The International Handbook of Telecommunications Economics, Volume II
Edited by Gary Madden
Chapter 1: Innovation in advanced telecommunications networks
1. Innovation in advanced telecommunications networks Cristiano Antonelli INTRODUCTION Advanced telecommunications provide an interesting area of analysis for the economics of innovation.1 The rate of technological change in advanced telecommunications since the late 1950s has been rapid. This technical change has led to general-purpose technological systems with a wide scope for application. Further, technological change is characterized by the introduction and market selection of an array of technological innovations, each of which exhibits high levels of complementarity and interrelatedness with diﬀerent technologies. Such process and organizational innovation also changes the production mix of ﬁrms and the composition of their markets. This array of technological innovations is characterized by the complementarity of innovative eﬀorts of a variety of players, each with its own localized ﬁeld of activity. The emergence of such a cluster of complementary innovations appears to be the outcome of the sequential introduction of interdependent innovations along deﬁnable paths shaped by a number of factors. They include complementarities (technological externalities and economies of scope), advantages of learning in speciﬁc areas of application; competence accumulated by the dynamics of learning to do and use; and the irreversibility and indivisibility associated with signiﬁcant portions of the material and immaterial capital structure of existing ﬁrms. The next section presents an interpretative framework and considers the role of super-ﬁxed productive factors and the dynamics of accumulation of localized knowledge and competence as the key focusing devices for understanding the market construction of technology change (Appendix A presents...
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