Telephony in an Era of Network Cornucopia - Strategic Considerations on the Declining Value of Proprietary Networks

Kelen, András (2005) Telephony in an Era of Network Cornucopia - Strategic Considerations on the Declining Value of Proprietary Networks. Acta Oeconomica, 55 (1). pp. 23-42. ISSN 0001-6373

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Abstract

This study focuses on the strategic management consequences of technology development. Business policy considerations are predicated on the overall assumption that the multiplication of broadband telecommunication networks, capable of delivering both voice and data bits of information, has led telephone companies into a competitive situation where they are compelled to decrease their interconnection fees. All over the world there is an observable trend towards a cornucopia of networks and a glut of bandwidth. This means that legislation putting a cap on connection fees will only conserve a business situation that is gone long ago. Browsing the classical literature on telecommunication regulation, this study on business policy argues that instead of waiting for legislation - that is far too late to orient companies what to do policy-wise with the imminent new market situation -, wireless carriers should rather start emphasising the design of new, value-added services. Such a change of emphasis - turning away from the provision of connectivity alone - can help them achieve some added value and remain in business. Otherwise, they may soon follow the path of a slow corporate funeral following their wired brethren.

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