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The rise and fall of the competitive local exchange carriers in the U.S.: An institutional perspective

Author

Listed:
  • Qing Hu

    (Florida Atlantic University)

  • C. Derrick Huang

    (Florida Atlantic University)

Abstract

The debacle of the telecommunications industry at the turn of the millennium resulted in significant consequences for investors, workers, financial institutions, telecom companies, and the economy in general worldwide. In the midst of the telecom bubble, the CLECs (competitive local exchange carriers) adopted similar or identical business plans and saturated the market, which resulted in destructive competition. In this study, we investigate the isomorphic business models of the CLECs from the perspectives of the new institutional theory. We argue that the combined coercive, mimetic, and normative institutional forces exerted on the companies by the actors who controlled the funding, managed the business, and provided the information fashioned the isomorphic CLEC business models, which in turn contributed to the demise of these companies and thus the burst of the telecom bubble. Evidence of the institutional influences on CLECs and the actors exerted the influences are presented and their consequences are discussed.

Suggested Citation

  • Qing Hu & C. Derrick Huang, 2006. "The rise and fall of the competitive local exchange carriers in the U.S.: An institutional perspective," Information Systems Frontiers, Springer, vol. 8(3), pages 225-239, July.
    • Handle: RePEc:spr:infosf:v:8:y:2006:i:3:d:10.1007_s10796-006-8781-1
    DOI: 10.1007/s10796-006-8781-1
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    References listed on IDEAS

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    1. Koski, Heli A. & Majumdar, Sumit K., 2002. "Paragons of virtue? Competitor entry and the strategies of incumbents in the U.S. local telecommunications industry," Information Economics and Policy, Elsevier, vol. 14(4), pages 453-480, December.
    2. Alexander Osterwalder & Yves Pigneur, 2002. "An e-Business Model Ontology for Modeling e-Business," Industrial Organization 0202004, University Library of Munich, Germany.
    3. Shane Greenstein & Michael Mazzeo, 2003. "Differentiation Strategy and Market Deregulation: Local Telecommunication Entry in the Late 1990s," NBER Working Papers 9761, National Bureau of Economic Research, Inc.
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    2. Kim, Dokyung & Kim, Seongcheol, 2019. "An institutional analysis of environmental management in the Korean mobile communications industry," Telecommunications Policy, Elsevier, vol. 43(10).
    3. Siddhartha Menon, 2021. "An Institutional Analysis of TMP Regulation in India," Review of Policy Research, Policy Studies Organization, vol. 38(3), pages 300-325, May.
    4. Kim, Dokyung & Kim, Seongcheol, 2018. "An Institutional Analysis of Environmental Management in Korean Mobile Communications Industry," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190410, International Telecommunications Society (ITS).
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    7. Glass Victor, 2019. "The Net Neutrality Debate is Outdated: Time for a New Wider View," Review of Network Economics, De Gruyter, vol. 18(4), pages 243-276, December.

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