Xiaolingtong versus 3G in China: Which will be the winner?

Xiaolingtong (XLT), a new type of mobile phone system based on PHS technology for wireless access of fixed-line telephone networks, has grown very rapidly in China. However, there are many doubts about the future of XLT once 3G (the third generation of mobile communication) is finally employed. This paper proposes a theoretical framework to assess and compare XLT and 3G from four perspectives: technology, market demand, business models and government policy. It concludes that XLT and 3G will coexist with existing 2G/2.5G mobile communication networks for a considerable period of time. With service collaboration and integration, the coexistence of both of these technologies can enhance China's mobile communication infrastructure and support the growth of mobile commerce.     

A study on forward and backward linkage effects in South Korea's telecom industry across generations

The primary purpose of this study is to examine the spillover effect of South Korea's telecom industry on other industries until its evolution to the 4th generation. By using Input-Output Table Data to compute Forward and Backward Linkage Effects in South Korea's telecom industry throughout Generational Changes, this study aims to analyze South Korea's telecom industry's impacts and changes on upstream and downstream industries to offer implications for its evolution to the 5th generation. This study used empirical input-output data for the period between the years 2000–2014 to conduct input-output analysis to evaluate forward and backward linkages in South Korea's telecom industry for each generation of it. The results revealed that (1) Korea's telecom industry can be defined as a dependent manufacturing industry due to its below-average forward linkage and above-average backward linkage over the whole study period, and (2) backward linkage in South Korea's telecom industry was higher than the economy-wide average value during our study period although it decreased with the industry's generational shifts. The results indicate that telecommunications companies should create new markets in which they can propagate emerging technologies of the 4IR (4th Industrial Revolution) to other industries, in order to ensure that the 5th generation telecom industry maintain its position as a key industry. On the other hand, the government should make policies to support start-ups and SMEs in telecom industry and implement structural reforms in Korea's oligopolistic telecom market.     

Moving targets: Introducing mobility into universal service obligations

Structural changes in the economies of developing countries are leading to increased mobility of work and family life, and so an accommodating set of universal service obligations (USOs) implies new goals that extend beyond wireline telephone penetration and access. Wireless telephony penetration frequently exceeds wireline penetration in developing countries, and digital wireless platforms can incorporate Internet technology. This paper evaluates the history of telecom development in Mexico that has led to wireless telephony becoming the new consumption norm. The study takes the eMexico project as a case study of diversified USOs beyond wireline telephony. It considers potential obstacles to incorporating mobile phone and Internet (“Wireless Web”) services into Mexico's diversified universal service policy, including economic barriers to political mobilization over issues of telecom policy.     

Assessing Finland's Wireless Valley: can the pioneering continue?

Internationally, the success of Finland's Wireless Valley, i.e., the Finnish telecom/mobile cluster, has often been credited to Finnish industry competitiveness, population dispersion, and pro-technology attitudes. Yet, the number of competitors has been low, while demographic dispersion and technology attitudes have not been that different from those in other Nordic countries. In effect, the cluster performance during the second-generation rivalry has been a function of geopolitics (Finland's special relationship with Tsarist Russia and Soviet Union), public strategies (Nordic cooperation, EU strategies and Finnish liberalization in the 1970s and 1980s), and first-mover advantages (firm-level strategies of Finnish mobile vendors and operators). In the emerging 3G competition, the importance of geopolitics and public strategies has become secondary to that of the marketplace. As a result, the Finnish success drivers are dissipating in the new environment.     

Korea's leadership in 5G and beyond: Footprints and futures

The Korean government has played a crucial role in the development of advanced mobile networks, including 5G. Korea became the first country in the world to not only launch a nationwide 5G network but also to commercialize 5G services. In addition to looking at the steps toward 5G-related developments in Korea, this study used Latent Dirichlet Allocation (LDA) topic modeling analysis to examine how 5G-related discourse was formed in the media after its commercialization. As a result of analyzing news articles in the Korean press with 5G as the main keyword, a total of five topics were derived. Intriguingly, most topics contained several new articles related to government policies. Considering the characteristics of the mobile network industry—e.g. as an industry that receives licenses from the government—this result suggests that 5G-related issues are closely related to government policies. Our topic modeling results confirm that the interventionist promotion policy of the Korean government which acted as a catalyst for technology and business innovation played an important role in Korea's 5G leadership.     

Estimating consumer surplus in the mobile telecommunications market: The case of Korea

This paper estimates consumer surplus in the Korean mobile telephone services (MTS) market. The Korean mobile telecommunications market has grown rapidly since 1997 when competition was introduced and Code Division Multiple Access (CDMA) technology was commercialized. Because consumer surplus is relevant to the controversy over establishing an appropriate price level between consumers and service providers, the need for a robust measurement of benefit from MTS is increasing. The measured net consumer surplus estimated by means of elasticities of demand reached about US$48.8 billion in the period 1996–2004 and the changes amounted to about US$8.8 billion during the same period. In particular, after competition was introduced into the market with an accompanying price decrease and increase in the number of subscribers, consumers have benefited greatly. Therefore, it can be inferred that a facility-based competition policy and the reduction in price of access such as handset subsidies all played a positive role in the early diffusion of MTS in Korea. The estimated consumer surplus in this paper does not include network externality (option externality); if this were considered, the total social welfare of the consumer would be larger.     

Demand for telecommunication services in developing countries

Living standards and economic growth in developing countries are invariably linked to the availability and use of telecom services. Effective policy decisions require the best estimates of the drivers of these services. In this paper, telecommunications demand is estimated in models for residential mainline and mobile telephone service for developing countries for the period 1996–2003. The paper tests for cross-price effects between mainline and mobile service and its findings have important policy implications. It finds residential monthly price elasticity to be insignificant for developing countries, but the connection elasticity is larger than generally found in the literature. Mobile monthly price elasticities are very large. A new and important empirical finding is that although wireline phones are substitutes in the mobile market, the contrary is not true—mobile phones are not substitutes in the wireline market, and in fact may be considered complements. This lack of symmetry has important implications for properly defining telecom markets. Universal service subsidies and competitive market initiatives should be reevaluated in light of the paper's elasticity estimates. Increased competition, income growth and enhanced education may be the ultimate universal service promoters.     

Diversification strategies in network-based services: The case of mobile virtual network operators

This paper aims at discussing the entry process and competitive strategies of MVNOs in Italy and France. It illustrates the features of competition in a sector – the mobile telecom service industry – which is characterized by market saturation and demand heterogeneity. In doing so, it looks at the characteristics of the two countries in terms of competition and entry of new operators, at the motivations behind the entry of MVNOs, and at the performance of different companies. Results show that the most successful MVNOs are those characterized by the ability to find a perfect match between their core competencies (large network management, strong brand reputation) and the needs of specific segments of demand that had not been previously fulfilled. In this context, companies with ICT network management skills, whether coming from the telecom sector or from other network-based service industries such as postal operators, have been particularly successful in the market. From a policy perspective, despite the failure of some MVNOs, customers have benefited from the increased competition between MNOs and MVNOs in terms of range of service offerings and prices.     

Global political economy of technology standardization: A case of the Korean mobile telecommunications market

This paper examines empirical cases of standardization in the Korean mobile market as vehicles for approaching the broader political and institutional context of standardization in telecommunications. A consideration of Korean standardization in the mobile telecommunications market is particularly interesting because it reveals how the state's political interests influence standards decisions, which are primarily driven by market and technological changes in telecommunications. Judged from the social construction of technology perspective which sheds light not only on technology itself but also on political, social and economic interests that surround transformations in technology, this paper highlights power relations among the major actors that have made technology standards decisions in Korea regarding second (2G) and third-generation (3G) mobile telephony. The paper also attempts to show how the Korean government has dealt with the diverse interests of various market actors while pursuing its own policy agenda.     

Evaluating the efficiency change and productivity progress of the top global telecom operators since OTT's prevalence

The telecommunications industry has undergone significant evolvement from fixed to mobile substitution (FMS) to fixed mobile convergence (FMC) and now to over-the-top (OTT) services due to the huge rise in data usage. This paper explores efficiency variation during the period 2012–2017 for the top 41 global telecom operators in Forbes Global, 2000. Based on the data envelopment analysis (DEA) meta-frontier approach to reflect differences in production functions, the empirical results herein show that the number of operators achieving technical efficiency with respect to the meta-frontier fell from 13 firms in 2012 to 10 firms in 2013 to 8 firms in 2014 to 8 firms in 2015 and then to 7 firms in 2016, but then rose to 11 firms in 2017, displaying the impact from rise in OTT. For the mobile-only group, the average technical efficiency with respect to the meta-frontier is 0.841, which is superior to the fixed-mobile group's 0.774 and the fixed-only group's 0.714, and the group difference is significant among the three facilities-based groups. The meta-frontier estimation suggests that the fixed-mobile group has the highest meta-technology ratio (MTR) of 0.901 versus the mobile-only group's 0.886 and fixed-only group's 0.718. The empirical results offer policy implications for regulators to encourage telecom operators to have fixed-mobile operations. We further suggest that telecom operators cooperate with OTT service providers and invest in them in order to take advantage of people's more personalized digital life.     

The effect of government 5G policies on telecommunication operators’ firm value: Evidence from China

To lead the world's fifth-generation mobile communication networks (5G) market, China introduced several policies to support 5G industry development that will impact telecommunication operators, the main implementers in this industry. Thus, this study examines the impact of the government's 5G policy announcements on telecommunication operators' firm value in China, where the state exerts a strong influence on industry development. We find that government policy announcement in general affects telecommunication operators' stock returns negatively, and when the government announces policies with a higher level of interference, the decline in firm value is more pronounced. To understand the comprehensive impact of 5G technology on telecommunication operators, we also examine the effect of institution-driven corporate technology R&D and investment activities on firm value. We find that the firms' 5G activities also decrease their firm value, and this effect is more significant than government policy announcements. These results imply that the market has a negative evaluation of the introduction of 5G technology due to its immaturity and uncertainty. This study provides a basis for understanding the market's views on 5G technology and development policies.     

A business case for 5G services in an industrial sea port area

5G is a technology that was designed to provide citizens with access to faster and innovative wireless services. While different technical aspects related to 5G have been extensively examined by researchers worldwide, a lack in the existing literature is the economics of 5G in terms of business cases of specific 5G use cases. In this article we analyse the business case for three 5G use cases in an industrial sea port area, the Hamburg port in Germany, over the period 2020–2030. The first use case is enhanced mobile broadband and the results show a payback period lower than one year for all the scenarios analysed. The second use case is automation of container handling in the port's container terminal. It was found that the payback period is also lower than one year with a positive business case net present value in all scenarios studied. The business case of the third case, augmented reality for construction projects in the port's area, is challenging as the payback period was 5 years for the baseline case. Moreover, when performing the sensitivity analysis, it was found that in several scenarios there was a negative return on investment, and it was not possible to recover the investment over the time period studied. It can be concluded that mobile network operators will need to be careful as not all new 5G service offerings may have a positive business case. Future research work should focus on studying other 5G use cases in the port area, and on examining other industrial areas beyond ports such as airports, science parks and manufacturing facilities.     

Economic analysis of the introduction of the MVNO system and its major implications for optimal policy decisions in Korea

This study analyzes the anticipated economic effects arising from the introduction of the mobile virtual network operator (MVNO) system in the mobile communications service market. For the analysis, actual data (or estimated data)—such as price elasticity, the number of subscribers, traffic volume, rate, and access charge—were combined with an assumption about a competition scenario in the future market. Based on this analysis, consumer surplus, and change in the service provider's profits were estimated according to the type of policy that may be adopted for the MVNO system by the regulator. The results of the analysis indicate that consumer surplus appears to increase largely because of the reduction of the mobile service rate by the promotion of “service-based competition,” which occurs upon adoption of an MVNO policy in the mobile communication service market. Moreover, the introduction of an MVNO system into the mobile communication market seems to be socially beneficial regardless of policy type if access charges are set reasonably by a cost-plus or retail-minus method. In particular, in order to make sense of the introduction of a special MVNO, whether by the cost-plus method or the retail-minus method, the correct discount rate must be used in setting an access charge between the special MVNO and the significant market power (SMP) mobile network operator (MNO).     

Do International Roaming Alliances Harm Consumers?

This paper develops a model of international roaming in which mobile network operators (MNO's) compete both on the wholesale market to sell roaming services to foreign operators and on the retail market for subscribers. To allow their subscribers to place or receive calls abroad, they have to buy roaming services provided by foreign MNO's. In the absence of international alliances, competition between foreign operators would drive wholesale unit prices down to marginal costs. However, international alliances are endogenously formed since they serve as a commitment device to soften competition on the retail market, leading to excessively high roaming per‐call prices.     

Customer retention,loyalty, and satisfaction in the German mobile cellular telecommunications market

Customer retention (CR), loyalty (CL), and satisfaction (CS) are important (intermediate) goals for telecommunication network operators on their way to superior economic success in the liberalised German market. Therefore, drawing on a sample of 684 residential customers of digital cellular network operators in Germany this study tests hypotheses suggesting that CR, CL, and CS should be treated as differential constructs which are causally inter-linked. LISREL analyses support a two-staged model in which overall CS has a significant impact on CL which in turn influences a customer's intention to terminate/extend the contractual relationship with his mobile cellular network operator (=CR). Mobile service price and personal service benefit perceptions as well as (lack of) number portability between various cellular operators were identified as supply-related variables with the strongest effects on CR. Mobile network operators’ perceived customer care performance had no significant impact on CR. The findings suggest that an important lever for regulators to promote competition in cellular markets is the enforcement of efficient number portability procedures between mobile network operators.     

Exploring the potential of wireless technologies to accelerate universal Internet access in Ghana

Ghana was one of the first countries in sub-Saharan Africa to be connected to the Internet, yet has very low Internet usage (5.3 users per 100 inhabitants). A qualitative study including in-depth interviews with ISPs explored Internet diffusion in Ghana. Findings suggest that due to Ghana's inefficient and outdated fixed-line infrastructure, universal Internet access goals might not be achievable through fixed-line technologies. Rather, wireless technologies may be more efficient. However, high access costs continue to be a barrier. Policy options to encourage widespread deployment of wireless broadband and cost reduction are presented as suggestions for further research. These include using universal service funds to expand the national backbone with an open access high capacity wireless backbone to reach unserved and underserved areas, reducing license and regulatory fees for the wireless industry to encourage coverage and capacity expansion, and mandatory infrastructure sharing to reduce cost.     

A mixed spectrum management framework for the future wireless service based on techno-economic analysis: The Korean spectrum policy study

The evolution of radio technology and various services has increased the world's dependence on wireless communications. The demand for and value of spectrum resources therefore are also increasing. Spectrum efficiency is the most important factor in managing spectrum scarcity. However, under the current spectrum management approach, it is difficult to adopt innovative technologies that improve spectrum efficiency and flexible usage in the current dynamic wireless market. Recently, there have been several approaches to improve efficient use of spectrum resources, and each approach has its own advantages and disadvantages. Therefore, this research first discusses current issues and analyzes relative social welfare based on the different characteristics of technology and market conditions to compare various attributes of each approach. Based on the techno-economic simulation results, this paper introduces a mixed spectrum management framework for the future wireless service and support policy makers’ decision making. Furthermore, the mixed spectrum policy to spectrum management in Korea is proposed to find a more realistic and efficient spectrum management policy.     

Race to the top: Does competition in the DSL market matter for fibre penetration?

High speed broadband creates potential productivity gains and has a positive impact on economic growth. Achieving Europe's broadband access objectives will require large scale investment in next generation broadband networks, and it is imperative that an appropriate investment climate is created to encourage fibre network rollout. This study considers whether and how competition in the DSL market affects the incentives of operators to invest in the deployment of high-end fibre optic networks. Most earlier research on the drivers of investment in broadband technology has focused on the effect of mandatory access policies, such as local loop unbundling, or competing infrastructures. We posit that competition in the DSL sector may also influence fibre penetration, possibly to a considerable extent. We find that the relationship between service-based competition and fibre penetration is non-linear: a lack of or severe DSL competition is correlated with a negative effect on fibre penetration, but if a moderate degree of competition is already present in the market, more service-based competition may positively influence fibre penetration. The scale of these effects however varies with the openness of the DSL market: operators' incentives to invest in fibre appear to be more sensitive to changes in DSL competition if there is extensive local loop unbundling.     

Analysing disruptive potential: the case of wireless local area network and mobile communications network companies

In this article, we analyse the prediction that wireless local area network (W-LAN) technologies will be disruptive for incumbent mobile communications network operators. For this purpose, we develop a methodology of guided interviews to assess technologies for their disruptive characteristics based on theory of disruptive technology developed by Christensen (1997) and recent extensions. The application of our comprehensive step-by-step method improves the precision of the disruptive technology concept and its usability for practitioners to make ex ante distinctions between disruptive technologies and other phenomena caused by emerging technologies. Our method predicts that contrary to common assumptions, W-LAN is not likely to represent a disruptive technology for the established mobile communications network firms in terms of Christensen's concept. This research was conducted in close collaboration with Vodafone Pilotentwicklung, an R&D and technology monitoring unit of the Vodafone Group. Vodafone provided part of the empirical data through expert interviews and market reports.