Operator value creation through technological convergence: The case of VoIP

During the past few years there have been numerous reports and articles from the telecommunications sector, focusing on technological convergence and aiming at presenting managerial implications for operators active in the industry. This paper adds to the discussion by suggesting that there lies value-creation potential in convergence processes. The case of VoIP is discussed and analysed as an example of a market, where incumbent operators are most likely not winners, but are rather defeated by new entrants (allowed by industry convergence) and other providers with more customer-focused strategies (such as pure VoIP providers, ISPs and cable companies). The paper raises questions concerning technological convergence and its role in the telecommunications landscape, which is characterized by increasing competition and technological development. The paper thus suggests that technological convergence may be used as a tool in order to create value for incumbent and service operators in telecommunications Based on this study, one could assume that challengers and attacker’s possess an advantage when it comes to converging markets such as the VoIP market, and creating value for both the firm and the end-customers. Incumbent operators entering the VoIP market are likely to cannibalize their own revenues and missing out on value-creation.

[1]  Stephen P. Bradley,et al.  The Converging Worlds of Telecommunications, Computing, and Entertainment , 1998 .

[2]  C. Marxt,et al.  How incremental innovation becomes disruptive: the case of technology convergence , 2004, 2004 IEEE International Engineering Management Conference (IEEE Cat. No.04CH37574).

[3]  J. Bauer,et al.  The European market for mobile data: evolving value chains and industry structures , 2002 .

[4]  Brian R. Gaines,et al.  The learning curves underlying convergence , 1998 .

[5]  Michael L. Katz,et al.  Remarks on the Economic Implications of Convergence , 1996 .

[6]  Stephen P. Bradley,et al.  Winners and Losers--Industry Structure in the Converging World of Telecommunications, Computing, and Entertainment , 1997 .

[7]  Nils Stieglitz,et al.  Digital Dynamics and Types of Industry Convergence: The Evolution of the Handheld Computers Market , 2007 .

[8]  Milton L. Mueller,et al.  Digital Convergence and its Consequences , 1999 .

[9]  Geert Duysters,et al.  Technological Convergence in the IT Industry: The Role of Strategic Technology Alliances and Technological Competencies , 1998 .

[10]  David G. Messerschmitt,et al.  The convergence of telecommunications and computing: what are the implications today? , 1996, Proc. IEEE.

[11]  Lu Aiguo.  A Different Game , 2000 .

[12]  Communications Policy,et al.  Telecommunications and broadcasting : convergence or collision? , 1992 .

[13]  Jörg Rockenhäuser.  Digitale Konvergenz und Kompetenzenmanagement , 1999 .

[14]  Erik Bohlin,et al.  Convergence in Communications and Beyond: An Introduction , 2000 .

[15]  Erik Bohlin,et al.  Convergence in Communications and Beyond , 2000 .

[16]  D. Keeble,et al.  Technological convergence, globalisation and ownership in the UK computer industry , 2000 .

[17]  C. Prahalad.  The future of competition , 2004 .

[18]  John Edwards.  Convergence Reshapes the Networking Industry , 1999, Computer.

[19]  B. Wernerfelt,et al.  A Resource-Based View of the Firm , 1984 .

[20]  Colin Blackman.  Convergence between telecommunications and other media: How should regulation adapt? , 1998 .

[21]  M.H. Sherif.  Convergence: A New Perspective For Standards , 1998, IEEE Communications Magazine.

[22]  John Vince,et al.  Digital Convergence: The Information Revolution , 1999, Springer London.

[23]  J. Hagel,et al.  Unbundling the corporation. , 1999, Harvard business review.

[24]  Clayton M. Christensen,et al.  Explaining the attacker's advantage: Technological paradigms, organizational dynamics, and the value network , 1995 .

[25]  F. Kodama.  Technology fusion and the new R & D: Harvard Business Review, 70 (4), 70–78 (July/August 1992) , 1993 .

[26]  M. Porter.  Competitive Advantage: Creating and Sustaining Superior Performance , 1985 .

[27]  David B. Yoffie,et al.  Competing in the Age of Digital Convergence , 1997 .

[28]  Nils Stieglitz,et al.  Strategie und Wettbewerb in konvergierenden Märkten , 2004 .

[29]  Thorsten Blecker,et al.  Implications of Digital Convergence on Strategic Management , 2001 .

[30]  R. Ramírez.  Value co-production: intellectual origins and implications for practice and research , 1999 .

[31]  George S. Day,et al.  Wharton on Managing Emerging Technologies , 2000 .

[32]  Hemant Kumar Sabat,et al.  The evolving mobile wireless value chain and market structure , 2002 .

[33]  C. Freeman,et al.  As Time Goes by: The Information Revolution and the Industrial Revolutions in Historical Perspective , 2001 .

[34]  Feng Li,et al.  Deconstruction of the telecommunications industry: from value chains to value networks , 2002 .

[35]  C. Borés,et al.  Technological convergence: a strategic perspective , 2001 .

[36]  Bernard Clements.  The impact of convergence on regulatory policy in Europe , 1998 .

[37]  Dwayne Winseck,et al.  Convergence: Integrating Media, Information and Communication by Baldwin Thomas F., McVoy D. Stevens and Charles Steinfield (1996) , 1997, J. Inf. Law Technol..

[38]  Nick von Tunzelmann,et al.  Industry-specific competencies and converging technological systems: evidence from patents , 2001 .