Edited by Hitoshi Mitomo, Hidenori Fuke and Erik Bohlin
Erik Bohlin, Hidenori Fuke and Hitoshi Mitomo
Anders Henten and Reza Tadayoni
The aim of the paper is to examine the increasing dominance of IT companies in the converging ICT industry and, on the basis of this development, to contribute to extending the theoretical understanding of market and industry convergence in the ICT area. The term convergence is often used, but relatively little theory concerning convergence has been developed except for the basic differentiation between convergence based on substitution and convergence based on complementation. The framework proposed in the paper is a combination of the complementation/substitution framework with the structuralist concept of articulation used on modes of operation of companies from different parts of the ICT industries and the resource based view on companies extended to a sector perspective and the path dependent developments of the IT, telecoms and media sectors. Two kinds of empirical evidence are examined in order to discuss the emerging relations of dominance in the ICT area. First, there is a comparison of the basic technological properties of Internet communications and telecoms. Furthermore, there are two cases: One on the smartphone market and one on OTT TV. The two cases have an exemplary character illustrating the increasing dominance of the IT area in relation to telecoms and broadcasting, respectively.
Keisuke Takachi and Toshiya Jitsuzumi
In the Japanese mobile telecommunications market, consumers are increasingly purchasing smartphones such as iPhones and Android phones. However a detailed analysis of the business models of Apple’s iPhone and Google’s Android phone reveals significant differences between their policies regarding content aggregation. Apple only integrates its own content aggregator and never permits third-party content aggregators, whereas Google accepts competitive third-party aggregators besides its own content aggregator. In this study, we considered the influence of this difference on the performance of the mobile broadband industry and examined the need for policy intervention to maximise the total surplus. We established an economic model and analysed the profit maximisation of content aggregator(s) as well as monopolistic smartphone makers, to deduce the need for policy intervention. The results obtained are as follows. First, a smartphone maker tends to give incentives to the content aggregator(s) when the consumers’ valuation of the content variety is higher. Second, a business ecosystem with a smartphone maker and two competitive content aggregators produces a larger (smaller) total surplus than an ecosystem of a smartphone maker that integrates content aggregation when consumers do (do not) value the content variety very much. Third, when the consumers’ valuation of the content variety is at a medium level, a smartphone maker that integrates content aggregation enjoys a larger profit but produces a smaller total surplus than the combination of a smartphone maker and two competitive content aggregators. Given the current market environment in which smartphone makers are actually providing incentives to content aggregators, we propose the separation of content aggregation from vertically integrated smartphone makers. The relevant regulatory authorities need to establish an arena to discuss inclusive policy actions such as the promotion of open access, for third-party content aggregators, to the smartphone platforms.
Digital technologies are core technologies to sustain the development of information and telecommunication (IT) industries. ‘Digital Power’ is economic power developed by digital technologies, and it becomes the source of economic power in the IT industries. In this paper, the impact of ‘Digital Power’ on the telecommunication industries is examined, and then the function of regulator in the smart device age is reconsidered. First, the evolution of the industries is categorised into three period; they are age of network, age of platform and age of smart devices. Secondly, the function of regulators in each period is reexamined. Through this process, the development of government and business relationships is cleared. All telecommunication regulators have been organised in the age of voice telephone and analog broadcasting. In the conclusion, we will discuss how such traditional regulators cope with environmental change or not.
Hiroki Idota, Teruyuki Bunno and Masatsugu Tsuji
Social media such as blogs (a short form of ‘web log’) and SNSs (Social Network Service/Social Network Site) has recently been introduced by many firms as a means of obtaining and sharing information inside the firm, in particular to promote product and process innovation. This paper attempts to examine the relationship between social media inside the firm and product innovation and focuses on the following research questions: (1) whether social capital influences the use of social media; (2) whether social media promotes product innovation; and (3) how the effect of social media on product innovation differs between the manufacturing and service industries. The analysis clarifies that social capital in the firm is indispensable for the effective use of social media. Attitudes toward innovation and social media are requirements for firms in promoting product innovation. If employees understand the target of the firm and collaborate with each other, SNSs can function well. If social capital is well empowered in the firm, the members can send and receive information freely. Top management should thus make an effort to raise the level of social capital and nurture a reciprocal organisational culture for social media use inside the firm. In so doing, the following measures are required: (1) the learning of ICT skills for SNSs; (2) the establishment of ethical rules regarding SNSs; (3) the commitment of top management; and (4) guidelines for SNS use, such as how to use SNSs in the work context. The paper also finds that social media for product innovation is more important in the service industry than in manufacturing. Social media makes it easy to obtain information from customers and share it among related sections and thus social media enables the expansion of channels for making direct contact with the customer in the service industry.
Kyoung-Youn Na and Chang-Ho Yoon
This study examines the impact of ICT growth on the productivity effects of transportation infrastructure. Using dynamic panel data of OECD member countries, the study finds econometrically meaningful results on examining the complementarity between ICT and transportation infrastructures. The network effect of growth of motorway infrastructure in advanced countries tends to accelerate when the ICT network grows beyond a certain threshold level.
On March 11, 2011, the Great East Japan Earthquake hit Japan’s Tohoku area, resulting in severe damage to public services. The subsequent blackout around base and telephone stations rendered telecommunication services nonfunctional for a certain period. In light of this, government departments have undertaken several studies on this issue, which include investigating possible countermeasures against future earthquakes. However even for disaster mitigation, it is important to strike a balance between cost and benefits. Given this situation, this analysis investigates Japanese peoples’ preferences for taking countermeasures against disasters in the field of telecommunication by using data from an online survey. A review of the literature on the telecommunication field reveals that there are no empirical studies on estimating the willingness to pay (WTP) for countermeasures in the telecommunication field. The cost for and quantity of countermeasures supplied could be forecasted/estimated based on various available technical information; that is, by combining information on the WTP for countermeasures, the question of the extent to which the countermeasures that should be carried out are made available could become clearer. The analysis revealed the following results. First, WTP for measures that prevent the suspension of telecommunication services in the event of a disaster is not insignificant. Second, a higher priority should be placed on mobile (voice) services when formulating appropriate backup plans for communication services during times of disasters. Third, estimation results of victims’ WTP reveal that a backup provision within a 24-hour period would be beneficial even when suspension prevention is difficult. Finally, there was a national consensus on the importance of taking the necessary countermeasures so as to ensure that services are functional even in the event of a disaster.
Hitoshi Mitomo, Tokio Otsuka and Mikio Kimura
This paper aims to show empirical evidence of how media and ICT (Information and Communication Technology) motivate people to take after-quake initiatives such as collecting information, preparing for another disaster and participating in volunteer activities and making donations. Assuming that information provided by media and ICT is purely rational and influential because irrelevant information is discarded, the impact of the media information is to be analysed in conjunction with direct and indirect influences of the disaster and the existence of communities. The Great East Japan Earthquake hit the northern part of Japan on March 11, 2011. Some sixteen thousand lives were lost and three thousand people are still missing as of May 23, 2012. One of the distinct features of the earthquake with respect to the role of ICT and media is that television and other image media provided plentiful high-resolution visual images of the earthquake and the subsequent tsunami to other people. In addition, social networking services performed important role providing and exchanging information among people by complementing the role of mass media. In contrast, voice calls on mobile phones, the most popular communication means, were pretty much useless in terms of establishing communication due to heavy traffic on telephone lines. In the paper, the rationality of media information is defined as the “Pythagorean Effect” as it can be compared to his addiction to “rational numbers”. People faced with such information are assumed to be more motivated to take immediate action after the disaster. Structural equation modelling was applied to construct a model to examine the impact of media information. An online questionnaire survey was carried out over sample panels pre-registered in a survey research company. The result implies that media information has a different contribution to post-quake behaviour as compared to real experience in that it triggers information gathering while damages from the earthquake provoke countermeasures against possible aftermath. They both have the same influence on altruism. In addition, real communities motivate people to collect information. In contrast, virtual communities induce altruistic behaviour.
Rafael López, Teodosio Pérez-Amaral, Teresa Garín-Muñoz and Covadonga Gijón
From an economic perspective, the ultimate goal of a market is twofold: to provide consumers with a wide range of available options and to allow consumers to freely choose among them based on information. The first part is obtained by promoting competition while the second part is ensured through consumer protection. Regulators of mobile telecommunications markets have been particularly successful in promoting and securing competition and are now turning their attention to consumer protection. This is so because competition by itself does not ensure market efficiency. In fact, the existence of demand-side market failures, such as incomplete information and consumers' behavioural biases, usually lead to an inefficient outcome in competitive markets. In this paper we focus on the particular issue of low-quality customer service that, according to widespread evidence, prevails in the mobile telecommunications industry. We provide theoretical support to this empirical observation by using simple game theoretical models where inefficient low-quality customer service levels are obtained as part of an equilibrium strategy profile for the firms. In our models, this negative result is due to the existence of incomplete information: when signing a mobile phone contract, consumers cannot observe (ex ante) the operator's customer service quality and therefore firms may lack incentives to provide (ex post) high quality customer service levels. As a benchmark, we start by studying the simple case of a one-shot monopoly market and show that incomplete information leads to an inefficient outcome. We then show that the negative result continues to hold under repeated interaction and that it does not necessarily vanish with competition. This is particularly important in terms of policy implications because it suggests that the inefficiency should be solved through regulation via consumer protection.