TELE 450
The Structure of the Telecom Industry
Weeks 7-10 (Material for exam 2)
Week 7 - March 17 TELE 450
Agenda:
Housekeeping
· Return Exam 1
· Today IIP1 Due
· 3/24 WSE1 Due
Lecture:
· Porter’s Competitive Advantage of Nations
· Rogers’ Diffusion of Innovation
· Trends in technology
· Discussion:
· Copyright (Selling Wine Without Bottles)
Everett Rogers’
The Diffusion of Innovations
Everett Rogers’
The Diffusion of Innovations
Why do certain innovations “take off,”
and others do not?
· Relative Advantage (Is it better?)
· Compatibility (Does it fit?)
· Complexity (Can I understand it?)
· Trialability (Can I try it out?)
· Observability (Can I see the operations and results?)
· Re-invention (Can I modify it?)
Examples of innovations with a steep adoption curve (happens quickly)
· television
· VCR
· CDs
· New weapons, new fashions
Examples of innovations with a gradual adoption curve (happens slowly)
· Telephone
· Personal computer
· Democracy, birth control pills, soil conservation, use of seat belts
Examples of innovations that failed – so did not follow the curve
(they never happened – never caught on - and ultimately died)
· Videophone
· 8 track tapes
· Videodisks
· Prohibition, pony express
http://www.bgsu.edu/departments/tcom/diffusion.html
Innovation Analysis
There are several characteristics of new technologies that affect the likelihood of their being adopted by organisations. Research has illustrated that the higher the innovation's score on each of these characteristics, the more successful the implementation was likely to be. Research has suggested that the first three to be discussed here, relative advantage, compatibility, and complexity, have the most significant relationships with the adoption and implementation of technological innovations.
After reading about each of the factors below, you can print out and use the score card to help compare your assessments of various innovation and technical change options.
Relative Advantage (Is it better?)
Compatibility (Does it fit?)
Complexity (Can I understand it?)
Trialability (Can I try it out?)
Observability (Can I see the operations and results?)
Re-invention (Can I modify it?)
Score card
Relative Advantage (Is it better?)
The relative advantage of a new technology is defined as the degree to which the new equipment is perceived as being better than that which precedes it. Therefore, if a personal computer is perceived as providing easier text entry and editing, more flexibility in terms of document formats and preparation, and increased efficiencies due to its ability to electronically transfer data between users, then its relative advantage over manual type-writers is great. This will increase the likelihood of the PC being adopted over the manual alternative.
It is the notion of perceived advantage here that is most important, not just objective advantage. If vendors of new technology sell people on outlandish over estimates of possible benefits, even if these benefits are never realised, it is the expectation of realising these benefits that produces the perception of relative advantage that, in turn, leads to the decision to innovate.
Relative advantage may be further subdivided into at least two types: economic advantage and social advantage.
Economic advantages - Although reductions in labour and unit production costs are frequently cited to justify the purchase of new technology, new technologies do not save money as frequently as people seem to expect. New technologies do, however, provide other economic advantages allowing firms to stay competitive, to gain significant competitive advantages, or new technologies may provide new opportunities to make money.
Social advantages - Quite frequently new technology is seen as a way to increase prestige, personal power, and/or organisational status. Convenience and satisfaction are also among the many personal and/or social advantages that will increase the likelihood of the adoption of the new technology. If someone thinks that having a PC on their desk enhances their image in some way, then they will be more likely to adopt the technology and successfully use it.
An important thing to remember is that relative advantage is not enough to assure successful adoption. It is a necessary pre-condition; it is, however, not sufficient.
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Compatibility (Does it fit?)
Compatibility is defined as the degree to which an innovation/change is consistent with existing values, past experience, and current needs. Of course, the more compatible a new technology is with an organisation's needs, the more likely it will be adopted. Less obvious, however, is the notion that if the innovation/change is not totally compatible with elements of the firm's culture, this will negatively impact the likelihood and success of the adoption of the innovation.
If an organisation is faced with this type of situation and recognises the potential incompatibility barriers, managers can take steps to change attitudes and behaviours before the firm adopts the innovation in order to increase the likelihood of its success.
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Complexity (Can I understand it?)
Complexity is defined as the degree to which a new technology is perceived as relatively difficult to understand and to use. If a technology is perceived as being too complex, people will be less likely to try it. Many advanced manufacturing technologies are frequently assumed to be too complex by many firms. This inhibits the rate of their adoption. Also, many new technologies are so complex that they fail to satisfy the unrealistic expectations of many of those who do decide to adopt them.
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Trialability (Can I try it out?)
Trialability is the degree to which a new technology may be experimented with on a trial basis. Trialability reduces uncertainty and greatly increases the rate of adoption. Low trialability, due to required heavy capital investment, may necessitate more planning and consideration.
Computer integrated manufacturing (CIM) systems by definition are not trialable. Personal computers and fax machines, on the other hand, are trialable. It is very easy, and relatively inexpensive, to buy a single PC or fax machine and to try them out. Suppliers are frequently sensitive to users' desires to "take it for a spin" before investing in large numbers of units. Don't be afraid to take advantage of this and exercise your opportunity for trialability and experimentation. However, our desire for trialability may lead us toward the incremental, islands of automation strategy. This can lead to the problems associated with the huge leap necessary for later integration.
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Observability (Can I see the operations and results?)
Observability is the degree to which the operations and results of a new technology are observable to others. This may also be thought of as the "black box" idea. Generally, the more highly visible the operations and results of a new technology the better. This reduced uncertainty will be positively related to its rate of adoption.
The results of CIM are very observable. Therefore, if the results are good, this is a major advantage. If the results of the CIM implementation are less than attractive to employees and/or managers, however, this will negatively impact the success of the implementation. Considered from a broader overall business point of view, however, it is beneficial to get the "bad news" sooner, rather than later. Highly visible systems and results must be managed and implemented very carefully. As observability increases, so does the need to trial or pilot-test the innovation.
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Re-invention (Can I modify it?)
A sixth characteristic sometimes discussed in conjunction with the original five is re-invention. Re-invention is defined as the degree to which an innovation is changeable or modifiable by the user(s).
In the process of its adoption and implementation, certain innovations can be more or less modified by the users. Clearly, if customisation and incremental improvements via experimentation and adjustments are desired, technologies that are more modifiable will be considered better and will more likely be successfully adopted. However, if standardisation of procedures and/or output is the goal, then technologies that are modifiable may be less attractive and more problematic.
Week 8 - March 24 TELE 450
Agenda:
Housekeeping
· Return IIP1 Due
· Today WSE1 Due
Lecture:
· Porter’s Competitive Advantage of Nations
· Trends in technology
Discussion:
· Online from this week: Rogers’ Diffusion
· Webster – W5-6; W7
· Copyright (Selling Wine Without Bottles)
Michel Porter’s
The Competitive Advantage of Nations
Why are certain countries successful in certain industries?
Four Sets of Competitive Issues
1. Factor Conditions
· Labor
· Capital
· Relevant Services
2. Related and Supporting Industries
· Specific to the line of business
3. Demand Conditions
· The sophistication of the domestic market demand (for this industry’s products/services
4. Firm Strategy, Structure, & Rivalry
· How companies are created, organized, and managed
· Intensity of the domestic competition
Competitive Issues in the
Converging IT/Telecom Industries
USA / Europe /Japan
Factor Conditions1. Capital
2. InfrastructureTelephone
CableWireless
Related Industries
1. Computers
2. Telecommunications
3. Consumer Elec.
4. Content Industries
Competitive Issues in the
Converging IT/Telecom Industries
USA / Europe /Japan
Demand Sophistication1. Business market
2. Consumer
3. Government
4. Education
Domestic Rivalry
Converging markets in:
1. Devices
2. Transmission
3. Software
4. Content
TOTAL
Competitive Issues in the
Converging IT/Telecom Industries
USA / Europe /Japan
Factor Conditions1. Capital
/ H / M / M2. Infrastructure
Telephone
/ H / M / MCable / H / L/M / L
Wireless / M / H / H
5 / 4 / 3
Related Industries
1. Computers / 5 / 1 / 3
2. Telecom / 4.5 / 4 / 3
3. Consumer Elec. / 2 / 3 / 5
4. Content Industries / 5 / 3.5 / 2
4.5 / 3 / 3.5
Competitive Issues in the
Converging IT/Telecom Industries
USA / Europe /Japan
Demand Sophistication1. Business market / 4 / 3 / 2
2. Consumer / 5 / 3 / 2
3. Government / 3 / 4 / 2
4. Education / 4 / 3.5 / 2
4 / 3.5 / 2
Domestic Rivalry
Converging markets in:
1. Devices / 4 / 2 / 4
2. Transmission / 4.5 / 2.5 / 2
3. Software / 5 / 2.5 / 1
4. Content / 5 / 5 / 3
4.5 / 3 / 2
TOTAL
/ 4.5 / 3 / 2Trends in Technology
· Digitization
· Data is overtaking Voice
· Increased Bandwidth Needed in the Network (Transport: Transmission & Switching)
· Increased Bandwidth Coming - Not a Problem (?)
· Broadband Access Needed in Residential Market
· The “Local Loop” is the Bottleneck
· Voice over IP (But customers expect telephony-level QoS)
· New Demand for Wireless
· Broadband Wireless in Local Loop (MMDS, LMDS)
· Explosion of Cellular/PCS and Cellular Apps
· Convergence
Week 9 - March 31 TELE 450
Agenda:
Housekeeping
· Today C2 Revision Due
Lecture:
· Student IIP1 Presentations
Discussion:
· Webster – W5-6; W7
Moschella’s
Wave 3 to Wave 4
The transition from . . .
Network-centric to Content-centric
Means a transition . . .
· From electronic commerce to virtual business
· From Metcalfe’s to ‘law of transformation’
· An industry will be transformed to the extent that it is “digitizable”
· From the wired consumer to individualized services
· From bandwidth to software, info, and services
· From online channels to customer pull
From a converged computer/comm/ consumer elec. industry value chain, to embedded services
Week 10 - April 7 TELE 450
Agenda:
Housekeeping
· Today last 3 Student presentations
· Return: WSE1
Lecture:
· Student IIP1 Presentations
Discussion:
· Webster – W7,8,9
· Castells, Schiller, Habermas
Note:
You are NOT responsible for the student presentations of the FCC-related issues on Exam 2.
Include here the handout I gave you last week about Castells, Schiller, & Habermas – it’s the same material I posted on WebCt about them. Look for something similar about Giddens this week on WebCT.
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