Heterogenous networks and services

Su-En Tan

Research output: Book/ReportPh.D. thesisResearch

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Abstract

This thesis considers the development of the mobile industry from a techno-economic perspective. Theory of disruptive technologies and related theories are examined and further developed. While much of technology change has been analysed on either a technical level or a market level, another plane of analysis that links the technical plane to the market plane is developed here.

The changes in the mobile and wireless industry mean that new technologies are
constantly being developed. These new technologies can either be classified as being radical in nature or as an incremental technological change. Incremental technological changes are characterised by small changes that are linked to the previous generation of technology and are seen to be advancements of that technology. Radical technological changes, on the other hand, are characterised by a new innovative technology that is different from the existing generation of technology and presents new technological performance breakthroughs.

It is difficult to predict which radical technologies or innovations will result in a market disruption early on in their life cycles. Based on Clayton Christensen’s (Christensen 1997) definition of a disruptive technology, it is one that initially has lower performance than the mainstream technology and is aimed at a different market segment. But as the technology develops, it will also occupy a place in the market of the mainstream technology. A mainstream technology refers to one that has the largest percentage of the market. If mainstream technology firms do not address the disruption, it is likely they will fail and the new disruptive firm will grow in size and importance in the industry.

As we move to 3G (3rd Generation Mobile Services) and beyond 3G, one of the biggest challenges is to bridge network heterogeneity; that is, different types of access networks are inter-connected and interoperable, allowing users seamless roaming between different network types. Technology, business as well as standardisation will play a large role in achieving this. Technological innovation and advancement are the foundations of new products and services. Schumpeter described the motor of development as the innovation itself. However, business and financial aspects must also be considered as they provide the bottom line for firms in the industry. Standardisation is increasingly required due to the number of different technologies in the industry.

The heterogeneity of networks and services cannot be bridged by one company alone; it requires the efforts of many different companies working together. The mobile industry is made up of many different companies or entities that have a common interest in creating a value product. These entities form a value chain within which different members, with differing influence in the market, work together towards a common goal. The two concepts of business models and business strategies are presented. Business models have been used to characterise the complex interrelationships that exist between the different partners in an industry. The difference between business models and business strategy is that business models do not account for competition, which is something that strategy does.

A new model which incorporates the concepts of complementarity and substitutability is introduced in this thesis. It works on the assumption that there was a missing link from when an incremental or radical technology was introduced to how it disrupts or sustains a market. The complementarity and substitutability concept fills this void by introducing the possibility that firms that react to a new disruptive technology in different ways will result in the technology having a different type of impact in the market.

When a radically new technology becomes a reality, it will have a stronger chance of being a substitute technology by companies than a technology that is incremental in nature with respect to the existing technology. It is therefore, more probable that the substitute technology would become a market disruption. However, on the road from being a technological breakthrough to a market disruption, the adoption of the technology by companies in the industry would play a vital part in its development. Companies have strategic choices when it comes to new technological innovations: complement or substitute. A complement is one that will work with their current products. This paves the way for the technology to become a sustaining market change. A substitute resembles a threat, and paves the way for the technology becoming a market disruption. Companies therefore faced with the complementarity or substitutability of a product with relation to their current technologies or products. These differences are guided by the strategies laid out by individual companies. Business models, which are abstract representations of strategy, will then help to determine the success or failure of the technology. This is shown typically in the case of WiFi. WiFi is a wireless technology that addressed a new market, but was soon adopted as a complement by mobile operators into their suite of services. However, the future development of WiFi will enable it to possess more “mobile-like” features, thereby increasing its chances of being a substitute product to mobile technologies and becoming a market disruption. Whether it does become a market disruption is difficult to predict; but it will be a result of how mobile operators and other industry players adapt to the evolved WiFi standard.

This thesis has therefore been a study of the development of mobile and wireless technologies as well as that of market and business and shows the close
interrelatedness and dependencies between them. The concepts of business models and business strategies are used to explain the development of technological products from their conception until their diffusion into the market.
Original languageEnglish
Place of PublicationKgs. Lyngby
PublisherTechnical University of Denmark
Number of pages267
ISBN (Print)87-90-28835-1
Publication statusPublished - Jun 2006
SeriesCICT Ph.D. series
Number8

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