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Bundling, Differentiation, Alliances and Mergers: Convergence Strategies in U.S. Communication Markets

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  • Bauer, Johannes M.

Abstract

Convergence is a multi-facetted phenomenon affecting the technological basis of information and communication industries, the boundaries of existing and new markets, and the organization of service providers. Convergence in substitutes will tend to increase the intensity of competition but convergence in complements may have the opposite effect. Given the economics of advanced communication industries, convergence necessitates strategies to overcome the risk of commodification at the level of networks, applications, and services. The paper examines bundling, differentiation, alliances, and merger strategies adopted by North American service providers in response to convergence. Service providers'opportunities and risks in the emerging environment differ considerably, with cable and telephone service providers presently in stronger positions than wireless service providers, broadcasters, and satellite service providers. New entrants such as Vonage, Skype, Google, and Yahoo have high disruptive potential but remain disadvantaged without their own access networks.

Suggested Citation

  • Bauer, Johannes M., 2005. "Bundling, Differentiation, Alliances and Mergers: Convergence Strategies in U.S. Communication Markets," MPRA Paper 2515, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2515
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    File URL: https://mpra.ub.uni-muenchen.de/2515/1/MPRA_paper_2515.pdf
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    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. Farrell, Joseph & Weiser, Philip J., 2003. "Modularity, Vertical Integration, and Open Access Policies: Towards a Convergence of Antitrust and Regulation in the Internet Age," Department of Economics, Working Paper Series qt4dh7q2dd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    3. Koski, Heli A. & Majumdar, Sumit K., 2000. "Convergence in telecommunications infrastructure development in OECD countries," Information Economics and Policy, Elsevier, vol. 12(2), pages 111-131, June.
    4. Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 159-187.
    5. D. Geradin, 2001. "Regulatory issues raised by network convergence: The case of multi-utilities," Competition and Regulation in Network Industries, Intersentia, vol. 2(1), pages 113-127, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. repec:gam:jsusta:v:8:y:2016:i:5:p:469:d:69883 is not listed on IDEAS
    2. Kyoungsun Lee & Yuri Park & Daeho Lee, 2016. "Effect of the ICT Ecosystem Structure on the Sustainable Growth of ICT Firms: A Metafrontier Analysis on China, South Korea, the United States, and Japan," Sustainability, MDPI, Open Access Journal, vol. 8(5), pages 1-9, May.

    More about this item

    Keywords

    convergence; bundling; differentiation; alliances; mergers;

    JEL classification:

    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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