The co-evolution of technology and methods of standard setting: the case of the mobile phone industry

This paper applies the concept of co-evolution to technology, institutions, and industry structure in the mobile phone industry with a focus on technology and the institution/method of standard setting. The paper shows how changes in technology have caused the method of standard setting to come full circle. New switching technologies, in particular electronic switching, enabled a change from integral to modular problem solving and thus a change from quasi-vertical integration to open standard setting in the wireline telecommunications industry in the late 1970s and later in the mobile phone industry. Growth in those mobile phone markets that initially implemented an open standard setting process encouraged other countries to adopt similar types of standard setting where government agencies and firms were the mechanisms for this transmission of open standard setting methods. However, the latest technological change, the mobile Internet, requires integral problem solving and this has caused quasi-vertical integration to return in the form of service providers determining the mobile Internet standards and the specifications for the phones that support their mobile Internet services. A new set of firms is transmitting these methods of standard setting to the rest of the world.

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