TRANSITION PATHS TO NEXT-GENERATION WIRELESS SERVICES

Johannes M Bauer, and Yu-Chieh Lin

1/01/2005
(Original Publish Date: 10/1/2004)

We approach our theme both theoretically and empirically using the example of wireless communications in the European Union and in the United States. Using a neo-institutional economic approach, we first develop a framework that allows exploring the dynamic interactions of technology, policy, and business strategy under conditions of uncertainty. We then examine how policy choices affect the overall evolution of the wireless industry. Multiple technology platforms for the configuration of nextgeneration wireless services are available, including 2.5G, 3G, licensed 4G and unlicensed applications, such as WLANs. These platforms differ in important technical and economic characteristics. The mix of technology will be influenced by the legal and regulatory framework of the industry. The most important aspect of public policies towards wireless include: (1) spectrum management (e.g., initial assignment via auction or beauty contest, existence of secondary markets), (2) the specific market design (e.g., permission of network sharing, obligation to provide open access to mobile virtual network operators, ability to use 2G spectrum for 3G services), and (3) the standardization regime (e.g., mandatory or industry-driven).