2008 AGI-Information Management Consultants May be used for personal purporses only or by libraries associated to dandelon.com network. Telecoms in the Internet Age From Boom to Bust to...? MARTIN FRANSMAN OXFORD UNIVERSITY PRESS
CONTENTS List of Tables ^ T ' ' xii List of Figures '. xv Acronyms and Abbreviations. xvi Introduction *. 1 1. Explaining the Telecoms Boom and Bust, 1996-2002. 7 2. Evolution of the Telecommunications Industry in the Internet Age ' 34 3. AT&T, BT, and NTT: Super-adapters or Dinosaurs in an Age of Climate Change? 81 4. Deutsche Telekom: Europe's Giant Struggling to Globalize 124 5. France Telecom: France's Europeanizing Incumbent 158 6. The New Entrepreneurs in the Telecoms Industry ' 185 7. COLT: An American Telecoms Operator in Europe ' 201 8. The Changing Knowledge Base: Co-evolving R&D in Telecoms Network Operators 215 9. Mobile Internet: Explaining Japanese Success and European Failure ' - 235 Conclusion: Shareout, Consolidation; and the Restoration of Profitability 260 Appendix... 267 Bibliography 275 Index ' ' ' 285
LIST OF TABLES 1.1. The layer model of the Infocommunications Industry.. 18 1.2. Financial position of some US new entrants, April 2001 26 2.1. Layers of the Old Telecoms Industry 37 2.2. Characteristics of the innovation system in the Old Telecoms Industry 41 2.3. The location of R&D in the New Telecoms Industry, 1999 49 2.4. Employment by function in Energis 52 2.5. Market capitalization of some new entrants and other selected companies, 1999, 56 2.6. Landmarks in the evolution of the Internet 61 2.7. The Infocommunications Industry: a layer model 66 2.8. The innovation systems in the Infocommunications Industry and the Old Telecoms Industry,.. 69 2.9. Cooperative innovation by remotely located innovators: the case of Linux 71 2.10. Interpretive ambiguity and mobile communications 72 2.11. Vision of the video-phone, 74 2.12. Diffusion of second generation mobile systems in Europe, Japan, and North America,.. 76 2.13. Competing networks and technologies in the local access market 78 3.1. AT&T, BT, and NTT: supplier strategies 84 3.2. AT&T, BT, and NTT: R&D intensities, c. 1990 84 3.3. AT&T, BT, and NTT: convergence of strategy 84 3.4. AT&T, BT, and NTT: divisional structure, 2000 96 3.5. AT&T, BT, and NTT: performance in mobile 98 3.6. The US mobile market 98 3.7. NTT DoCoMo, Vodafone, and BT Cellnet: market share and market capitalization. 99 3.8. AT&T, BT, and NTT: performance in Internet-related services 100 3.9. AT&T, BT, and NTT: performance in globalization 101 3.10. TMA Annual Survey question: how do TMA members rate UK operators for quality of service? 102 3.11. AT&T, BT, and NTT: R&D, 1987 and 1999 105 3.12. AT&T, BT, and NTT: common sources of pain in 2000 106 3.13. AT&T: revenue and earnings from its four businesses, 2000. 107 3.14. BT: turnover and operating profit from its seven new businesses 107
LIST OF TABLES xiii 3.15. NTT: segment operating income 108 3.16. Falling telecoms share price (year to mid-october 2000). < 109 3.17. The forces operating behind the backs of the telecoms operators. no 3.18. Demand and supply of optical fibre, 1999-2004 - ', : 111 3.19. Falling cost of trans-atlantic and pan-european circuits 111 3.20. AT&T, BT, and NTT: three questions about the past.114 3.21. WorldCom: performance in major markets 115 3.22. WorldCom: what went wrong?..; '.116 4.1. Deutsche Telekom: relative share price performance. 126 4.2. Deutsche Telekom: share ownership structure 128 4.3. Deutsche Telekom's four strategic pillars. 129 4.4. Deutsche Telekom: distribution of revenue by pillar 129 4.5. Deutsche Telekom: growth in revenue by area ' 130 4.6. Deutsche Telekom: falling revenue from long distance 131 4.7. Deutsche Telekom's Supervisory Board, 1999-2000 ' 133 4.8. Functions of Deutsche Telekom's Board of Management... 135 4.9. Dr Ron Sommer: background of the CEO of Deutsche Telekom 136. 4.10. Deutsche Telekom: the politics of corporate decentralization and empowerment ' 136 4.11. Deutsche Telekom: corporate strategy 1: overall strategy ' 137 4.12. Deutsche Telekom: corporate strategy 2: strategic priorities, 2001-02.138 4.13. Deutsche Telekom: "corporate strategy 3: strategy by pillar 139 4.14. Deutsche Telekom: recent acquisitions ' 140 4.15. Deutsche Telekom: new acquisitions and businesses by pillar 141 416. Deutsche Telekom: market shares in the German mobile market, mid-2000 143 4.17. T-Mobile international group: main associated companies, 30 June 2000 143 4.18. T-Motion (Deutsche Telekom's mobile portal): most popular services 144 4.19. Europe's largest Internet companies, 2000 145 4.20. T-Online: growth in minutes per month per subscriber. 146 4.21. T-Online: e-commerce and advertising revenues, 2000 146 4.22. Tiscali and AOL: advertising revenue per customer, 2001 146 4.23. T-Online: major foreign subsidiaries 147 4.24. Deutsche Telekom: R&D expenditure 148 4.25. Patent applications by Deutsche Telekom 149 4.26. Deutsche Telekom: employment 150 4.27- Deutsche Telekom: the politics of integrating acquisitions 151 4.28. Deutsche Telekom: net revenue and income before taxes by segment, 2000, 1999, and 1998 154 5.1. France Telecom: relative share price performance 160 5.2. France Telecom: market share in France in the major growth areas 161 5.3. France Telecom's nine units, 2001 165 5-4- France Telecom's five business areas 165 5.5. France Telecom: distribution of revenue by business area 166 5.6. France Telecom: performance by business segment, 1999-2000 167 5.7. France Telecom: total number of employees 168 5.8. France Telecom's international business strategy 169 5.9. France Telecom: major acquisitions and investments 172
xiv LIST;OF TABLES 5.10. France Telecom: share of consolidated revenue from international business 173 5.11. France Telecom: new organization to drive international business development :.,174 5.12. French mobile market, 2000 ' v '"..» ' 176 5.13. Mobile market shares in the European market -.. ' 177 5.14. France Telecom/Wanadoo: breakdown of revenue > *. 178 5.15. France Telecom: R&D intensity ",: 180 5.16. France Telecom: public R&D obligations and R&D strategy '. 180 6.1. The entrepreneurs and their companies. 187 6.2. Market capitalization of some telecoms new entrants and : ' : other selected companies, 12 July 1999..,.188 6.3. Market capitalization of selected incumbents,and new r V entrants, 29 November 2000 : 188 6.4. Market capitalization of selected US telecoms operators 198 6.5. Percentage change in share price, 1997-2002: AT&T, Level 3, Qwest, WorldCom. ' " u-- 200 7.1. COLT'S entry strategy. 204 7.2. COLT's employment. 208 7.3. COLT'S profit and loss, 1998-2000 211 8.1. Periodizing the evolution of R&D in the telecoms network operators 217 8.2. Telecoms R&D, 1999. '" '.218 9.1. Conventional explanations of i-mode's success 238 9.2. The combinant properties of the 'i-mode innovation system' (IIS) 240 9.3. Periodizing the evolution of i-mode.,- '.245 9.4. Consumption of i-mode applications by type, 2001 249 9.5. Some i-mode content sites. 250 9.6. DoCoMo's revenues from i-mode 254 9.7. DoCoMo's global strategy.. 256 9.8. DoCoMo's global platform 257 9.9. DoCoMo's global partnerships 257
LIST OF FIGURES 1.1. The effect of a fall in the price of bandwidth.. 12 1.2. Incumbents and new entrants: share price'..13 2.1. Evolutionary paths for co-evolving consumer demand 73 3.1.' AT&T, BT, and NTT: evolution of corporate structure 89 4.1. Deutsche Telekom: organizational structure.... 132 5.1. France Telecom: organizational structure, 1996-2000. 162 5.2. France Telecom: organizational.structure from 2001 164 5.3. France Telecom: international organization, 2001 (using UK as example) 175 6.1: Five-year share price comparison: AT&T, Qwest, WorldCom 199 6.2. Five-year share price comparison: Level 3, Qwest, WorldCom 199 8.1. The evolution of corporate organization in AT&T, BT, and NTT 224 8.2. The technology function in the reorganized BT 226 8.3. The R&D function in the post-breakup AT&T, 229