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The competition among mobile network operators in the telecommunication supply chain

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  • Cricelli, Livio
  • Grimaldi, Michele
  • Ghiron, Nathan Levialdi

Abstract

In the mobile telecommunication sector, the high competitiveness has increased the complexity of strategic interactions among operators. As the vertical integration has become anything but a choice and not a compelling technical solution, the contest takes place at different levels of the components of the operator value chain: the network infrastructure, the service development and supply, and the relationship with consumers. Mobile virtual network operators act as retailers and concentrate on the last segment of the value chain by establishing commercial agreements with hosting network operators, which act as manufacturers, to get access to radio communications infrastructure. Productive processes of mobile services offered by operators are different and this difference is imperceptible to customers. Processes difference mainly consists in the infrastructural diversity of the operators and implies different consequences on each network service element. A model has been defined to analyze the consequences of such diversity in the competition among HNOs, MNOs, and MVNOs by focusing the attention on the characteristics of the call path, in dependence of the types of operators. In fact, many variables interact to define the call path, such as marginal costs and revenues, infrastructural investments, and interconnection charges among operators. The analysis of the results, obtained by the model, gives information on variations of retail prices, market shares, and profit allotment, to adopt the proper strategies. In particular, the model results shed light on how certain MVNOs should enter the markets and adopt a collaborative strategy with HNOs. The model owns the capability of being applied to different contexts, thus representing for the regulator a potential instrument of relevant usefulness.

Suggested Citation

  • Cricelli, Livio & Grimaldi, Michele & Ghiron, Nathan Levialdi, 2011. "The competition among mobile network operators in the telecommunication supply chain," International Journal of Production Economics, Elsevier, vol. 131(1), pages 22-29, May.
    • Handle: RePEc:eee:proeco:v:131:y:2011:i:1:p:22-29
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    2. Basaure, Arturo & Suomi, Henna & Hämmäinen, Heikki, 2014. "Effects of transaction and switching costs on mobile market performance," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106830, International Telecommunications Society (ITS).
    3. Son, Pham Hai & Son, Le Hoang & Jha, Sudan & Kumar, Raghvendra & Chatterjee, Jyotir Moy, 2019. "Governing mobile Virtual Network Operators in developing countries," Utilities Policy, Elsevier, vol. 56(C), pages 169-180.
    4. Chen, Xu & Wang, Xiaojun & Chan, Hing Kai, 2016. "Channel coordination through subsidy contract design in the mobile phone industry," International Journal of Production Economics, Elsevier, vol. 171(P1), pages 97-104.
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    6. Mihaela STEFAN & Andreea MARIN-PANTELESCU & Mirela TÃœRKES, 2018. "Strategic Management Of The Romanian Telecommunication Services," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 451-461, November.
    7. Greco, Marco & Cricelli, Livio & Grimaldi, Michele, 2013. "A strategic management framework of tangible and intangible assets," European Management Journal, Elsevier, vol. 31(1), pages 55-66.
    8. Matinmikko, Marja & Latva-aho, Matti & Ahokangas, Petri & Seppänen, Veikko, 2018. "On regulations for 5G: Micro licensing for locally operated networks," Telecommunications Policy, Elsevier, vol. 42(8), pages 622-635.
    9. Vuojala, Heli & Mustonen, Miia & Chen, Xianfu & Kujanpää, Kaisa & Ruuska, Pekka & Höyhtyä, Marko & Matinmikko-Blue, Marja & Kalliovaara, Juha & Talmola, Pekka & Nyström, Anna-Greta, 2020. "Spectrum access options for vertical network service providers in 5G," Telecommunications Policy, Elsevier, vol. 44(4).
    10. Cricelli, Livio & Grimaldi, Michele & Levialdi Ghiron, Nathan, 2012. "The impact of regulating mobile termination rates and MNO–MVNO relationships on retail prices," Telecommunications Policy, Elsevier, vol. 36(1), pages 1-12.

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