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.     

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.     

A business case for 5G mobile broadband in a dense urban area

5G networks are envisioned to provide consumers and industry with improved transmission performance and advanced communication possibilities. To deliver on this promise of ushering in faster downloads and lower latency, mobile network operators are called upon for substantial investment in network infrastructure. Investors and operators need a clear 5G business case before making such investment. So far, very little research has been published on the topic of the 5G business case. This article studies the impact of different elements driving the business case of a 5G network. The study was performed within 3 boroughs of central London, UK, for the period 2020–2030. 5G-related costs and revenues were calculated to derive the business case. The results show that the business case for a 5G network providing mobile broadband services alone is positive over the time period 2020–2030 but has some risk in the later years of this time period. The business case is also particularly sensitive to assumptions on the revenue uplift and the rate of traffic growth which are inherently challenging to forecast. The sensitivity analysis shows that the return on investment becomes negative if both traffic and costs are significantly higher and revenues increase more slowly than our baseline forecasts. Network sharing helps to substantially improve the business case. Further research is needed to understand the business case on a regional or nationwide basis, and for a network that provides additional services beyond broadband.     

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 role of mobile handsets in advanced network service evolution: Evidence from Japan

This paper aims at a better understanding of the mechanisms of mobile network service evolution through a closer examination of the context of mobile handsets. It aims first to establish quantitatively that mobile handsets are a determinant of mobile network service evolution patterns, and second, to develop a consistent perspective capable of explaining the evolution of various mobile network services. Despite the fact that mobile handsets are indispensable to users of mobile network services, surprisingly little is known about the role of these handsets in mobile network service evolution. This paper provides quantitative evidence of a positive relationship between intra-network-carrier penetration rates for mobile network service subscribers and mobile handsets designed for these services. The relationship is such that if one network service is diffused more than another, the mobile handsets related to the more diffused service are similarly more widely diffused in the market, and vice versa. The evidence is derived from an analysis of two mobile network services in Japan, mobile Internet and third generation mobile, initiated by NTT DoCoMo and KDDI. There are no existing studies that consistently explain the mechanisms of different mobile network service evolution patterns. Since the positive relationship that emerges from the analysis is consistent for both cases, by examining the mechanisms underlying this relationship, the paper develops an adequate and consistent perspective based on a constituent model reflecting the technological and competition structure of mobile network services. From this perspective, this positive relationship can be explained as the similarity or dissimilarity in essential technology ownership distribution across constituents. This perspective describes mobile network evolution in terms of changes in the distribution of essential technology ownership and, therefore, could be generalised more widely.     

Quantifying the costs of a nationwide public safety wireless network

The existing US public safety wireless infrastructure consists of thousands of disparate systems built by separate local agencies. Problems with interoperability, cost, spectral efficiency, and limited functionality plague these systems but could be significantly reduced through the deployment of a single nationwide network that serves all public safety personnel. Two major efforts towards such a nationwide network are the federal-government-only Integrated Wireless Network (IWN) and an FCC-led effort to create a public-private partnership in the 700 MHz band; the future of both projects is uncertain due in part to concerns surrounding cost. This paper presents a model to estimate cost for two fundamental approaches to a nationwide network: a public-safety-only network and a public–private partnership which serves both public safety and commercial subscribers. We apply this general model to four network scenarios which differ in the amount and band of spectrum allocated as well as the number and type of subscribers (public-safety-only versus commercial and public safety) under three traffic scenarios: voice-only, data-only, and voice and data. We demonstrate that the nation's many small systems could be replaced with a single nationwide network with a small fraction of the tower sites and spectrum. The cost of building this new infrastructure is comparable to what is likely to be spent in just a few years on upgrading and maintaining the existing infrastructure. In addition, we show that these cost estimates are highly dependent on some key system design parameters including the public safety capacity required and signal coverage reliability, which must therefore be well-defined in advance.     

The politics of public safety communication interoperability regulation

This article examines an understudied area of telecommunication policy, namely the regulation of public safety radio communication to bring about communication interoperability. Commonality and funding are the two intertwined policy challenges need to be overcome to achieve this interoperability. Addressing these challenges separately, US federal policy has struggled to establish communication interoperability. By contrast, the integrated approach of the Europeans has resulted in a relatively successful outcome. It is argued that this integrated approach may even permit the transplantation of a more general telecommunication policy thread—competition—to the public safety radio communication field. However, whether interoperability is established may also be linked to intra-agency fears of a potential re-direction of hierarchical communication flows brought about by new (and configurable) communication infrastructure. If this is the case, policy-makers regulating for interoperability will need to take into account inter- and intra-agency organizational dynamics as well.     

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.     

Impacts of mobile Internet use intensity on the demand for SMS and voice services of mobile network operators: An empirical multi-method study of German mobile Internet customers

Scholarly and business publications alike convey the message that past and future strong growth in mobile Internet (MI) access and service demand has solely positive commercial implications for mobile network operators (MNOs). This position neglects the possibility that increasing MI use intensity may lead to demand decreases for the highly profitable short messaging service (SMS) and mobile voice telephony. The extant literature provides few insights on relations between MI use intensity, on the one hand, and SMS as well as mobile voice call use intensities, on the other hand. This study developed hypotheses concerning the presence or absence of impacts of MI use intensity and circumstances of MI use (e.g., device type, tariff scheme) on the demand for SMS and mobile voice telephony at the individual customer level. The hypotheses were tested by analyzing actual use behaviors of 304 MI adopters in Germany, for whom objective use intensity data were extracted from the billing system of an MNO. These non-reactive measures were combined with responses collected from the adopters through a telephone survey. Multivariate regression results suggest that though MI use intensity significantly negatively affected both number of SMS sent and received, these effects were so small that their practical relevance is highly doubtful. Further, customers who used MI more intensively did not generate lower volumes of outgoing or incoming mobile voice connection minutes. Conclusions are drawn for MNO, telecommunications sector regulators and scholarly researchers seeking to explain the acceptance of mobile communications services.     

The business case of a network that serves both public safety and commercial subscribers

Deploying a single nationwide broadband wireless network to serve all public safety users would have great advantages over the existing fragmented public safety systems. A nationwide system could be created to serve both public safety and commercial subscribers, which would allow a provider to exploit important economies but force it to meet the more costly requirements of public safety. This paper analyzes the viability of a public-private partnership that serves public safety and commercial subscribers from a for-profit provider's perspective. A model is presented that estimates the net present value (NPV) of a wireless network by calculating costs based on the number of cell sites required and revenue based on the projected number of subscribers acquired. The model is applied to both a network that serves only commercial subscribers on 10 MHz of 700 MHz spectrum and a public-private partnership that serves commercial subscribers and public safety personnel on 20 MHz of 700 MHz spectrum. It is found that NPV is greater for the public-private partnership than for the commercial-only network for any population density, which shows that the value of 10 MHz of spectrum exceeds the cost of meeting public safety requirements. Furthermore, the paper demonstrates that NPV/cell increases with population density, so urban areas are profitable and rural areas are unprofitable. The paper demonstrates that a partnership covering 94% of the US population breaks even because the most urban 56% of population subsidizes coverage for the next 38%. If initial deployment is subsidized, a financially sustainable public-private partnership can serve much more than 94%. Additionally, it is shown that allowing urban municipalities to opt-out of the partnership can significantly increase the subsidies required.     

The diffusion of mobile data services and applications: Exploring the role of habit and its antecedents

Given the prevalence of mobile data services and applications (MDSA) such as App Store, it is important to diffuse MDSA and understand user behavior toward it. Recent research on marketing and information systems (IS) has shed light on the habitual use of frequently used IS. This study attempts to develop a research model that clarifies the role of habit in the actual use of MDSA. Considering the unique and specific characteristics of MDSA, this study examines the antecedents of MDSA habit in an effort to elucidate key factors accelerating the development of MDSA habitual use. Data collected from 317 users who had prior experiences with MDSA were empirically tested against the research model using partial least squares (PLS). The analysis results indicate that both continuance intention and habit play an important role in the actual use of MDSA. Moreover, the findings reveal that habit is a more prevalent predictor of actual use compared to conscious intention. It was found that user satisfaction, perceived monetary value, and variety of use serve as the antecedents of MDSA habit. The theoretical and policy implications of the findings are described.     

Firm and target country characteristics as factors explaining wealth creation from international expansion moves of mobile network operators

Although mobile network operators (MNOs) carried out numerous international expansion moves over the past 25 years industry-specific empirical research on shareholder reactions to such moves and on factors explaining differences of the wealth effects of international expansion moves is scarce. Using event study methodology, the present investigation empirically captured the impacts of 148 major expansion steps into foreign mobile communication services markets announced by 29 large MNOs during the period from December 1989 to December 2004 on “abnormal” market value changes of the expanding MNO. Further, it sought to explain differences in cumulative abnormal shareholder returns related to an announcement by four characteristics of the expanding firm (e.g., foreign experience) and nine characteristics of the country targeted by an internationalization step (e.g., cultural distance; intensity of MNO regulation).     

The impact of regulating mobile termination rates and MNO-MVNO relationships on retail prices

A mobile virtual network operator (MVNO) provides mobile telecommunication services by eluding the constraints of the radio communication infrastructure and establishing an agreement with a hosting network operator (HNO) for the use of its spectrum. Thus, MVNOs offer a wide range of mobile services and directly compete with every mobile network operator (MNO). This paper studies the economic justifications for potential regulatory intervention that defines the level of mobile termination rates (MTRs) and negotiations and agreements among MVNOs and HNOs. The results show that symmetric MTR reduction leads to competition growth among operators, forcing every operator to reduce retail prices and, consequently, to enhancing consumer welfare. The paper also finds that a collaborative strategy adopted by an HNO and an MVNO is advantageous for both and induces a reduction in retail prices, thus weakening other MNOs.     

Consolidation of public safety wireless networks: An options-based economic analysis of numerous scenarios

The Korean National Emergency Management Agency proposed to replace existing public safety wireless networks of 46 agencies with a nation-wide consolidated network. This study compares the public-private partnership alternative of sharing a network with the conventional alternative of building a government autonomous network. Using exploratory modeling and real option analysis which compute path-dependent values (including network effects and switching costs) of all the plausible sequential incremental investments against a wide range of future states, this study has designed adaptive investment strategies (“start robust, then adapt”) which start in the highest pay-off area, and then make investment decisions about whether to expand or switch to lower pay-off areas, based on an updated information of technology prospects and the previous-stage performances of inter-agency operational effectiveness and public-private partnership. This case study has demonstrated that well-designed adaptive investments will enhance long-term values and reduce downfalls arising from public-private partnership.     

Relationships in the purchasing of business to business professional services: The role of personal relationships

There has been a shift from transactional to relational exchange and relationship marketing both in the business to business and professional services contexts. This paper seeks to explore the manner in which personal relationships affect the process and outcomes of purchasing of professional business services. Specifically, it focuses on the role of the professional service providers as boundary spanners in the formation of personal relationships. These personal relationships constitute the underlying basis of long-term relationships between the purchasing and provider organizations in such complex service settings. The findings of this study demonstrate that the manner in which the boundary spanners cultivate relationships support the concept of relationship specific tasks. It extends this conception by use of the data to outline the chronological process over time Understanding the roles, function, and ultimately importance, of these relationships facilitates the identification and development of appropriate strategies to manage these relationships.     

Social imaginary and dilemmas of policy practice: The food safety arena in Japan

Through the string of food safety scares that has rocked Japanese society since the early 2000s, conflicts between the traditional notion of socially acceptable risk and the idea of a science-based risk analysis approach have surfaced in the food safety arena. Elites, including government officials and those members of scientific communities who support the science-based risk analysis approach, have become responsible for communicating seemingly contradictory ideas such as “food in Japan is safe” and “there is no such thing as zero risk with food.” This communication logjam has resulted in confusion and created public distrust of both government and scientific experts. Against this backdrop, this paper aims to examine the struggles and challenges faced by government officials in explaining and practicing policies that pertain to highly controversial food safety issues. The primary data used for illuminating the discourses is the official minutes of governmental committees including the Agriculture, Forestry and Fisheries Committee and the Consumer Commission.     

Reducing the level of switching costs in mobile communications: The case of Mobile Number Portability

Switching costs are one of the most important economic forces that affect market competition in mobile communications. Both theoretical and empirical studies have shown that switching costs reduce market competition leading to higher prices, lower product and service quality, and lower customer welfare. Given their negative consequences, national regulatory authorities have designed policies aimed at reducing switching costs and fostering competition. One of the most important of these, in the mobile communications industry, is mobile number portability (MNP). The aim of this paper is to investigate the effect of MNP on switching costs in mobile phone services. First, a hierarchical Bayes model is proposed to measure switching costs at the customer level and to investigate the impact of MNP on them. Second, this study examines the drivers of MNP adoption by customers using a binary logit specification. The results reveal that this regulatory policy has significantly reduced the cost of switching and that MNP adoption partially depends on customer-related variables.     

The making of public investments: The role of champions,co-ordination,and characteristics of nutrition programmes in Mozambique

This study examines governance and institutional factors that influence how public resources are allocated for nutrition interventions in the context of a developing country—Mozambique—with very high rates of malnutrition. Based on qualitative empirical analysis building on a political economy framework, we explore the importance of two agent-centred and two investment-centred factors that determine how decisions on budget allocation to nutrition are made. The analysis finds that public decisionmakers strongly favour highly visible nutrition investments and those with a short duration between the time that spending is incurred and outcomes or outputs are achieved. Co-ordination has been quite successful among donors, and mainly of a spatial nature. Co-ordination is significantly weaker among government agencies, given the absence of fiscal tools of the co-ordinating agency, and its placement in a sector ministry rather than at a supra-sectoral level. Champions as change agents have had a truly influential role in attracting more funding to nutrition and improving its allocation. But their influence is also fleeting and difficult to sustain.     

The changing public role in services to food and agriculture : The legal regulation of food markets in India

A framework allowing the commercial transfer of property rights is an essential prerequisite to market exchange widely considered the prerogative of the state. Here, the social history of the legal regulation of agricultural markets in central, south and northeast India is examined. Regulatory law is shown to be riven with unanticipated outcomes, working as intended only under rare conditions of competition and absence of preharvest commercial debt. Meso level institutions of collective action and micro level behaviour by firms also regulate exchange, unsystematically according to their multiple objectives. Foreign funded projects and another layer of customary procedure. In the light of this analysis, the current policy debates over agricultural market reform are discussed and an analytical framework and suggestions for reform are offered.