This work arose in the course of Advanced Microeconomics taught by Ms. Prof. Dr. Alina Badulescu at the University of Oradea.
The work focuses on the telecommunications market, through market analysis and study of oligopolistic characteristics.
This document summarizes the history and evolution of Nokia Corporation from 1865 to 2012. It discusses key details about Nokia's leadership, finances, and operations. It also examines Nokia's decline in the smartphone market due to factors like lack of innovation, inadequate assessment of shifting consumer demands towards touchscreen smartphones, and failure to adopt the Android operating system in a timely manner. The document analyzes Nokia's strengths as well as changes it needs to make to its strategy in order to compete effectively in the future.
Nokia was once the dominant mobile phone company but lost significant market share as smartphones became popular. The document analyzes reasons for Nokia's decline, including complacency, lack of innovation in transitioning from Symbian to Windows, and not creating user-friendly smartphones like Apple. In contrast, Samsung embraced Android, launched iPhone-like smartphones for different segments, and saw large gains in market share over Nokia from 2010 to 2012. The SWOT analysis identifies strengths like experience but also weaknesses like less stylish low-cost phones that lacked the appeal of competitors' products.
Nokia was founded in 1898 and is headquartered in Espoo, Finland. It employs over 68,500 people globally and offers products in 150 countries. Nokia was a leader in mobile phones but lost market share due to its slow response to smartphones and reliance on the Symbian operating system. It now holds about 15% of the global market share. Strengths include its experience and brand reputation, but weaknesses include poor smartphone designs and low performance. Opportunities exist in growing markets, while threats include competition from other manufacturers and operators.
- Nokia was originally founded in 1865 as a paper mill and has since expanded into various industries including rubber, cables, and telecommunications.
- It became the world's largest mobile phone manufacturer during the late 1990s and 2000s but its market share declined in the smartphone era as it failed to keep up with Apple and Android.
- In 2013, Nokia acquired Siemens' stake in their joint venture Nokia Siemens Networks, betting on the network equipment business as its smartphone business struggled. The acquisition was aimed to help Nokia regain momentum and focus on connectivity infrastructure.
Vodafone Group plc is a global telecommunications company headquartered in the UK. It operates networks in over 30 countries and owns 45% of Verizon Wireless in the US. Vodafone has around 332 million subscribers worldwide, making it the world's largest mobile telecommunications company by revenue and second largest by subscribers. The company derives its name from "voice" and "data" services provided over mobile phones. It has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 index.
Nokia revitalization - Strategy to revitalize NokiaVinit Gandhi
A revitalization strategy for Nokia from a B School Graduate view. Intent of this exercise was to provide with an insight on how revitalization can be performed.
Nokia is a large mobile phone company founded in 1865 in Finland. It was formerly the largest mobile phone manufacturer in the world, but has faced increasing competition from Apple and Android devices. A SWOT analysis identifies Nokia's strengths as its large distribution network and qualified workforce, but also notes weaknesses such as poor promotion to lower socioeconomic groups and limited after-sales support. Opportunities exist to expand their product line to different price points. Key threats are maintaining market position against competitors and providing competitive services and features.
This document summarizes the history and evolution of Nokia Corporation from 1865 to 2012. It discusses key details about Nokia's leadership, finances, and operations. It also examines Nokia's decline in the smartphone market due to factors like lack of innovation, inadequate assessment of shifting consumer demands towards touchscreen smartphones, and failure to adopt the Android operating system in a timely manner. The document analyzes Nokia's strengths as well as changes it needs to make to its strategy in order to compete effectively in the future.
Nokia was once the dominant mobile phone company but lost significant market share as smartphones became popular. The document analyzes reasons for Nokia's decline, including complacency, lack of innovation in transitioning from Symbian to Windows, and not creating user-friendly smartphones like Apple. In contrast, Samsung embraced Android, launched iPhone-like smartphones for different segments, and saw large gains in market share over Nokia from 2010 to 2012. The SWOT analysis identifies strengths like experience but also weaknesses like less stylish low-cost phones that lacked the appeal of competitors' products.
Nokia was founded in 1898 and is headquartered in Espoo, Finland. It employs over 68,500 people globally and offers products in 150 countries. Nokia was a leader in mobile phones but lost market share due to its slow response to smartphones and reliance on the Symbian operating system. It now holds about 15% of the global market share. Strengths include its experience and brand reputation, but weaknesses include poor smartphone designs and low performance. Opportunities exist in growing markets, while threats include competition from other manufacturers and operators.
- Nokia was originally founded in 1865 as a paper mill and has since expanded into various industries including rubber, cables, and telecommunications.
- It became the world's largest mobile phone manufacturer during the late 1990s and 2000s but its market share declined in the smartphone era as it failed to keep up with Apple and Android.
- In 2013, Nokia acquired Siemens' stake in their joint venture Nokia Siemens Networks, betting on the network equipment business as its smartphone business struggled. The acquisition was aimed to help Nokia regain momentum and focus on connectivity infrastructure.
Vodafone Group plc is a global telecommunications company headquartered in the UK. It operates networks in over 30 countries and owns 45% of Verizon Wireless in the US. Vodafone has around 332 million subscribers worldwide, making it the world's largest mobile telecommunications company by revenue and second largest by subscribers. The company derives its name from "voice" and "data" services provided over mobile phones. It has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 index.
Nokia revitalization - Strategy to revitalize NokiaVinit Gandhi
A revitalization strategy for Nokia from a B School Graduate view. Intent of this exercise was to provide with an insight on how revitalization can be performed.
Nokia is a large mobile phone company founded in 1865 in Finland. It was formerly the largest mobile phone manufacturer in the world, but has faced increasing competition from Apple and Android devices. A SWOT analysis identifies Nokia's strengths as its large distribution network and qualified workforce, but also notes weaknesses such as poor promotion to lower socioeconomic groups and limited after-sales support. Opportunities exist to expand their product line to different price points. Key threats are maintaining market position against competitors and providing competitive services and features.
Nokia was once the dominant player in the mobile phone market but saw its market share collapse due to failure to innovate and keep up with competitors like Apple and Android phones. When Stephen Elop became CEO in 2010, he described Nokia's position as being on a "burning platform" but his strategies, like switching solely to the Windows OS, further deteriorated Nokia's performance. Elop oversaw a 40% drop in revenues, 95% drop in profits, and 60% drop in share price during his tenure, leading some to argue he deliberately devalued Nokia to make it cheaper for Microsoft to acquire, his former employer. By 2013, Microsoft purchased what remained of Nokia's business for $7.2 billion.
LG is a South Korean multinational conglomerate corporation founded in 1947. It is headquartered in Seoul, South Korea and operates in various industries including electronics, chemicals, telecommunications, and more. LG initially started as a chemical company and later diversified into consumer electronics. It has over 200,000 employees worldwide and annual revenue of $143 billion. LG has established itself as a leading global brand through its wide range of innovative products and extensive global distribution network. However, it faces intense competition in the consumer electronics industry from other major players like Samsung.
Airtel and Vodafone are two major telecommunications companies operating globally. Airtel has over 261 million subscribers across 20 countries as of 2012, making it the world's third largest mobile operator. It is the largest mobile provider in India with over 185 million subscribers. Vodafone has over 439 million subscribers as of 2011, making it the second largest mobile operator globally. Both companies utilize similar marketing mix strategies of providing a range of products and services, establishing widespread distribution networks, employing flexible pricing, and conducting significant promotional activities.
presentation on the history of nokia then discuss its five mistakes that leads the nokia to decline and at he end what lession we learnt from nokia decline
Nokia Corporation is a multinational telecommunications company headquartered in Espoo, Finland. It was founded in 1865 and started as a wood pulp manufacturer before expanding into the communications industry. Key details from the document include that Olli-Pekka Kallasvuo is the CEO, Jorma Ollila is the Chairman, and Nokia launched its first GSM handset in 1992. The document provides an overview of Nokia's history and operations.
Product Life Cycle-Nokia Example[Krunal Saija]Krunal Saija
Product Life Cycle-Nokia Example
Starting era of Nokia mobile company, decline period and collaboration with Microsoft.
Discuss about business strategy of Nokia and wrong decision which they had made in business
Reason for Success and Failure
Trade Cycle of Nokia
Comeback of Nokia
SWOT Analysis
Marketing Mix
Porter's Five Force Model
Comeback Strategies
Recommendations
Nokia was once the dominant mobile phone manufacturer, holding over 30% of the global market share. However, its market share dropped below 30% in 2011 as it struggled to compete with smartphones running Android and iOS that had more advanced apps and processors. In an attempt to turn things around, in 2011 Nokia partnered with Microsoft to use the Windows Phone platform for future devices. However, Nokia remained dependent on Microsoft and faced strong competition from Apple and Google, making a full recovery difficult. The partnership aimed to combine Nokia's manufacturing and distribution with Microsoft's software expertise to build a new mobile ecosystem.
vodafone , vodafone report, project on vodafone, service operation managementMicky Lyf
Vodafone Group plc is a British multinational telecommunications company headquartered in London and with its registered office in Newbury, Berkshire. It is the world's second largest mobile telecommunications company measured by both subscribers and 2013 revenues (behind China Mobile), and had 434 million subscribers as of 31 March 2014.
Vodafone owns and operates networks in 26 countries and has partner networks in over 50 additional countries. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in 150 countries.
Vodafone has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £89.1 billion as of 6 July 2012, the third-largest of any company listed on the London Stock Exchange.It has a secondary listing on NASDAQ.
Vodafone is a global mobile telecommunications company headquartered in the UK. It has a presence in over 30 countries and partners with over 40 more. The document discusses Vodafone's history, vision, products/services, key milestones, strategies employed by different CEOs, benefits of its international scope, and SWOT analysis. It recommends strategies for Vodafone to derive increased value from its international portfolio, such as entering entertainment and partnering locally.
Nokia was originally founded as a paper mill but became involved in telecommunications in the 1970s-80s. They released the first handheld mobile device in 1987 and digital device in 1992, becoming the leader in the mobile phone industry by 1998. Recently their market standing has fallen. This document describes research into factors affecting Nokia's current mobile phone market presence using exploratory, descriptive, and causal methods. Surveys found Apple was most considered brand and quality was most important phone feature. Results showed Apple had highest perceived quality while Nokia was lowest. The experiment found no statistically significant differences in brand quality means.
Airtel faces competition from Reliance Jio in India. Airtel outsources operations except marketing, sales and finance. Equipment is provided by Ericsson and Nokia, IT support by IBM. Transmission towers maintained by subsidiaries.
While Airtel and Jio both have resources and brands, Airtel has a more effective process which is most difficult for competitors to copy. Airtel has advantages over Jio as India's largest telecom player with market leadership, global recognition, and pan-India presence through strategic alliances.
Airtel's CRM strategy focuses on long-term customer connectivity and service to increase revenue through acquisition, cross-selling, and more efficient call centers
LG Electronics entered the North American washing machine market in 2002 with its front-load TROMM model. It aimed to establish its LG brand through innovation, meeting American consumer expectations, and building brand identity centered on trust, innovation, people, and passion. LG faced challenges in consumer perception of foreign brands and establishing its brand. Its strategy focused on innovation, high-growth segments, and patented steam technology. It sought to segment consumers and target environmentally conscious, fashion conscious, and homemaker groups with an efficient, premium product.
Sony Corporation is a leading Japanese manufacturer of electronic devices, games and entertainment products which incurred huge amount of loss for four consecutive years. The company declared that it incurred a total loss of 6.4 billion dollars for the year end in March 2012. The company’s main weakness lies in the numerous product lines In addition to this problem, the company also faces both internal and external challenges. Thus, a SWOT analysis and Porter’s Five Forces Analysis is carried out to understand the basic strengths and weaknesses of the organization. This helped to find out the basic reason behind the poor performance of Sony Corporation. Based on the analysis, a-five year recommendation plan have been framed that consist of four basic steps. Following this plan would help the organization to improve it current position in market.
Porters five force analysis for telecom industryAkash Agamya
The telecom industry in India is highly competitive with over 15 players. The top players, Airtel, Vodafone and Idea, capture over 75% of the market share. While competition is intense, the industry is still growing with a focus on expanding to rural areas. The financials of the top players remain strong, however future consolidation in the industry is expected as players seek to improve margins. Overall, the telecom sector in India is one of the fastest growing globally due to strong competition and regulatory reforms that have promoted further expansion.
Bharti Airtel is the largest cellular service provider in India, with over 261 million subscribers across 20 countries as of 2012. Founded in 1995 by Sunil Bharti Mittal, Airtel provides mobile and fixed line services, broadband, DTH, and enterprise services. It offers 2G, 3G, and 4G mobile services, as well as fixed line, broadband, DTH, and enterprise services. Airtel has expanded its operations to several African countries like Nigeria, Burkina Faso, Chad, Congo Brazzaville, and Democratic Republic of Congo, and recently launched services in South Africa and Cameroon. The company's objectives are to put customers at the heart of everything
Idea Cellular provides wireless services in India and has grown from 7 million subscribers in 2006 to over 89 million in 2011; it aims to rollout 3G services to 200 towns by 2011 and 4,000 towns by 2012 to offer higher data services. The internship report discusses Idea's operations, competition, pricing strategies for 2G and 3G services, and the intern's targets and achievements in promoting Idea's products and services.
Samsung Electronics is a South Korean electronics company and the flagship subsidiary of Samsung Group. It conducts SWOT analysis which reveals its main strengths are strong brand loyalty, market position, and supplier relationships, while weaknesses include strong competition and need for improved marketing. Opportunities include favorable economic conditions and technological advances. Main threats are frequent legislation changes and high industry innovation. The document discusses Samsung's segmentation, targeting, positioning, and marketing mix strategies. It focuses on maintaining leadership in the TV and other consumer electronics markets through continuous innovation.
Samsung Electronics is the largest manufacturer of electronic devices and components in the world. It is headquartered in South Korea and employs over 300,000 people globally. While it initially specialized in electronics components, it now produces smart devices utilizing new technologies such as 5G. Between 2012-2016, Samsung's annual revenue increased while profits fluctuated, experiencing declines in 2014-2015 due to failures to meet customer expectations in mobile device sales. The company focuses on employee skill development, passion, integrity, and prosperity.
This document provides an overview of key concepts used in industrial economics. It defines the firm as an organization engaged in productive activity for profit. The industry is defined as a group of firms producing similar or substitute products for a common market. The market is where buyers and sellers transact for goods and services, with supply and demand equalizing price. Different types of markets are business-to-business and business-to-consumer, and markets can be segmented.
Competition policy, cartel enforcement and leniency programDr Danilo Samà
Competition policy, cartel enforcement and leniency program
Author:
Dr Danilo Samà (LUISS “Guido Carli” University)
Abstract:
The present assessment focuses on the antitrust action in detecting and fighting oligopolistic collusion, analyzing the development of the innovative and modern leniency policy. Following the examination of the main conditions and reasons for cartel stability and sustainability, our attempt is to comprehend under which circumstances leniency program represents a functional and successful tool for preventing the formation of anti-competitive agreements.
Keywords:
cartels enforcement, competition policy, game theory, leniency program, oligopolistic markets
JEL classification:
C70; K21; L13
Year:
2008
Pages:
1-12
Citation:
Samà, Danilo (2008), Competition policy, cartel enforcement and leniency program, LUISS “Guido Carli” University, Rome, Italy, pp. 1-12.
Nokia was once the dominant player in the mobile phone market but saw its market share collapse due to failure to innovate and keep up with competitors like Apple and Android phones. When Stephen Elop became CEO in 2010, he described Nokia's position as being on a "burning platform" but his strategies, like switching solely to the Windows OS, further deteriorated Nokia's performance. Elop oversaw a 40% drop in revenues, 95% drop in profits, and 60% drop in share price during his tenure, leading some to argue he deliberately devalued Nokia to make it cheaper for Microsoft to acquire, his former employer. By 2013, Microsoft purchased what remained of Nokia's business for $7.2 billion.
LG is a South Korean multinational conglomerate corporation founded in 1947. It is headquartered in Seoul, South Korea and operates in various industries including electronics, chemicals, telecommunications, and more. LG initially started as a chemical company and later diversified into consumer electronics. It has over 200,000 employees worldwide and annual revenue of $143 billion. LG has established itself as a leading global brand through its wide range of innovative products and extensive global distribution network. However, it faces intense competition in the consumer electronics industry from other major players like Samsung.
Airtel and Vodafone are two major telecommunications companies operating globally. Airtel has over 261 million subscribers across 20 countries as of 2012, making it the world's third largest mobile operator. It is the largest mobile provider in India with over 185 million subscribers. Vodafone has over 439 million subscribers as of 2011, making it the second largest mobile operator globally. Both companies utilize similar marketing mix strategies of providing a range of products and services, establishing widespread distribution networks, employing flexible pricing, and conducting significant promotional activities.
presentation on the history of nokia then discuss its five mistakes that leads the nokia to decline and at he end what lession we learnt from nokia decline
Nokia Corporation is a multinational telecommunications company headquartered in Espoo, Finland. It was founded in 1865 and started as a wood pulp manufacturer before expanding into the communications industry. Key details from the document include that Olli-Pekka Kallasvuo is the CEO, Jorma Ollila is the Chairman, and Nokia launched its first GSM handset in 1992. The document provides an overview of Nokia's history and operations.
Product Life Cycle-Nokia Example[Krunal Saija]Krunal Saija
Product Life Cycle-Nokia Example
Starting era of Nokia mobile company, decline period and collaboration with Microsoft.
Discuss about business strategy of Nokia and wrong decision which they had made in business
Reason for Success and Failure
Trade Cycle of Nokia
Comeback of Nokia
SWOT Analysis
Marketing Mix
Porter's Five Force Model
Comeback Strategies
Recommendations
Nokia was once the dominant mobile phone manufacturer, holding over 30% of the global market share. However, its market share dropped below 30% in 2011 as it struggled to compete with smartphones running Android and iOS that had more advanced apps and processors. In an attempt to turn things around, in 2011 Nokia partnered with Microsoft to use the Windows Phone platform for future devices. However, Nokia remained dependent on Microsoft and faced strong competition from Apple and Google, making a full recovery difficult. The partnership aimed to combine Nokia's manufacturing and distribution with Microsoft's software expertise to build a new mobile ecosystem.
vodafone , vodafone report, project on vodafone, service operation managementMicky Lyf
Vodafone Group plc is a British multinational telecommunications company headquartered in London and with its registered office in Newbury, Berkshire. It is the world's second largest mobile telecommunications company measured by both subscribers and 2013 revenues (behind China Mobile), and had 434 million subscribers as of 31 March 2014.
Vodafone owns and operates networks in 26 countries and has partner networks in over 50 additional countries. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in 150 countries.
Vodafone has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of approximately £89.1 billion as of 6 July 2012, the third-largest of any company listed on the London Stock Exchange.It has a secondary listing on NASDAQ.
Vodafone is a global mobile telecommunications company headquartered in the UK. It has a presence in over 30 countries and partners with over 40 more. The document discusses Vodafone's history, vision, products/services, key milestones, strategies employed by different CEOs, benefits of its international scope, and SWOT analysis. It recommends strategies for Vodafone to derive increased value from its international portfolio, such as entering entertainment and partnering locally.
Nokia was originally founded as a paper mill but became involved in telecommunications in the 1970s-80s. They released the first handheld mobile device in 1987 and digital device in 1992, becoming the leader in the mobile phone industry by 1998. Recently their market standing has fallen. This document describes research into factors affecting Nokia's current mobile phone market presence using exploratory, descriptive, and causal methods. Surveys found Apple was most considered brand and quality was most important phone feature. Results showed Apple had highest perceived quality while Nokia was lowest. The experiment found no statistically significant differences in brand quality means.
Airtel faces competition from Reliance Jio in India. Airtel outsources operations except marketing, sales and finance. Equipment is provided by Ericsson and Nokia, IT support by IBM. Transmission towers maintained by subsidiaries.
While Airtel and Jio both have resources and brands, Airtel has a more effective process which is most difficult for competitors to copy. Airtel has advantages over Jio as India's largest telecom player with market leadership, global recognition, and pan-India presence through strategic alliances.
Airtel's CRM strategy focuses on long-term customer connectivity and service to increase revenue through acquisition, cross-selling, and more efficient call centers
LG Electronics entered the North American washing machine market in 2002 with its front-load TROMM model. It aimed to establish its LG brand through innovation, meeting American consumer expectations, and building brand identity centered on trust, innovation, people, and passion. LG faced challenges in consumer perception of foreign brands and establishing its brand. Its strategy focused on innovation, high-growth segments, and patented steam technology. It sought to segment consumers and target environmentally conscious, fashion conscious, and homemaker groups with an efficient, premium product.
Sony Corporation is a leading Japanese manufacturer of electronic devices, games and entertainment products which incurred huge amount of loss for four consecutive years. The company declared that it incurred a total loss of 6.4 billion dollars for the year end in March 2012. The company’s main weakness lies in the numerous product lines In addition to this problem, the company also faces both internal and external challenges. Thus, a SWOT analysis and Porter’s Five Forces Analysis is carried out to understand the basic strengths and weaknesses of the organization. This helped to find out the basic reason behind the poor performance of Sony Corporation. Based on the analysis, a-five year recommendation plan have been framed that consist of four basic steps. Following this plan would help the organization to improve it current position in market.
Porters five force analysis for telecom industryAkash Agamya
The telecom industry in India is highly competitive with over 15 players. The top players, Airtel, Vodafone and Idea, capture over 75% of the market share. While competition is intense, the industry is still growing with a focus on expanding to rural areas. The financials of the top players remain strong, however future consolidation in the industry is expected as players seek to improve margins. Overall, the telecom sector in India is one of the fastest growing globally due to strong competition and regulatory reforms that have promoted further expansion.
Bharti Airtel is the largest cellular service provider in India, with over 261 million subscribers across 20 countries as of 2012. Founded in 1995 by Sunil Bharti Mittal, Airtel provides mobile and fixed line services, broadband, DTH, and enterprise services. It offers 2G, 3G, and 4G mobile services, as well as fixed line, broadband, DTH, and enterprise services. Airtel has expanded its operations to several African countries like Nigeria, Burkina Faso, Chad, Congo Brazzaville, and Democratic Republic of Congo, and recently launched services in South Africa and Cameroon. The company's objectives are to put customers at the heart of everything
Idea Cellular provides wireless services in India and has grown from 7 million subscribers in 2006 to over 89 million in 2011; it aims to rollout 3G services to 200 towns by 2011 and 4,000 towns by 2012 to offer higher data services. The internship report discusses Idea's operations, competition, pricing strategies for 2G and 3G services, and the intern's targets and achievements in promoting Idea's products and services.
Samsung Electronics is a South Korean electronics company and the flagship subsidiary of Samsung Group. It conducts SWOT analysis which reveals its main strengths are strong brand loyalty, market position, and supplier relationships, while weaknesses include strong competition and need for improved marketing. Opportunities include favorable economic conditions and technological advances. Main threats are frequent legislation changes and high industry innovation. The document discusses Samsung's segmentation, targeting, positioning, and marketing mix strategies. It focuses on maintaining leadership in the TV and other consumer electronics markets through continuous innovation.
Samsung Electronics is the largest manufacturer of electronic devices and components in the world. It is headquartered in South Korea and employs over 300,000 people globally. While it initially specialized in electronics components, it now produces smart devices utilizing new technologies such as 5G. Between 2012-2016, Samsung's annual revenue increased while profits fluctuated, experiencing declines in 2014-2015 due to failures to meet customer expectations in mobile device sales. The company focuses on employee skill development, passion, integrity, and prosperity.
This document provides an overview of key concepts used in industrial economics. It defines the firm as an organization engaged in productive activity for profit. The industry is defined as a group of firms producing similar or substitute products for a common market. The market is where buyers and sellers transact for goods and services, with supply and demand equalizing price. Different types of markets are business-to-business and business-to-consumer, and markets can be segmented.
Competition policy, cartel enforcement and leniency programDr Danilo Samà
Competition policy, cartel enforcement and leniency program
Author:
Dr Danilo Samà (LUISS “Guido Carli” University)
Abstract:
The present assessment focuses on the antitrust action in detecting and fighting oligopolistic collusion, analyzing the development of the innovative and modern leniency policy. Following the examination of the main conditions and reasons for cartel stability and sustainability, our attempt is to comprehend under which circumstances leniency program represents a functional and successful tool for preventing the formation of anti-competitive agreements.
Keywords:
cartels enforcement, competition policy, game theory, leniency program, oligopolistic markets
JEL classification:
C70; K21; L13
Year:
2008
Pages:
1-12
Citation:
Samà, Danilo (2008), Competition policy, cartel enforcement and leniency program, LUISS “Guido Carli” University, Rome, Italy, pp. 1-12.
This document provides an overview of monopolistic competition and oligopoly market structures. It discusses key concepts such as product differentiation, advertising, pricing and output determination under monopolistic competition. It also examines oligopoly models including collusion, Cournot, kinked demand curve and price leadership models. Game theory, repeated games, and the prisoners' dilemma are discussed. The role of government regulation of mergers to promote competition is also summarized.
This document provides an overview of monopolistic competition and oligopoly market structures. It discusses key concepts such as product differentiation, advertising, pricing and output determination under monopolistic competition. It also examines oligopoly models including collusion, Cournot, and kinked demand curve models. It notes that oligopolies can be inefficient due to pricing above marginal cost, strategic behavior wasting resources, and potential for advertising waste. Government regulation aims to limit mergers that reduce competition.
- A market is a place that enables buyers and sellers to interact and exchange goods and services. The elements of a market include buyers, sellers, goods/services, price, money, and a defined area.
- Market structure depends on the number of buyers/firms, product type, entry barriers, and is characterized as perfect competition, monopolistic competition, oligopoly, or monopoly.
- Perfect competition has many small firms/buyers, homogeneous products, no entry barriers, and price-taking firms. Monopoly has a single firm, a unique product, and high entry barriers, allowing price-setting behavior.
This document discusses market structure and types of market competition. It defines market structure and describes the characteristics of perfect competition, monopoly, monopolistic competition, and oligopoly. Perfect competition is defined as a market with many buyers and sellers and a homogeneous product. Monopoly is a market with a single seller and no substitutes. Monopolistic competition has many sellers of similar but differentiated products. Oligopoly has only a few large sellers dominating the market.
This document summarizes a model of monopolistic competition in international trade of agricultural products. The model assumes firms are symmetric and considers how market size impacts firm behavior. It describes equilibrium as the intersection of average cost and price curves, where the number of firms and price maximize profits. The analysis shows market expansion or subsidy increases can raise the equilibrium number of firms in a sector by lowering costs for farmers.
D bove and a yokwana 'the role of competition advocacy in shaping 20 years of...Daniela Bove
12th Annual Conference on competition law, economics and policy (2018)
A paper presented by Daniela Bove and Azania Yokwana on "the role of competition advocacy in shaping 20 years of competition law in South Africa."
The paper shows how competition advocacy played a significant role in cases in the Antiretroviral market, in the construction sector, in markets that employ procurement or bidding processes and in market inquiries. The paper also highlights some of the strategic alliances formed through the competition advocacy initiatives of the Competition Commission of South Africa.
The document discusses how new entrant firms can survive and create market niches within the mobile phone manufacturing industry. It analyzes the firm's external environment using Porter's five forces model, noting high threats of substitutes and competitive rivalry due to product differentiation. The document also examines a firm's internal environment, highlighting the importance of gaining competitive advantages through resource endowments, dynamic capabilities, and networks. It proposes a model combining these external and internal factors to assess how new entrants like Fairphone B.V. achieve success in the industry.
This document discusses competitor analysis and brand development. It begins by defining competitors as either direct or indirect. Direct competitors offer similar products, while indirect competitors satisfy similar needs. It then discusses Porter's five forces model for analyzing competition, including the threat of new entrants, substitute products, rivalry between firms, supplier power, and buyer power. A large part of the document focuses on branding, defining it as a way to differentiate products and create monopoly power. It traces the history of branding from agricultural practices to modern marketing strategies. Branding allows firms to charge premium prices and build long-term, stable demand.
Analysis Of Competition In The Mobile Phone Markets Of The United States And ...Fiona Phillips
This thesis analyzes competition in the mobile phone markets of the United States and Europe, with a focus on Nokia's performance in the United States. The document provides an overview of relevant literature which shows that competition in these specific markets has received little academic attention. It then outlines the research questions which aim to understand the characteristics of the US and European markets, how they differ, and why Nokia struggled in the US. The methodology section describes a qualitative case study approach involving interviews and secondary data analysis to address these questions between 2002-2011.
This paper aims to explore the factors influencing the ability of firms to compete in globalised markets. The Austrian and evolutionary economics and the endogeneous growth literature highlight the role of innovation activities in enabling firms to compete more effectively - and expand their market share. On the basis of these theories, and using a large panel of firms from several Central and East European Countries (CEECs), this paper attempts to identify the factors and forces which determine the ability of firms to compete in conditions of transition. The competitiveness of firms, measured by their market share, is postulated to depend on indicators of firms' innovation behaviour such as improvements in cost-efficiency, labour productivity and investment in new machinery and equipment as well as characteristics of firms and their environment such as location, experience, technological intensity of their industries and the intensity of competition. To control for the dynamic nature of competitiveness and the potential endogeneity of its determinants, and to distinguish between short and long run effects of firm behaviour, a dynamic panel methodology is employed. The results indicate that the competitiveness of firms in transition economies is enhanced with improvements in their cost efficiency, productivity of labour, investment and their previous business experience while stronger competition has a negative impact on it.
Authored by: Iraj Hashi, Nebojsa Stojcic, Shqiponja Telhaj
Published in 2011
This document analyzes the competitive strategies of Nokia and discusses the balance between market-led and resource-based approaches. It summarizes Nokia's strategies over time, noting that Nokia was initially successful because it balanced market opportunities with its internal strengths in mobile phones. However, in the early 2000s, Nokia focused too much on high-end phones and less on market trends, causing it to lose market share. But Nokia was able to recover by adjusting its strategy to again balance market-led and resource-based approaches. The document argues that long-term success requires a complementary relationship between these two strategic approaches.
The document discusses monopolies and anti-competitive practices legislation in the UK and EU. It outlines how the UK and EU aim to restrict monopolies through acts like the Competition Act 1988. The Competition Commission/Competition and Markets Authority regulates monopolies and mergers in the UK and investigates anti-competitive agreements and abuses of dominant market positions. Exemptions may be made for potentially anti-competitive practices under EU law if they increase business activity and efficiency.
THE JAPANESE TRANSFORMER INDUSTRY A CASE STUDY OF ITS COMPETITIVENESSijcsit
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Competition and oligopoly in telecommunications industry in the EU
1. Competition and oligopoly in
telecommunications industry
in the EU
Vítor Santos
ovitorsantos@hotmail.com
2. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 2
TABLE OF CONTENTS
Index of Tables ..................................................................................................................2
Introduction .......................................................................................................................3
Competitiveness ................................................................................................................4
Oligopoly ...........................................................................................................................5
European regulations in the telecommunications sector ...................................................6
Application of sector specific rules ..........................................................................7
Regulation of the telecommunications market .........................................................8
Concepts underlying the regulation of telecommunications
From competition to monopoly................................................................................9
Barriers to entry......................................................................................................10
The definition of a regulatory sector ...............................................................................10
Issues to tackle .................................................................................................................12
Deduction from the analysis of telecommunications regulation .....................................14
The oligopoly of telecommunications .............................................................................14
Case study
The Portuguese case ............................................................................................... 15
European Union .....................................................................................................16
Conclusion .......................................................................................................................17
Bibliography ....................................................................................................................18
INDEX OF TABLES
Table 1 - The Oligopoly in the telecommunications sector in the European Union .......16
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
3. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 3
INTRODUCTION
This work arose in the course of Advanced Microeconomics taught by Ms. Prof.
Dr. Alina Badulescu at the University of Oradea.
The work focuses on the telecommunications market, through market analysis and
study of oligopolistic characteristics.
In fact, their characteristics, the mobile telecommunications market is
characterized by an oligopoly. This kind of market does not compete with each other at
European level, but within each country, where the composition of the market is
dominated by a small group of companies to ensure distribution of the service market.
The description of this work begins with a sense of competitiveness, which from
my point of view is important because it depends on the market, and results in better
organized, better results through to the consumer.
How could it not be, is a short introductory presentation described the concept of
oligopoly, which will be developed throughout the work.
In the following it is shown how the EU regulates the telecommunications market
through measures to regulate the market, owing to possible domain markets, it
developed specific rules for this sector, bearing in mind that this is a market
characterized by oligopoly.
The European Union also attempts to resolve, through its regulations, some faults
that are felt in the telecommunications market in Europe.
Finally is presented a case study of an oligopolistic sector in the
telecommunications market, the case of Portugal where the market is dominated by
three large companies, which somehow reflects the more European Union countries,
which are characterized in this sector, few companies dominate the market, and hence
be seen as an Oligopoly.
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
4. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 4
COMPETITIVENESS
It is said that a given industry is highly competitive when the various companies that
comprise it have conditions and similar resources in the search for spaces on the market
competing more evenly among themselves. On the other hand, the industry may have a low
competitiveness, showing that few companies have the resources and conditions
highlighted, while other companies have few resources, featuring a lopsided contest.
Competitiveness can be somehow expressed for market share achieved by any firm in
a market in a certain moment in time (Possas 1999) 1. Market share expresses how much a
particular company has sales or revenue out of the total sales or revenues realized for a
given market. For the analysis of competition in the telecommunications industry, the use of
this concept is relevant, since the market share achieved by a particular firm expresses its
ability to gain customers and revenue within the industry.
However, Possas (1999) considers the market share in an indicator of the success
achieved by a particular firm in the past. Therefore, it is necessary to better assess the
potential that a company has to achieve consistent results in the future. For this, Possas
(1999) suggests an internal review of the firm when seeking to understand their strategic
choices that affect their market share. That is, how market share is a historical fact and,
therefore, refers to the past, it is necessary to understand the strategy of organizations to
try to predict their behavior and therefore its ability to maintain participation.
Concomitantly, Kupfer and Hasenclever (2002)2 present the competitiveness and
efficiency achieved by the company in competition, as it reflects its ability to
differentiate themselves from competitors. Efficient firms are more capable of offering
distinctive products and services to the market than its competitors, meaning more
likely to maintain their market shares.
It is possible verify that exists a correlation between the concepts of
competitiveness, market share and strategic choices of companies. This follows from
the fact that is the choices and strategic actions and way of how a company operates in
the market that will determine your sales, revenue and market share. Thus, one way to
assess the competitiveness of a firm is to check their market share while we observe the
1
POSSAS, S. 1999. Competition and competitiveness: note about strategy and selective dynamic on capitalist
economy. São Paulo, Hucitec.
2
KUPFER, D. and HASENCLEVER, L. 2002. Industrial Economics: theoretical and practice in Brazil. Rio de
Janeiro, Campus
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
5. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 5
intrinsic characteristics of the organization that contribute toward achieving that result.
Kupfer and Hasenclever (2002, p. 3) present a summary of this concept:
[...] Competitiveness was defined as the ability of the company
formulates and implements competitive strategies, which enable it to
expand or maintain, in a lasting one sustainable market position.
Following this line of reasoning, it is important that decisions and strategic actions
of a firm should be in line with the competitive practices of other competitors. That is,
the firm should make strategic choices consistent with the competitive dynamics of the
market, because, otherwise, could be moved further than the market expects in terms of
supply. Possas (1999) supports this statement by pointing out that the competitive
dimensions are related to market characteristics.
Brand, production process, internal management, knowledge of people, customer
relations, among others, are examples of resources and expertise that an organization
may have as a source of competitive advantage. For Grant (1991)3, the resources and
skills, as mentioned earlier, are the basis for company’s profitability.
For Porter (1981)4, industrial organization has important contributions to the
determination of strategy in that it uses market analysis to devise strategies to deal with
the forces driving the industry.
OLIGOPOLY
An oligopoly corresponds to a market structure of imperfect competition,
characterized by the fact that the market is dominated by a small number of producers
so that one company alone has any power to influence the price as well. In an oligopoly,
the products produced can be homogeneous or show any differentiation being that,
generally, the competition is in the highest levels of factors such as quality, customer
service, loyalty or image, rather than to the price level.
3
GRANT, R.M. 1991. The resource-based theory of competitive advantage: implications for strategy
formulation. California Management Review
4
PORTER, M.E. 1981. The contributions of industrial organization to strategic management. Academy of
Management
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
6. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 6
An important feature of oligopoly is that they are in sectors with high barriers to
entry, whether the high entry costs, the existence of a minimum scale of very high
efficiency, the existence of strong economies of experience, legal limitations, or others.
Oligopolies are common, we can find them in the communications sector, where entry
barriers are high.
An evolutionary trend oligopolies is for oligopolies collusion (or cartel), in which
the oligopolists organize themselves and jointly make decisions about the supply and
prices. In situations of the cartel, prices and quantities traded in the market tend to catch
up with prices and quantities that occur in a monopoly situation. Usually, this kind of
practice is illegal under the antitrust laws because of adverse effects on the economy
and giving rise to the damage it brings to consumers.
EUROPEAN REGULATIONS IN THE TELECOMMUNICATIONS SECTOR
The European Parliament voted on the "telecoms package", which aims to
improve the existing legislation relating to electronic communications services and
establish a new European telecommunications regulator body. This reform is aimed at
enhancing competition, widening the choice for users, increase the transparency of
tariffs and contractual conditions, to facilitate access for people with disabilities and
protect consumers' personal data.
European citizens should enjoy, regardless of where they live and wherever they
travel in the EU, communications services more efficient and less costly, whether they
use mobile phones, broadband connections to the Internet or cable television.
Proposals for reform of EU rules on telecommunications, presented by the
Commission in November 2007 and on which Parliament legislates on an equal footing
with the Council, provide new rights for consumers, such as change of operator
telecommunications within a day, offering more consumer choice through more
competition between operators, promoting investment into new communication
infrastructures, in particular by freeing radio spectrum for broadband services, wireless,
and increased reliability and network security through new tools for fighting spam,
viruses and other cyber attacks.
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
7. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 7
Apart from the distribution of UMTS5 licenses and issues related to sharing of
infrastructure, which are still being discussed in some European countries, the following
topics on mobile communications are on the agenda of national regulators and the
European Union, and must be outlined here for a summary: the first number portability,
which is an important prerequisite for a competitive market, since it reduces commuting
costs second, international roaming, the third mobile termination charges that are
considered too high and the fourth Mobile Virtual Network Operators, who need access
to mobile operators' infrastructure, which refers to the general issue of interconnection
in the mobile telecommunications market.
The international mobile roaming charges are high on the agenda of DG
Competition of the European Commission and national regulatory authorities since
January 2000. Unannounced inspections were conducted by the European Commission
in July 2001, nine European mobile operators in the UK and Germany in order to find
out if there are bees with collective fixing of retail prices or illegally fixed wholesale
prices charged to pressure operators. Another competitive international roaming rates
appears to be weak since the charges are high and static and operators are suspected of
exploiting the lack of customer awareness about these roaming charges. This is true for
the mobile operator's customer is traveling the country as well as for the home network
operator, which usually adds a margin of 10 to 25 cents per minute. High prices for
international roaming is a problem very similar to mobile termination rates. In most
cases those who ask for termination of international roaming also requires the regulation
of mobile termination rates.
APPLICATION OF SECTOR SPECIFIC RULES
Public intervention through sector specific regulation is closely linked to the
concept of utility based on the notion that a company be "clothed with a public interest."
Even though the line between public services and other sectors is a shadow area, which
can be defined as a core industries in which "the first guarantee of acceptable
performance is not designed to be competitive or self-restraint but the government
controls direct".
5
Universal Mobile Telecommunications System
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
8. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 8
Public utilities often involve conditions where a private monopoly, public
monopoly or public regulation appear, or appear for a long time, the only viable
alternatives for the structure of the industry.
Permits are issued for example for the operation of mobile telecommunications
networks, leading to restrictions on the entry. Access problems are also seen as such, if
competitors have access to facilities owned by other companies, therefore, price
controls are among the most common instruments of regulation and can take many
forms.
REGULATION OF THE TELECOMMUNICATIONS MARKET
The European Union was the driving force in the liberalization of European
telecommunications markets and promoted the development of mobile services since
1980. However, it was in 1994 that the first time, the European Union promoted a
coherent policy framework for the entire mobile sector to open it to competition. The
1994 Green Paper proposals for positions on the licensing conditions for operators of
mobile networks. The proposed framework would mainly rely on what was at that time
the telecommunications policy of the European Union that it had to be applied to the
mobile sector.
Under the amendment of ONP6 Framework Directive in 1997, an additional
directive dealing specifically with issues of interconnection has been introduced, which
plays a significant role in terms of regulation for MVNOs7 and termination charges. The
Interconnection Directive requires all operators providing publicly available telephone
services to negotiate interconnection with each other, if requested by another operator.
More important is that it requires mobile operators in the national interconnection
market to offer cost-orientated interconnection, which is a severe intervention in the
market and in the center of discussion. SMP8 is generally presumed when an operator
has more than a market share of 25% in the relevant market, however the National
Regulatory Authorities (NRAs)9 are flexible and can decide on SMP independently of
market share data. As for the economic regulation is the concept of SMP and its
consequences for the interconnection and pricing issues that are the most important
basis for the regulation of mobile telecommunications markets in Europe.
6
Open Network Provision
7
Mobile Virtual Network Operator
8
Significant Market Power
9
National Regulatory Authority
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9. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 9
CONCEPTS UNDERLYING THE REGULATION OF TELECOMMUNICATIONS
FROM COMPETITION TO MONOPOLY
There is a competition that is believed to give companies stronger incentives to
offer customers what they want on prices and quality products. Finally, innovation is
promoted through competition, as it offers companies the opportunity for short term
gains. A monopoly, in contrast to a competitive market occurs and can be kept under
three conditions: first, the market is occupied by a single seller, the second replacement
of the product is not possible because similar products are not available enough, and last
entry market this product is limited by substantial barriers and exit is difficult. There are
many possible reasons for the existence of monopolies and they are all listed as barriers
to entry. A firm with monopoly power may choose to produce at any point on the curve
of market demand, ie it can set the price and consequently reduce production or vice
versa.
A case that is connected to the case of monopoly is the case of oligopoly that is a
model of market behavior that falls between monopoly and perfect competition.
Oligopolies refer to markets with an extremely limited number of companies operating.
Oligopoly theory and not particularly distinguished coalition of collusion between the
companies. Attempts by economists to describe and model oligopolistic markets have
generated a series of theories, none of which became a standard or can claim universal
applicability. Often the net effects of welfare under oligopoly remain unclear.
Imperfect information is an important issue, because only through sufficient information
customers are able to evaluate competing products and make rational decisions. In the
telecommunications sector this is particularly important, since different rates can create
an environment in which consumers get to the point of not knowing how much they will
pay for services.
Switching costs are a potential source of market distortion. In many markets (and
particularly in previously monopolistic markets like the telecommunications market),
consumers who purchased a certain product has switching costs for the product of a
competitor, even if it is identical or slightly better. While there are different categories
of switching costs, transaction costs of switching suppliers (to cancel a contract, change
of phone number, etc.) and research costs seeking alternatives most relevant to the
telecommunications market.
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
10. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 10
BARRIERS TO ENTRY
Barriers to entry are considered the most important reason why markets are not
contestable and are usually the reason why markets become monopolies. They form an
important structural feature of the industry. Examples are the barriers to entry the
absolute cost advantages of incumbent firms (eg, knowledge of a technique of low-cost
production), economies of scale and product differentiation as entry barriers for
potential competitors. The ownership of resources, patents, exclusive franchises from
the government or even unique managerial talent can also be barriers to entry.
Due to the need to sink for example, costs for advertising, new entrants are faced
with additional costs higher than the historical that has already committed its resources.
The risk of losing funds unrecoverable can indeed be increased by the incumbent's
threat of retaliatory strategic or tactical responses. Thus, a potential candidate requires
additional revenue expected to be offset by an increase in incremental costs and risk.
This allows the incumbent to win a corresponding income. Thus, barriers to entry
supernormal profits, inefficiencies, cross-subsidies and the prices can not ideal. Can
inhibit the work of the invisible hand and have negative consequences for the well-
being.
THE DEFINITION OF A REGULATORY SECTOR
There has been an intense debate under way in the world to regulate the sector
makes sense. The creation of regulatory bodies, therefore, is very controversial in many
countries. Besides the general fear of regulatory activity to be captured, a number of
other arguments have been made against economic regulation and in favor of relying on
competition law. It is argued that the sector regulators have a natural tendency to
perpetuate and expand the fields of activity, which of course increases the costs of
regulation to an improper value. Also, firms are suspected of playing "a game of tactics,
with different statuses and authority that makes the costs resulting from the dual
application of both general competition law and sector specific regulation. Another
question is whether regulatory authorities will really have easy access to knowledge and
experience gained by the cartel office with similar constellations of market in other
branches, which significantly affects the quality of decisions being made.
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
11. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 11
Effects of regulation on innovation are considered negative. The regulation is
supposed to stifle investment and risk, because this rulemaking postpone the rapid
deployment of new technologies, they may sometimes have little incentive to innovate
because of preference strategies become less attractive. Also they may be afraid to be
unduly regulated in the future, making innovation a risky expensive affair. It is also an
argument against the sector-specific regulation that regulators can not rely on economic
theory as a basis for decisions to intervene in many cases it is absent or very difficult to
apply in practice. This is particularly detrimental to price regulation, which has a
significant impact on markets, but due to the complexity of the matter is not always well
matched. Thus, the regulation substitutes individual judgments and judicial decisions
for the aggregation of information effectively and accurately than the competition
effectively.
People feel in telecommunications markets that can still be a need for prior
regulations to clearly define an environment conducive to the emergence of
competition, not only retrospectively apply remedies to punish unlawful conduct. In
market surveillance and decisions on issues such as interconnection and quality of
service can only be granted by a regulatory authority. One key issue, mandatory access
to the markets always lead to price regulation. But in most cases, competition
authorities are not sector specific skills and expertise needed to deal with issues not
afford, often make the needed constant supervision, for example, and termination rates
are still quite slower in the reaction of regulators, so that these issues are normally not
part of their task.
So many authors argue that:
”It will be long time before the evolution of competition in
telecommunications reaches the point where competition law alone is
sufficient.(…). The desire, if not impatience, of competition law policy-
makers to shift telecommunications regulation onto more familiar
ground may indeed cause them to disregard the time and effort required
for telecommunications competition to take hold.” 10
10
See Waters et a. (2000), p. 739. Experiences in New Zealand have proven how difficult it is to ensure
competition in the absence of regulation and demonstrate how reluctant courts can be in getting involved in
technical yet crucial details. See Laffont; Tirole
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
12. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 12
Telecommunications services often require the combination of several elements.
Long distance calls to the flow of sample through the local loop, switches and
transmission facilities between offices, as well as through the lines of the long distance
company in the middle of the trunk.
The inefficiency of a monopoly to coincide with a protected market where
producers can produce inefficiently, because no real competition (natural monopoly), or
potential competition (due to high barriers to entry of the stranded costs, which does not
would exit the market without significant losses) are a threat. The monopolist can
prevent potential competitors from competing not only on the market (monopoly)
primary but also in adjacent complementary to that potential entrants do not have
access, because the monopolist has no incentive to provide it in commercial terms.
ISSUES TO TACKLE
Charges for terminating calls on mobile networks are currently one of the most
crucial issues facing regulators in Europe. Call termination refers to the final completion
of calls on a network, and in this case refers calls to mobile phones or the completion of
calls on mobile networks that originate in other fixed or mobile networks. The
termination fee is a wholesale charge paid by the operator on whose network the call
originates to the network operator when the call ends. The retail price paid by callers to
a call from one network to a mobile network is largely composed of two components:
one, the cost of the first operator of origin and make the call, and two, the termination
fee paid by the first operator to the second terminating operator. The latter strongly
affects the retail price and it gets to between 40 and 65% of retail price for calls from
one network to another mobile network. Termination charges are on average as high as
18.16 Cent in the European Union is about ten times the average rate for fixed-fixed
interconnection. And even if the cost structures of mobile networks are different from
those in fixed networks, a difference of this magnitude is difficult to explain. Therefore,
it seems that mobile operators can set prices on their networks call termination without
significant competitive pressure.
Traders and consumers are directly affected by the issue of termination charges.
termination charges above cost and unbridled competition normal operators make profit
unduly from their business. Consumers suffer directly from the high termination
charges, because they pay much to call mobile phones in relation to costs for operators,
MICROECONOMICS ADVANCED UNIVERSITY OF ORADEA
13. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 13
so that eventually the income is transferred from consumers to the operators. Operators
say they are adjusting their prices and that termination charges are therefore consistent
with economic efficiency and in the best interest of the client. This implies that
consumers are reimbursed for the high termination charges through the benefits
generally low retail prices and complete package of mobile phone, even if the operators
of market power over termination charges. It also implies that the global players do not
generate profit rather than in a competitive market and are exposed to competitive
pressure on the entire package of mobile services.
Each fixed-mobile call subsidizes mobile phone users. This is even more serious
since a market research indicates that those who do not have mobile phones are usually
low-income families. This problem will only be reduced by increasing the penetration
rate of mobile phones.
In the process of developing the new regulatory framework the issue of
termination charges almost lead to a severe crisis when one of the committees of the
Parliament accepted proposals for compulsory regulation of prices based on costs to be
imposed on international roaming and mobile termination rates, including explicitly in
the new Interconnection Directive. However, it did not accept the proposed amendment
out of fear too many regulations on the market.
In several European countries (France, Ireland), some operators have been known
to enjoy SMP in the national interconnection market. Obligations of cost orientation
imposed on these operators for termination charges. In the UK, although SMP is not
designed for mobile operators, Oftel uses the power of competition to impose controls
on fares for all operators and has launched a proposed takeover of termination rates until
2006, through amendment of licenses mobile operators.
Based on evidence that the market for termination charges is a monopolist, and
that due to lack of vendor competition have the power to set prices as a result, the
control of the termination rates to lower prices for consumers seems appropriate and is
also recommended by most experts and committees that have worked on the subject.
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14. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 14
DEDUCTION FROM THE ANALYSIS OF TELECOMMUNICATIONS REGULATION
Should be taken into account, however, that the dynamics of the
telecommunications markets in terms of growth and competitive development and
technology seem to make it impossible to provide a final statement on the matter. All
kinds of factors that can hardly be evaluated today may influence the situation. So
although it is now difficult to imagine how it could develop a real competition, experts
agree that it is necessary to reassess the situation on a regular basis to see if the market
or technological developments have changed the situation.
Considering the measures necessary to ensure competitive prices, it seems
inevitable that a regulatory agency is responsible for controlling prices. Price regulation
is a very complex issue and requires ongoing supervision and dealing with carriers.
Regulations based on concepts of market power, such as the concept of PMS
flexibility in deciding when and when not to regulate. Although this flexibility of the
course can be interpreted as a source of easy to manipulate discretion is essential to
have, since the telecommunications market is developing dynamically. This is even
more important at European level.
THE OLIGOPOLY OF TELECOMMUNICATIONS
Clearly, the mobile telecommunications market is not a monopoly. Due to the
number of licenses in different countries, is a naturally oligopolistic market. The cost
functions are considered as a form of economies of scale, but only to a certain extent,
thus enabling all existing players to survive.
There is broad consensus that 4-5 players should be sufficient to generate
sufficient competition in the market.
But some regulators are uncomfortable with the limited number of operators and
the environment of oligopoly, from the beginning, with little chance of expanding the
number of operators. In his view, an oligopoly does not provide sufficient competition
in itself.
Three competitors having three different infrastructures in an oligopoly situation
could theoretically still provide for adequate competition
Exit the market is so expensive (loss of license) that nobody will leave, no matter
how low prices. Anticipating this, nobody starts a price war. In such a scenario UMTS
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15. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 15
operators will probably also increase the barriers to entry remaining competitive
pressure.
Considering the potential market entry, more factors must be taken into account.
The infrastructure for mobile telecommunications is characterized by a cost function
with strong economies of scale with a growing number of customers.
Competition in services will enable consumers to make an even greater value on
the more common, since it involves more likely to complement smart service offerings
and services. This can develop to be a major barrier to entry in itself. But the resulting
positive feedback to the operators also implies that there will be no reduction in
marginal costs and economies of scale, for example because of the improvement of
cooperation between operators and service providers with a growing number of service
offerings.
CASE STUDIES
THE PORTUGUESE CASE
In Western Europe, the infrastructure sector has undergone radical change since
the liberalization process began over 20 years. Contrary to what happened, the decisions
on investments in innovation and public infrastructure now reflect the actual
competition, innovation and performance: the case of mobile telecommunications
Portuguese characteristics of network industries: barriers to entry, the exit barriers,
economies of scale, economies of scope, irreversibility and high risk. Hence the natural
tendency to oligopoly. The infrastructure companies now operate in a market context,
under operating conditions laid down by government policy enforced by regulators.
However, these markets, the networks have become an integral part of complex
structures with high value added businesses, in which each agent tends to optimize the
own position in the interest of its shareholders.
The constant and intense technological change today is a fundamental variable in
the analysis of the relationship between differentiation, innovation and efficiency, i.e.
the key vectors that articulate and define the behavior and strategy in oligopolistic
context.
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16. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 16
The year 1995 already showed an explosive growth market: Telecel had 177,360
customers and TMN 152,105. Indeed, this feature remains the most obvious Portuguese
telecommunications market.
The third mobile operator - Optimus - licensed in 1997, was characterized by an
entry with an aggressive strategy focused on low prices, causing an almost immediate
reaction of the two competing reaction also focused on reducing prices.
In a first analysis, the entry of a third element in the existing duopoly has proved a
benefit for consumers: keeping, apparently, the same quality of service, the price
decrease was indeed substantial.
The regulatory authority for telecommunications in Portugal - Anacom - attributes
to the three national mobile operators Significant Market Power, a quality that brings
the fulfillment of a set of obligations. Among these three players are required to make
several cuts in termination rates for fixed-mobile by 2006 in order to harmonize the
prices in Portugal with the rest of Europe.
EUROPEAN UNION
The Portuguese case here's an example of what happens in Europe, the
telecommunications sector.
As can be seen in Table 1, the telecommunications sector in the countries shown
as an example is dominated by a small group of companies representing the entire
sector. Thus, it is clear that this sector is characterized by an oligopoly in other
European countries.
Table 1 :: The Oligopoly in the telecommunications sector in the European Union, an example of some countries
Tim O2
AMC Vento Meteoro, 3
Albânia Vodafone
Italy 3
Ireland Móbil de Tesco
Vodafone Vodafone
O2
KPN
Czech T- Móvel Vai o Móbil
Vodafone
Netherlands T-Móbil Malta Vodafone
Répúblic Vodafone
U: fon
T- Móvel
Vodafone
Vodafone KKT Cell
Germany E-Mais
Cyprus KKTC Telsim 2 Turkey Turkcell
Avea
O2
Cosmote Orange O2
Vento Cosmote United Vodafone
Greece Q-Telecom
Romania Móbil de Zapp T-Móbil
kingdom
Vodafone Vodafone Orange, 3
Movistar
T-Móvel Vodafone (Telecel)
Orange
Hungary Pannon Spain Yoigo
Portugal TMN
Vodafone Optimus
Vodafone
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17. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 17
CONCLUSION
The telecommunications market is a market where exponential growth when
viewed from a European perspective. In Europe, there are 79 mobile network operators.
Is usually characterized as an oligopoly, the European Commission is obliged to
implement regulatory measures so that there is an abuse of market power, which would
translate into higher costs for consumers.
It is important to be aware of possible strategies for small business groups that
dominate the market, so they do not result in familiar situations such as cartels in which
this group of companies established between itself and that in turn set prices and
measures that are not advantageous to consumers.
This way, is fundamental to the European Union to intervene with its rules, hence
the emphasis in this work that gave the rules of EU regulation. In an increasingly
competitive market, customers have the possibility to switch to an operator who can
best fit the profile of its demand, forcing companies to increase productivity and reduce
prices.
Regarding the situation of the sector across the EU, the European Commission
said that it considers have been denied to consumers and businesses as well as the
European Union as a whole, the full economic benefits that would result from a single
telecoms market and competitive real due to the inconsistent enforcement of the sector.
This work had interest for me, since, despite the concept of oligopoly is not new
to me, the market for telecommunications was something they had never sought to
know so badly. Thus, resulted in new knowledge for me.
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18. COMPETITION AND OLIGOPOLY IN TELECOMMUNICATIONS INDUSTRY IN THE EU 18
BIBLIOGRAPHY
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http://groups.haas.berkeley.edu/fcsuit/Pdf-papers/Regulation-Landgrebe.pdf
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+IM-
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http://www.anacom.pt/
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/215&format=HTML&aged=0&l
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NATIONAL COMMUNICATIONS AUTHORITY (ANACOM). Statistical data on mobile
communications. Portugal: Anacom, 2003
Samuelson, Paul A., 2005 Economics, McGraw-Hill
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