of a truly „dark fibre-based? fixed line broadband environment, then in the initial stages of network deployment at least, arrangements similar to those of CityLink are more likely to induce sufficient and timely private sector investments than the rigid and rigorous separation and access regulation arrangements common in the recent history of the telecommunications industry.

The diffusion of IP telephony and vendors' commercialisation strategies

This is a post-peer-review, pre-copyedit version of an article published in the Journal of Information Technology. The definitive publisher-authenticated version is available at the link below.The Internet telephony (IP telephony) has been presented as a technology that can replace existing fixed-line services and disrupt the telecommunications industry by offering new low-priced services. This study investigates the diffusion of IP telephony in Denmark by focusing on vendors’ commercialisation strategies. The theory of disruptive innovation is introduced to investigate vendors’ perceptions about IP telephony and explore their strategies that affect the diffusion process in the residential market. The analysis is based on interview data collected from the key market players. The study's findings suggest that IP telephony is treated as a sustaining innovation that goes beyond the typical voice transmission and enables provision of advanced services such as video telephony

Broadband: Europe needs more than DSL

Efficient broadband technologies such as DSL, fibre, cable modem, powerline communications, UMTS, WLAN or WiMax are powerful locational factors for an economy. Europe in particular should promote broadband communication further to tap into its growth potential. But given the prevailing ownership structures in fixed wire business, the promotion of broadband must not concentrate exclusively on DSL. Rather, its impact should be technology-neutral.communications, technology, broadband, DSL, cable modem, FTTH, regulation authority, liberalisation, deregulation, convergence

Do Information and Communication Technologies Empower Female Workers? Firm-Level Evidence from Viet Nam

This paper studies the effects of firms’ investments in information and communication technologies (ICT) on their demand for female and skilled workers. Using the gradual liberalization of the broadband Internet sector across provinces from 2006 to 2009 as a source of exogenous variation to identify the causal impacts of ICT, we find evidence from the country’s comprehensive enterprise survey data that firms’ adoption of broadband Internet and other related ICT increased their relative demand for female and college-educated workers. The effect of ICT on firms’ female employment is particularly strong among the college-educated workers, and is stronger in industries that are more dependent on highly manual and physical tasks. These results suggest that ICT can lower gender inequality in the labor market by shifting the labor demand from highly manual, routine tasks in which men have a comparative advantage toward more nonroutine, interactive tasks in which women hold a comparative advantage. However, the effect of ICT is weaker in industries relying more on complex and interactive tasks, suggesting that gender differences in education may have limited female labor supply for the most innovative industries that require highly technical skills to complement ICT

The Mobile Broadband and Fixed Broadband Battle in Swedish market: Exploring complementary or substitution

The mobile broadband (MBB) in Swedish market has become a more attractive opportunity for service providers, with growing demand for ubiquitous broadband connectivity after the mobile operators got 3G license in 2000. MBB seems to have more advantage compare to Fixed broadband (FBB) in term of mobility, compatibility and quality of service. This paper aims to explore the current broadband situation in Swedish market, in particular whether the mobile broadband is a complementary or substitute by using descriptive analysis. The data is collected from the Post- och telestyrelsen (PTS) Survey and the secondary data from PTS during 2002-2009. The findings indicate that the MBB and FBB subscribers remain growing, but the issue of complementary and substitution between MBB and FBB cannot be given an answer at this stage. The crucial problem of comparing MBB and FBB is the different units of measurement. Also, the potential of avoiding regulation by service providers is discussed since the market participants in FBB and MBB services are the same players. The rapid growth of MBB together with a lower degree of regulation in mobile services may attract the market player to put their effort more in MBB market. Moreover, the gap between broadband infrastructure coverage and the usage of this service is huge. Thus, the inefficiency of BB infrastructure utilization becomes another issue that NRAs could consider. --Mobile broadband,Fixed broadband,Complementary,Substitution

The Nature, Timing and Impact of Broadband Policies: a Panel Analysis of 30 OECD Countries

We empirically investigate the impact of a vast array of public policies on wireline broadband penetration through a novel and unique dataset covering 30 OECD countries, over 1995-2010. We find that while both supply and demand-side policies have a positive effect on broadband penetration, their relative impact depends on the actual stage of broadband diffusion. When an advanced stage is reached, only demand-side policies appear to generate a positive and increasing effect. Moreover, both technological and market competition play a positive role, and the effect of the latter shows a non-linear path along the stage of market development. Finally, the relative weight of the service sector in the national economy reveals to be crucial for broadband penetration. Our analysis provides new insights into the policy debate and in particular on the rationale of a selective policy design for broadband penetration and, in perspective, for the rollout of next-generation networks.telecommunications policies, broadband penetration, infrastructure investments

Profiting in the info-communications in the age of broadband: lessons and new considerations

Who profits in the info-coms industry in the broadband age, and how? This paper looks at this question, decomposing the industry in terms of five complementary activities: (1) equipment provision, (2) network operation, (3) Internet access and service provision, (4) navigation and security provision, and (5) Internet content provision, which correspond to five different assets in the sense of Teece (1986). By focusing on two key stylized facts (SF1: “R&D and patent licensing are increasingly high in this industry, but the initiators of innovations have greatly changed over time”, and SF2: “Small, facilities-less companies emerged during the development of the Internet industry, but have generally performed badly as the industry has matured and broadband use has become widespread”) the paper analyses the robustness of Teece (1986) in its ability to provide a framework appropriate to the changes that have occurred in the broadband industry. The paper draws some lessons, and provides some new considerations related to the robustness of Teece's framework.