The History Of The Mvno Model

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02 Nov 2017

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The emergence of the MVNO model in various markets worldwide varied based on local factors. In some markets, the MVNO concept came about as the result of regulatory intervention. Regulators wished to force established mobile network operators to offer wholesale access to their network to ensure robust competition to benefit the consumer. In other markets, mobile network operators responded to market opportunities to offer their excess capacity at wholesale rates to other entities in an effort to bring in incremental revenue on what would otherwise be unused network capacity. Mobile network operators believed that savings from not providing customer service and marketing would offset any revenue lost by selling network access at wholesale rates.

For some of the earlier markets that embraced the MVNO model, such as in Scandinavia, the regulatory authorities sought to introduce the MVNO model to drive competition into a market that was considered to involve significant market power which existed for early entrant mobile network operators in those countries. Regulators believed that the MVNO model would be a time efficient and cost effective route for telecoms companies to enter the market and therefore bring increased competition for the benefit of the consumer. The MVNOs in Scandinavia ended up having a market share above 10%.

The Innovator’s Dilemma is intended to help a wide range of managers, consultants, and academics in manufacturing and service businesses—high tech or low—in slowly evolving or rapidly changing environments. Given that aim, technology, as used in this book, means the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value. All firms have technologies. A retailer like Sears employs a particular technology to procure, present, sell, and deliver products to its customers, while a discount warehouse retailer like PriceCostco employs a different technology. This concept of technology therefore extends beyond engineering and manufacturing to encompass a range of marketing, investment, and managerial processes. Innovation refers to a change in one of these technologies.

Generally, subscribers are required to give up their number when switching providers. MNP brings a new opportunity to customers by giving them the right to keep their mobile telephone number when switching between mobile telecommunication service providers. The main regulatory objectives of MNP are to bring considerable benefits to consumers of mobile services: lower price, higher quality, greater choice and a greater range of services. Subscribers would be allowed to take advantage of the choices in a more competitive telecommunication market. NERA/Smith (1998) proposed a classification of five potential benefits of introducing MNP: (1) avoided costs of number change in the absence of MNP; (2) benefits of moving to a more preferred operator and obtaining services from them when MNP is introduced (Buehler & Haucap, 2004); (3) intensified competition among providers of mobile telecommunication services benefits non-switching consumers as well as those who actually switch (Aoki & Small, 1999; Galbi, 2001); (4) avoided costs of finding changed number (OFTEL, 1997); and (5) increased investment in number value due to reallocation of property rights (Gans & King, 2001). While the first two benefits are private, the rest of the benefits resulting from the strengthening of competition and increased investment incentives are public. The later ones accrue regardless of whether customers actually port their number or not, but result from the option to do so.

It is striking that conjoint (service profile) 3, where the focus of this service functionality is on the work and personal productivity, likelihood to use, fit into day-to-day routine and enjoyment, received the highest score based on the respondent preferences. This is apparently the far most attractive use case to the respondents. It is even more interesting to notice that conjoint (service profile) 4, where the focus of this service functionality is on the sharing contents and switching between the devices and media, is the least likely to be used service and the least enjoyable service. Table V shows the mean and standard deviation value for the conjoint 3, for more details (see Appendix 1).

The Conjoint procedure requires two filesˇXa data file and a plan fileˇXand the specification of how data were recorded (for example, each data point is a preference score from 1 to 100). The plan file consists of the set of product profiles to be rated by the subjects and should be generated using the Generate Orthogonal Design procedure. The data file contains the preference scores or rankings of those profiles collected from the subjects. The plan and data files are specified with the PLAN and DATA subcommands, respectively. The method of data recording is specified with the SEQUENCE, RANK, or SCORE subcommands. The following command syntax shows a minimal specification:

CONJOINT PLAN='CPLAN.SAV' /DATA='RUGRANKS.SAV'

/SEQUENCE=PREF1 TO PREF22.

CONJOINT PLAN='CPLAN.SAV' /DATA='RUGRANKS.SAV'

If only a plan file or data file is specified, the CONJOINT command reads the specified file and uses the active dataset as the other. For example, if you specify a data file but omit a plan file (you cannot omit both), the active dataset is used as the plan, as shown in the following example:

CONJOINT DATA='RUGRANKS.SAV'

With low-end disruptions, it can be easy to determine the right sequence of product improvements in the up-market march. The low-end disruptor’s marketing task is to extend the lower-cost business model up toward products that do the jobs that more profitable customers are trying to get done. With new-market disruptions, in contrast, the challenge is to invent the upward path, because nobody has been up that trajectory before. Choosing the right improvements is critical to the disruptive march up-market. Here again, job-based segmentation can help.

There are various reasons for managers to target innovations that are not aligned with the way that customers live their lives. These include fear of focus, the demand for crisp quantification and the structure of many retail channels.

With low-end disruptions, it can be easy to determine the right sequence of product improvements in the up-market march. The low-end disruptor’s marketing task is to extend the lower-cost business model up toward products that do the jobs that more profitable customers are trying to get done. With new-market disruptions, in contrast, the challenge is to invent the upward path, because nobody has been up that trajectory before. Choosing the right improvements is critical to the disruptive march up-market. Here again, job-based segmentation can help.

There are various reasons for managers to target innovations that are not aligned with the way that customers live their lives. These include fear of focus, the demand for crisp quantification and the structure of many retail channels.

mental and happens at points of interdependence. Radical sustaining innovations lie at the complex end of the continuum. Only integrated incumbents who control large portions of an industry's value chain can introduce radical sustaining innovations. Integrated companies can master the various interdependencies associated with compatibility, interoperability, and legacy issues. Specialist companies do not have enough control of the architecture to handle such situations. Radical sustaining innovations give incumbent firms an opportunity to dramatically change their relative competitive positions in a marketplace. Launching a radical sustaining innovation puts pressure on other players to upgrade.

Incremental sustaining innovations offer smaller improvements than radical sustaining innovations. Because incremental sustaining innovations occur at interdependent interfaces, integrated companies still have a big advantage. If a new entrant attempts to introduce an incremental sustaining innovation, the incumbent will retaliate. When companies have the same capabilities and motivation, they care about the battle and have the necessary skills to retaliate. This is so in case of sustaining innovation. But the situation is different when there are asymmetries of motivation or skills. This happens when one firm wants to do something that another firm specifically does not want to do. Asymmetries of skills occur when one firm's strength is another firm's weakness.

Per Characteristic 2, which follows directly from Theorems 1 and 2 of Druehl and Schmidt (2006), in this scenario the first buyers would be the specialty users, as shown by the narrow rectangle on the right side of the left frame of Figure 6: The drive would have too little capacity to be of much use for anyone else. Effectively, the current and new products would initially sell to the two opposite ends of the market, nd in this sense the markets for the two products would be ‘‘detached’’ from one another. Interestingly, both products would be priced high, as indicated by the somewhat comparable heights of the rectangles labeled ‘‘Sales of old’’ and ‘‘Sales of new’’ in the left frame of Figure 6.

The engineers then showed their prototypes to marketing personnel, asking whether a market for the smaller, less expensive (and lower performance) drives existed. The marketing organization, using its habitual procedure for testing the market appeal of new drives, showed the prototypes to lead customers of the existing product line, asking them for an evaluation. Thus, Seagate marketers tested the new 3.5-inch drives with IBM’s PC Division and other makers of XT- and AT-class desktop personal computers—even though the drives had significantly less capacity than the mainstream desktop market demanded.

Not surprisingly, therefore, IBM showed no interest in Seagate’s disruptive 3.5-inch drives. IBM’s engineers and marketers were looking for 40 and 60 MB drives, and they already had a slot for 5.25-inch drives designed into their computer; they needed new drives that would take them further along their established performance trajectory.

Organizations create value as employees transform inputs of resources—people, equipment, technology, product designs, brands, information, energy, and cash—into products and services of greater worth. The patterns of interaction, coordination, communication, and decision-making through which they accomplish these transformations are processes.3 Processes include not just manufacturing processes, but those by which product development, procurement, market research, budgeting, planning, employee development and compensation, and resource allocation are accomplished.

Processes differ not only in their purpose, but also in their visibility. Some processes are "formal," in the sense that they are explicitly defined, visibly documented, and consciously followed. Other processes are "informal," in that they are habitual routines or ways of working that have evolved over time, which people follow simply because they work—or because "That’s the way we do things around here." Still other methods of working and interacting have proven so effective for so long that people unconsciously follow them—they constitute the culture of the organization. Whether they are formal, informal, or cultural, however, processes define how an organization transforms the sorts of inputs listed above into things of greater value. Processes are defined or evolve de facto to address specific tasks. This means that when managers use a process to execute the tasks for which it was designed, it is likely to perform efficiently. But when the same, seemingly efficient process is employed to tackle a very different task, it is likely to seem slow, bureaucratic, and inefficient. In other words, a process that defines a capability in executing a certain task concurrently defines disabilities in executing other tasks.4 The reason good managers strive for focus in their organizations is that processes and tasks can be readily aligned.



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