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.     

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.     

The Influence of Regulation and Disruptive Potential on Incumbents' Submarket Entry Decision and Success in the Context of a Network Industry

This paper uses the theoretical perspectives of disruptive innovation, network externalities, and regulation to study the submarket strategies of incumbent firms that operate in a regulated network industry. In this setting, the impact of potentially disruptive innovations might be different because of the tighter regulation of incumbent firms. By analyzing the entry and success patterns of incumbent mobile network operators (MNOs) in the public hotspot markets in 17 Western European countries, we focus on how regulation and network effects as well as disruption factors influence the incumbent firms' strategies. In doing so, this paper departs from prior research that has primarily focused on unregulated industries and combines contradicting explanations from disruptive innovation theory, the motivation/ability framework, regulation theory, as well as network effects to provide a comprehensive analysis on how incumbents behave in a regulated network industry that is being confronted with a potentially disruptive innovation. In particular, while disruptive innovation theory predicts that the incumbents' vast experience in an industry could cause them to avoid entering new submarkets created by potentially disruptive innovations, the desire to avoid regulation could encourage such submarket entry. Furthermore, in regulated network industries, incumbent firms might have a stronger motivation to enter new submarkets as the importance of single customers and high market shares could be substantially different. These contrasting insights are used to develop an integrative research model and to derive hypotheses on incumbents' submarket entry decision and success. Drawing on cross‐sectional, multicountry data of 62 MNOs that operate in 17 Western European countries, this study uses logit and tobit regressions to test the impact of disruption factors, regulation, and network externalities on the entry decision and success of incumbent firms. The results reveal that the incumbent MNOs are caught in an area of conflict between the regulated industry context and their international technology strategy. The findings suggest that the incumbent MNOs' motivation and ability to escape regulation positively influenced their submarket entry and success in the public hotspot market. Thus, the potentially disruptive scenario was successfully turned into a potentially sustaining one as the incumbent MNOs could enhance their presence in the mobile broadband market. The testing on a multicountry basis as well as the positive influence of ethnocentric technology strategies for public hotspots, which are devised in the headquarters' location and are then brought out internationally, shed new light on an industry that has typically been characterized by country‐by‐country decisions. These findings may also reveal challenges for future research on disruptive innovations in multinational industries and expose future challenges for regulative authorities and managers. This paper thereby adds to the theory of disruptive innovation as it includes the influence of regulation on incumbents in network industries. Additionally, this study expands on previous findings on the disruptive potential of wireless local area network technology by employing a multi‐country analysis in 17 Western European countries.     

The role of mobile network operators in next-generation public safety services

Field of researchThis research is in the field of public safety communications in mobile broadband 4G/5G networks. The focus is on mobile network operators and their business opportunities in the public safety market.PurposeThe purpose of this research is to provide a review of ongoing public safety mobile broadband projects in which mobile operators play a key role. In addition, a business model analysis is presented to determine the role of mobile operators in these projects. A comparison of the two key business models is also included to reveal their general characteristics.Methods and dataThe research used a qualitative method, an inductive case study. This method was used to draw general conclusions from a small number of case studies based on ongoing public safety mobile broadband projects. The Casadesus-Masanell and Ricart framework and the business model canvas were used to analyse and compare the two key business models discussed. Data were collected from a variety of sources, including company reports, press releases, international events and conferences, and selected interviews with managers in charge.FindingsThe results show that mobile operators have new business opportunities in the public safety market. Their existing mobile networks can be used for public safety services with certain enhancements. Within existing projects, mobile operators have different business models. The two analysed models were found to require different resources and offer different business opportunities for mobile operators. Procurement authorities responsible for selecting business models are encouraged to pay attention to the choice of model based on, for example, strategic objectives.ValueVery little research has been done on the business opportunities of mobile operators in the public safety market. In this area, this study lays the groundwork for new research. Procurement authorities can use the results when deciding on the business model. Mobile operators can benefit from these results by better understanding their own roles in public safety projects and when assessing the business opportunities of a particular project.     

Exploring the role of data enclosure in the digital political economy

This exploratory research analyzes the impact of data enclosure initiatives on market competition. Data enclosure is the process by which the information about user activity generated by digital operations are withdrawn from an open or shared arrangement with other operators and made more exclusive to the service providers whose operations generate the data. We make the case that data enclosure is emerging as a significant feature of the multi-sided markets of digital platform providers, by looking empirically at, 1) the encryption of DNS query data using the DNS over HTTPS (DoH) protocol, and 2) the enclosure of Apple and Google's mobile identifiers used in digital advertising and cross-app user tracking. These efforts are not only privacy-enhancing moves, but also a means by which service providers compete with each other over the value and security of data. We assess the degree to which exclusivity of data fosters or forecloses competition in the relevant markets, and find mixed results. DoH, apparently a more disruptive form of data enclosure, has had little impact on industry shares so far, primarily because it was embraced by a small-share, declining actor, but the growing use of DoH and other encrypted DNS protocols does indicate a market-driven response to privacy-enhancement. In mobile identifiers in adtech, the shift in the default from opt-out permission to opt-in permission had both strong privacy effects and major effects on the distribution of revenues in the industry. But the changes are recent and the situation remains unsettled.     

How disruptive is 5G?

The hypothesis is put forward that, after three decades of stability, there is now the prospect of significant change in the vertical and horizontal structure of the mobile market place. On the supply side, significant factors are, first, the availability of a new and very powerful form of mobile connectivity in the shape of 5G, and second, software defined networking, which allows a single network to provide a variety of heterogeneous services or ‘slices’. On the demand side, the digital transformation of the whole economy (and not just the communications sector) creates the need for diverse communications functions operating in a universe with a much wider set of digitally transformed services.Mobile operators will find themselves contesting customer relationship with firms or other organisations providing these services in an integrated fashion, and thus risk replacing their direct link with end users with becoming the wholesale supplier of an expanded but ‘commoditised’ communications product. We may also observe fewer radio access networks; more competitive backhaul; and the (partial) vertical disintegration of mobile network operators. The regulatory changes implied may include heavier regulation of fewer RANs, and the need for market analyses to confront situations in which network operators sell more and more of their services to a variety of heterogeneous content and application providers – some of them exercising substantial levels of market power.     

The response strategies of incumbent mobile network operators on the disruptive potential of public W-LAN in Germany

This paper examines how three incumbent mobile network operators (MNOs) in Germany responded in terms of their strategy to the emergence of the wireless local area network (W-LAN) technology and how they interpreted this potentially disruptive technology in their own strategic context. Additionally, prior empirical results and forecasts on the limited disruptive potential of W-LAN for the German MNOs lacked persuasive firm-level evidence to distinguish the real reason for the presented observations and analysis. So far it was unclear whether the observations were caused by successful response strategies of incumbent MNOs or by the inherent limited disruptive potential of the W-LAN technology. For this purpose case studies of three major MNOs in Germany were performed to assess and compare their respective response strategies. Using the theoretical framework of disruptive technology, the results were evaluated in a cross-case analysis to study how these firms interpreted and reacted to the potential disruptiveness of W-LAN. The results indicate significant differences for the respective MNOs between their perception of W-LAN as a potential disruptive technology, their strategic development processes inside the organisation to understand the potential impact of W-LAN on their respective business model, and to enforce an appropriate response strategy and structural implementation. This incumbent heterogeneity depends primarily on their idiosyncratic strategic and structural context. These findings reveal that the incumbent MNOs in Germany were aware of the disruptive technology concept but did not react in a theory-conform way. However, since W-LAN had a sustaining impact on the MNOs and their response strategies followed sustaining reaction patterns, earlier studies, which show a limited disruptive potential of W-LAN for the German MNOs, are supported.     

The competition among mobile network operators in the telecommunication supply chain

In the mobile telecommunication sector, the high competitiveness has increased the complexity of strategic interactions among operators. As the vertical integration has become anything but a choice and not a compelling technical solution, the contest takes place at different levels of the components of the operator value chain: the network infrastructure, the service development and supply, and the relationship with consumers.Mobile virtual network operators act as retailers and concentrate on the last segment of the value chain by establishing commercial agreements with hosting network operators, which act as manufacturers, to get access to radio communications infrastructure. Productive processes of mobile services offered by operators are different and this difference is imperceptible to customers. Processes difference mainly consists in the infrastructural diversity of the operators and implies different consequences on each network service element.A model has been defined to analyze the consequences of such diversity in the competition among HNOs, MNOs, and MVNOs by focusing the attention on the characteristics of the call path, in dependence of the types of operators. In fact, many variables interact to define the call path, such as marginal costs and revenues, infrastructural investments, and interconnection charges among operators. The analysis of the results, obtained by the model, gives information on variations of retail prices, market shares, and profit allotment, to adopt the proper strategies. In particular, the model results shed light on how certain MVNOs should enter the markets and adopt a collaborative strategy with HNOs. The model owns the capability of being applied to different contexts, thus representing for the regulator a potential instrument of relevant usefulness.     

Cognitive radio systems specific for IMT systems: Operator’s view and perspectives

Cognitive radio (CR) is still an emerging and disruptive communication technology which is expected to improve the overall efficiency of the spectrum use. It is envisaged that cognitive radio systems (CRS) could impact many aspects of communications and in particular could facilitate accommodation of the increasing amount of services and applications in wireless networks. Intensive research on CR aims at maximising the utilisation of the limited radio spectrum resource. There have been many advances in CR regarding the technology development aspects; however supplementary research on regulation, policy and market structure reforms in relation with application specific deployment is still required before any CR-based spectrum access could be implemented for specific broadband mobile applications. Indeed, mobile community is still at an early stage of understanding and development of CR capabilities and it is premature to envisage wide deployment of CRS without careful consideration of regulatory and business issues. Therefore, this paper gives a classification of CR-based network and application scenarios, and investigates the feasibility of them from a regulatory perspective at a global level (ITU-R). Main part of this paper presents the wireless network operator’s approach to CRS specific for International Mobile Telecommunications (IMT) systems and proposes the radio environment map (REM) concept as a cognitive tool that increases environmental awareness in wireless network operator’s networks. Studies, which the authors performed internally and within the framework of a collaborative European project as well as within ITU-R yield the conclusion that, at shorter term, only intra-operator based CRS maximises the possibility for CR capabilities to be implemented.     

Impact of roaming regulation on revenues and prices of mobile operators in the EU

We use a difference-in-differences approach to assess the impact of the EU roaming regulation on mobile operators’ average revenues per user (ARPU) and the retail prices of mobile services. Our results suggest that due to the regulation the ARPU of EU mobile operators decreased since 2007 on average by 9.1%. When considering purchasing power parities, the decline of ARPU is estimated on average at 5.8%, but in this case we cannot reject that there was no decrease at all. We also find that the impact of the regulation on ARPU depends on traffic imbalances, which may be related to tourism flows, and has a stronger negative impact on operators from countries with a surplus in tourism traffic. There is however no difference in the impact of the regulation on cross-country and national operators. Moreover, our results suggest that the Roam Like at Home (RLAH) regulation implemented in June 2017 had no impact on the tariffs of national mobile plans.     

三个男人一台戏

手机舞台上的戏码从未像今天这样精彩过。自美国人马蒂.库珀发明了全球第一部手机以来,通信终端这台大戏已经开唱了39年。舞台上的角儿们你方唱罢我登场,各领风骚三五年。所有人似乎都已经习惯了这样的节奏和腔调。     

Business ecosystem strategies of mobile network operators in the 3G era: The case of China Mobile

In order to define the mobile network operators' strategies of building value network in the 3G era, this paper applies the ecosystem principles to the mobile industry through a China Mobile case study. Based on an analytical framework of such principles, this paper reviews China Mobile's ecosystem, and identifies its success factors and problems. The results indicate that a complete ecosystem, where mobile network operators collaborate closely with value-added service providers, content/application providers, equipment and device manufacturers, and other involved organizations, can promote the development of mobile data services substantially. Therefore, mobile network operators should play a central role in the ecosystem by managing the entire value-chain and setting up proper value-sharing mechanisms. However, while doing so, problems may arise because of regulatory issues and information asymmetry. High-value common assets, a centralized management system, partner selection schemes and continuous innovations are important success factors.     

When technological superiority is not enough: The struggle to impose the SIM card as the NFC Secure Element for mobile payment platforms

Mobile network operators have long played an essential role in the Near Field Communication (NFC) mobile payment ecosystem. In most implementations, the SIM card has been the main technical component to secure payments. Currently, mobile payment providers are increasingly planning to place the Secure Element (SE) for authentication in the handset or cloud, rather than on the SIM card. This paper unveils factors that influence stakeholder preferences for the SE location. To structure the analysis, we use a multi-level framework based on concepts borrowed from multi-sided platform theory. Using interviews with stakeholders, we elicit themes and preferences for each level of the framework (provider, technology, and user). Our findings explain why mobile network operators, despite their superior technology, will likely lose the battle for control in the mobile payment ecosystem.     

When are technologies disruptive? a demand‐based view of the emergence of competition

By identifying the possibility that technologies with inferior performance can displace established incumbents, the notion of disruptive technologies, pioneered by Christensen (1997), has had a profound effect on the way in which scholars and managers approach technology competition. While the phenomenon of disruptive technologies has been well documented, the underlying theoretical drivers of technology disruption are less well understood. This article identifies the demand conditions that enable disruptive dynamics. By examining how consumers evaluate technology and how this evaluation changes as performance improves, it offers new theoretical insight into the impact of the structure of the demand environment on competitive dynamics. Two new constructs—preference overlap and preference symmetry—are introduced to characterize the relationships among the preferences of different market segments. The article presents a formal model that examines how these relationships lead to the emergence of different competitive regimes. The model is analyzed using computer simulation. The theory and model results hold implications for understanding the dynamics of disruptive technologies and suggest new indicators for assessing disruptive threats. Copyright © 2002 John Wiley & Sons, Ltd.     

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.     

Competition in wholesale markets: Do MNOs compete to host MVNOs?

This paper extends previous research examining wholesale market shares of mobile network operators (MNOs). This study demonstrates that wholesale market concentration has decreased over time because of the increase of competition of MNOs for hosting mobile virtual network operators (MVNOs). However, differences in wholesale market shares between MNOs have not disappeared. We propose that those operators that are late entrants in a market and belong to an international group with a proactive attitude towards hosting virtual operators positively influences wholesale market shares of MNOs. The empirical analysis is based on a panel data from 2000 to 2010 corresponding to MNOs and virtual operators in five European countries with high development of the virtual mobile industry. By closely examining KPN we show how being an international mobile group specialising in the wholesale market across Europe has enabled it to exploit complementarities that exist between traditional and virtual businesses.     

Mapping worldwide mobile networks: Some problems and indicative solutions

Mobile telecommunications is a global and complex industry containing many actors. However, relatively little research has been undertaken into explaining its structure. With this in mind, the objective of this paper is twofold: first, to map the structure of the mobile telecommunications industry and, second, to use this mapping exercise to highlight the data collection issues that are frequently encountered. Through outlining one particular approach to data collection, the paper argues that researchers need to be careful when constructing datasets and wary when relying on those provided by others. By mapping the structure of the mobile industry, the paper highlights a series of key issues in data collection and trends in operator and market structure.     

Royalties vs. upfront lump-sum fees in data communication environments

Mobile communications markets worldwide, today, are saturated, the number of mobile network operators (MNOs) in market is declining, mobile revenues are stagnant or falling, MNOs are becoming wireless Internet service providers, and economies of scope are strengthening. This paper challenges existing dominant views on spectrum assignment and license fee payments, estimates spectrum fees that MNOs would have paid under royalties and then compares them with upfront lump-sum fees actually paid by 3G licensees. This paper further proposes that governments need to consider assigning additional spectrum to incumbents as needs arise without using auctions and adopting royalties as a way of collecting spectrum fees should they collect them.     

Paradoxical impact of asymmetric regulation in Taiwan's telecommunications industry: Restriction and rent seeking

The mobile penetration rate in Taiwan has climbed from 6.86 to 112.15. Mobile phone accounts per 100 capita in the first 6 years of market competition, during this time the state-owned incumbent Chunghua Telecom has been dethroned by a new entrant, Taiwan Cellular Corp. This paper addresses the cause of Taiwan's unprecedented mobile growth, and provides policy solutions for countries that strive to improve their telecommunications sectors in a short time scale. The authors highlight the fundamental role of asymmetric regulation, rather than pure liberalization, in the creation of the deregulated telecommunications industry in Taiwan. The asymmetric regulation in Taiwan is manifested in a twofold framework: the dominant carrier vs. competitors, and the fixed-line carrier vs. mobile companies. Econometric analysis concludes that dualistic asymmetric regulation leads to higher growth for mobile competitors and raises the total mobile penetration rate. However, the authors warn against the paradoxical consequences of dualistic asymmetric regulation. The regulatory benefits which mobile entrants received evolved into rents when they successfully lobbied to end the follow-me call service, the pricing scheme of which contradicts the asymmetric revenue-sharing constraint. The paper calls for a sunset clause for dualistic asymmetric regulation in order to take full advantage of its strengths, while at the same time preventing rent seeking by the firms, which benefit.