Analysis of the dynamic broadband technology competition. Implications for national information infrastructure development
| Pages | 1223-1241 |
| DOI | https://doi.org/10.1108/IMDS-09-2015-0394 |
| Published date | 11 July 2016 |
| Date | 11 July 2016 |
| Author | Sun Me Choi,Siew Fan Wong,Younghoon Chang,Myeong-Cheol Park |
| Subject Matter | Information & knowledge management,Information systems,Data management systems |
Analysis of the dynamic
broadband technology competition
Implications for national information
infrastructure development
Sun Me Choi
Future Technology and Strategy Research Laboratory,
Electronics and Telecommunications Research Institute (ETRI),
Daejeon, South Korea
Siew Fan Wong
Department of Computing and Information Systems, Sunway University,
Bandar Sunway, Malaysia
Younghoon Chang
Division of Business and Management,
BNU-HKBU United International College, Zhuhai, China, and
Myeong-Cheol Park
Management Science Department, KAIST, Daejeon, South Korea
Abstract
Purpose –The purpose of this paper is to investigate the effect of inter-platform competition on the
adoption of different broadband technologies (i.e. among xDSL, fibre-optic technologies, and hybrid
fibre coaxial (HFC)), examine the direction of the effect, and identify potential technology convergence
and the speed of technology innovation.
Design/methodology/approach –It uses Lotka-Volterra equation to determine the dynamic
competition pattern for xDSL, fibre-optic technologies, and HFC.
Findings –The influence of inter-platform competition on the adoption rate may vary depending on
the market conditions, the phase of the adoption period, and the types of competing technology. Even
though new technology has competitive advantage, it still requires time to acquire market share. Even
though fibre-optic is leading in the market, alternative technologies have also garnered significant
market share in the early stage. Specifically, HFC has gained its own market position, making it a
valuable alternative in the short term. Nonetheless, the market will eventually converge to fibre-optics.
Originality/value –The findings show that inter-platform competition does not always exert positive
influence on broadband adoption as indicated in previous literature. Instead, the influence may vary
from negative to neural. This information is an important knowledge addition to the literature. Overall,
the study has important implications to governmental effort in managing market competitions and in
planning national broadband infrastructure policies. It also provides valuable implications on how
ISPs should strategize their investment in new broadband technologies.
Keywords Broadband access network, Korean broadband policy, Lotka-Volterra equation,
Platform competition, Technology substitution
Paper type Research paper
Introduction
Having advanced network infrastructure is critical to develop a better information an d
communications technology (ICT) ecosystem (Garfield and Watson, 1997; Picot and
Wernick, 2007; Rasmussen, 2001; Chang et al., 2014; Rampersad and Troshani, 2013;
Chang et al., 2015). Recognizing this, many developed and newly industrialized
Industrial Management & Data
Systems
Vol. 116 No. 6, 2016
pp. 1223-1241
©Emerald Group Publis hing Limited
0263-5577
DOI 10.1108/IMDS-09-2015-0394
Received 27 September 2015
Revised 15 January 2016
Accepted 2 March 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
1223
Dynamic
broadband
technology
competition
countries have implemented national information infrastructure policies for their
broadband market as far back as two decades ago (Frieden, 2005; Štefan and Imre,
2012). Most of these policies focus on increasing the adoption rate and incentivizing
investments in the next generation network (Røpke, 2012). One strategy that is often
used to increase rapid growth in broadband adoption is to practice inter-platform
competition (Lee and Brown, 2008). For inter-platform competition to function, it
becomes essential to lower the price, improve the quality of service, and promote
investment and innovation (DotEcon, 2003). Guided by the market trend, research in
the broadband market also tend to focus on topics such as strategies to stimulate the
adoption of broadband technology and methods to facilitate inter-platform competition
as the driving force to encourage the entrance of alternative broadband platforms into
the marketplace (Denni and Gruber, 2007).
As market and consumer demand increases, internet service providers (ISPs) face
challenges to offer not only significantly better quality connections but also to create
more business opportunities especially in a saturated ICT market. To provid e
differentiated services in terms of speed and quality, ISPs need to make prudent
investment decision on broadband technologies (EC, 2013). Among the next generation
broadband technologies, fibre platforms such as fibre-to-the-home (FTTH) and local
area network (LAN) are outstanding options (Lee et al., 2003) because these
technologies can provide reliable speed up to 10 Gbps. However, despite having the
support of the regulators to substitute old technologies, ISPs are careful and
conservative in their investment decisions due to unpredictable future profit and
commercial viability. According to the OECD (2013), digital subscriber line (DSL) is still
the dominant technology with 52.69 per cent share in fixed broadband subscri ptions
and 30.91 per cent share in cable subscriptions. Even though DSL is being gradually
replaced by fibre at a rate of 15.75 per cent, fibre deployment still presents a great
challenge (Briglauer and Gugler, 2013).
Furthermore, despite the increasing attention given to the mobile market, fixed
broadband network is still the basic infrastructure needed to ensure ubiquitous
connection. Delayed substitution to faster and more reliable networks can mean a loss
of competitiveness in the broadband market. In particular, substitution from old
technologies to new fibre platform is important to prepare for future internet services
such as ultra-high density quality contents, video streaming services, and the internet
of things (IoT).
This paper is motivated by the following research questions. Many research in inter-
platform competition found that it positively influences the level of market saturation
and competitive relationship between technologies such as xDSL and hybrid fibre
coaxial (HFC) as well as between xDSL and FTTH (Distaso et al., 2006; Lee and Brown,
2008). We questioned:
RQ1. If the influence will always remain positive regardless of the market condition
and market saturation level.
Another question that we raised is:
RQ2. The effect of inter-platform competition on the speed of technology innovation.
The high-speed internet market no long just concerns about the increment of adoption
rate. Rather, now, it worries about the effect of new technology innovation on the
market. Previous research only covers the rate of competition and adoption. To address
the latest market trend, research needs to start investigating the effect of new
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