The effects of variety and bundling on choice and satisfaction: Applications to new telecommunication and media services

The purpose of this working paper is twofold; 1)to review consumer behavior literature on how assortment variety and bundling influence choice related variables, and 2)to apply this review on an analysis of telecommunication and new services. Literature related to the characteristics of assortment/bundle, perception of the assortment/bundle, perception of the choice situation, choice, perception of the choice, and experience with the chosen option is reviewed with focus on assortment and bundling. The review is based on an open literature search using keywords as “assortment size”, “assortment variety”, “bundling” and “unbundling” in databases as ISI and Ebsco. In addition, manual reviews of references used in the articles revealed from the databases have also been used to make sure we cover as many relevant articles as possible. The articles reviewed are briefly summarized in table 1 (assortment studies) and table 2 (bundling studies). Based on the literature reviewed, the results revealed are applied in a theoretical analysis of the effects of variety and bundling on choice- and post-choice related variables in new telecommunication and media services. Six services are discussed; traditional telephony and broadband services, mobile internet services and applications, services in heterogeneous access networks, multiplay services, TV-channel network services, and online video services. The analyses focus on potential effects of assortment variety and bundling on choice and post choice related variables for each of the six services. Because regulatory authorities typically use variety to stimulate efficient competition, some regulatory issues of relevance for each of the six services are also briefly discussed. The main results from the general consumer literature review on variety and bundling is summarized. A brief summary of what seems to be the most relevant issues related to variety, bundling, and regulatory actions for the six telecommunication and media services analyzed is also presented. The review of the literature and the analyses of the six services show a significant need for research on how variety and bundling influence choice and choice related variables. A discussion of potential routes for future research together with a preliminary draft of a research model closes the discussion of this working paper

Mobile Security as a Service

The purpose of this paper is to study how a software product company can expand its product-based business with the Software as a Service (SaaS) model in the mobile setting. In this research study we examine how the SaaS model can be implemented by a software company with existing PC-based software business and conduct a case study on F-Secure and its mobile security as a service offering. The differences between the product and service business are considerable and the change of focus from one to the other is not easily done. For example, the scale economies, which are associated with product business, are not easily achieved in service business. However, the SaaS business model has many benefits to offer to SaaS providers. To providers, SaaS offers e.g. expanded customer base, lowered production and distribution costs, more predictable cash flows, and shortened sales cycle.Our findings include that by successfully solving the risks associated with the SaaS model and by fulfilling the customers’ demands of customization and at the same time benefiting from economies of scale, scope, and aggregation, F-Secure has managed to leverage its domain area expertise with its SaaS offering: F-Secure has expanded its PC-based antivirus and security application business to cover also mobile devices. F-Secure has also increased its potential customer base amongst smart phone users (both end-users and businesses) with the help of its partners: mobile operators and handset manufacturers

Internet economics and policy: An Australian perspective

Publicly available information indicates that the demand and supply of Internet and Internet-related services are continuing to expand at a rapid pace. Since 1997 the number of Internet service providers (facilities-based and resellers) has increased by nearly 40 per cent; the number of points-of-presence per Internet service provider has increased by five times; the number of hosts connected to the Internet has more than quadrupled; and Internet traffic has increased from six to 10 times. The emergence of electronic commerce (e-commerce), driven by this rapid adoption of Internet services and continual technological innovation, is likely to have profound economic and social impacts on Australian society. This paper provides a detailed analysis of the impact of the Internet and e-commerce, ranging from the changes in the market structure of the telecommunications industry, its role in changing the organisation of traditional markets, the emergence of new markets, and the structural shifts to employment, productivity and trade. The paper also analyses contemporary Australian regulatory responses. IIe-commerce; internet economics

A Survey of the Economic Role of Software Platforms in Computer-Based Industries

Software platforms are a critical component of the computer systems underpinning leading– edge products ranging from third– generation mobile phones to video games. After describing some key economic features of computer systems and software platforms, the paper presents case studies of personal computers, video games, personal digital assistants, smart mobile phones, and digital content devices. It then compares several economic aspects of these businesses including their industry evolution, pricing structures, and degrees of integration.software platforms, hardware platforms, network effects, bundling, multi-sided markets

Mobile Service and Phone as Consumption System -the Impact on Customer Switching

Mobile telecommunications service sector is, in spite of providing high service quality and striving for customer satisfaction, characterized by dynamic customer activities and provider switching. In this research with data from Slovenia we explore the impact of usage, budgetary constraints, involvement and customer characteristics on customers\u27 intention to switch mobile service provider. By using the consumption system perspective on mobile services and mobile phone, we seek to provide explanation on the factors of customer switching. It is shown that the mobile services usage effect on switching intentions is curvilinear (positive linear and negative quadratic) and that only the budgetary constraint regarding the service matters and not the one related to the mobile phone. Past mobile service providers switching experience also contributes to the intention to switch. Mobile phone ego involvement has positive impact on customer retention, however purchase involvement (both mobile phone and mobile services) increases customer risk. This research thus emphasizes the studying of the mobile services system together with its phone subsystem and it based on extensive survey. Managerial implications are discussed

EU’s antitrust policy against U.S. based big tech: Protecting European consumers from Google Search and Amazon e-books

The focus of this research paper is to address the state of competition in the European high-tech industry from the perspective of its main beneficiaries, the consumers. This is done by assessing the antitrust policy of the European Commission against U.S. based multinationals, the “big tech”. By choosing Google and Amazon as the representative firms, I draw upon recent antitrust cases and secondary literature related to the Android Operating system and Amazon e-books to examine whether the European Commission’s antitrust authorities have acted in a way that improves consumer welfare. The analysis of the arguments for and against government intervention is executed through competing antitrust doctrines: Chicago and Ordoliberal approach. I find that in both cases, the business practices under scrutiny have pro-competitive rationale that can bring benefits to consumers. I do not find direct evidence that the EU’s antitrust policy would be used to protect European companies from foreign competition

Power play in television: a political economy analysis of power balances in broadcasting markets

In this dissertation, the focus is on the (evolving) configurations of power and control in broadcaster-to-distributor markets. Technological developments, as well as changes in the institutional framework, are in the process of fundamentally transforming legacy TV business models and have transferred power to ‘gatekeepers’ which derive a dominant position by controlling competitive bottlenecks. Since technology shocks might disrupt established power relationships in television, interactions between TV broadcasters and distributors incur tensions and conflicts of interests. It is argued that each party controls crucial platform resources and that the broadcaster-to-distributor market is organized around two converging TV platforms that unfold enveloping strategies and thus provoke power conflicts. One of the major assumptions of this dissertation is the mutual dependency between broadcasters and distributors, which leads to the conclusion that the market is marked by bilateral bargaining power, and needs to deal with double-marginalisation problems. Although both parties may have bargaining power, relationships between broadcasters and distributors are often characterised by power asymmetries, either in favour of the broadcaster or distributor. In the ever-increasing complex TV ecosystem, broadcasters as well as distributors are looking for outside opportunities to lessen dependence on their counterparty, and build strategic advantage during carriage negotiations. However, pricing power usually remains with the distributors, which eventually decide about the possible carriage and the package (basic or upgraded), and the position of the channel in that package (or in the electronic programming guide). A gatekeeping position allows distributors to pressure broadcasters to demand lower wholesale (input) prices. On top, distributors leverage bargaining power through the ownership of affiliated channels that directly compete access-seeking broadcasters. In a similar vein, owners of premium rights or must-have channels leverage their popularity and exclusivity in order to bargain higher retransmission payments from distributors. Whereas existing frameworks hold that competitive advantage essentially rests on the activities a firm performs within the value chain, it is claimed here that a firm’s position in the value chain does not adequately explain why different firms with similar activities have different levels of bargaining power. Rather than sticking to hollow aphorisms like ‘Content is King, but Distribution is King Kong’, it is assumed that the allocation of power between broadcasters and distributors crucially depends on the politico-economic context of broadcasting and its distribution, including the set of complex relationships between different parties in the business ecosystem. Since bargaining power in the broadcaster-to-distributor market tends to be context-specific and varies between different local settings, it is determined by the allocation of scarce resources in the industry, the individual nature of the broadcaster-to-distributor relationship and potential path dependencies in media and telecommunication policies. Hence, the major research objective is to study the interactions between broadcasters and distributors, and identify, in a qualitative way, those contextual variables that define bargaining power in broadcaster-to-distributor relationships. Although Porter’s model is still relevant for analysing the industry environment, the complexity of broadcasting and distribution markets and the speciality of carriage negotiations demands for a more specific framework to examine relationships and power conflicts between broadcasters and distribution. Following a resource-centric perspective, the ownership and control of strategic assets are considered determinants of bargaining power. Based on a literature review and interviews with 36 media managers and experts, it was possible to come up with a multidimensional and multilevel approach to bargaining power and to construct a complex of interrelated power attributes (clustered in five dimensions) that influence a firm’s competitive position in carriage negotiations. On the macro level, a number of legal provisions and regulatory requirements strongly affect the carriage negotiations. Reference is made to telecommunications rules, competition law, media-specific regulation and copyright law. On the meso level, the model suggests that the market structure forms an important factor in the creation of bargaining power. Industry concentration, number of business partners, entry barriers and the threat of technological progress are identified as critical parameters. On the micro level, the structure of the negotiating firms needs to be taken into account to assess bargaining power. Hence, firm-specific characteristics of broadcasters and distributors involved in a carriage negotiation include relative firm size, conglomerateness, vertical integration and financial resilience. Next to firm characteristics, emphasis is put on product differentiation as a source of a bargaining power. Product characteristics are related to the market and industry structure, and predominantly refer to product differentiation, exclusivity, bundling and switching costs. On the individual level, psychological, emotional and interpersonal issues play a decisive role in carriage negotiations