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Outline

• E-commerce: definitions & scope

• E-commerce: drivers and impacts

• E-commerce & telecoms: an uneasy relationship

• Telecoms: fixed

• Telecoms: mobile

• Summary

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What is electronic commerce?

• Steinauer, Wakid&Rasberry

(1997): Commerce

conducted through the

electronic exchange of

digitally encoded

information.

• Chaffey (2009): all

electronically mediated

information exchanges

between an organisation

and its external

stakeholders.

Business to

consumer with

transaction

Business-to-consumer

Business-to-business

Electronic commerce infrastructure

EFT + credit cards transactions

A typology of definitions

Source: OECD (1997) Measuring electronic

commerce. OCDE/GD(97)185. Paris, France

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There are many different forms

of e-commerce

Firms Consumers Non-profit

Firms B2B B2C B2G

Consumers C2B C2C C2G

Non-profit G2B G2C G2G

A matrix of e-commerce activity

Source: Priessl, B. (2000) Employment effects of electronic commerce: concepts and

measurement problems,paper presented to the Euro CPR. March Venice.

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Through electronic commerce,

organisations can…

…Enter new markets

…Redefine their business processes

…Improve customer service

…Exploit resources located elsewhere

…Develop new business models

…etc

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Potential efficiency gains for

electronic transactions

Completion

Digital ++ Physical +

Preparation

Routines ++ ++/++ ++/+

Negotiations + +/++ +/+

Source: Verhoest, P., Leyten, J. & J. Whalley (1999) Costs and control in electronic

commerce: a reconnaissance flight, Communications & Strategies, 2nd Quarter

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ICT contribution to labour

productivity (1995-2004)

Source: OECD (2008: 27) The future of the internet economy: a

statistical profile, Paris, France.7

Businesses selling/purchasing

over the Internet, 2007

Source: OECD (2008: 25) The future of the internet economy: a

statistical profile, Paris, France. 8

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Changing value chainsIntermediaries link buyers with sellers. Some have been side-stepped (dis-

intermediation), whilst others have appeared (re-intermediation).

B

U

Y

E

R

S

E

L

L

E

R

LOCATE TRANSACT SUPPLY

- advertisers- retailers- assemblers &cataloguers

- testers &evaluators

- financial &credit services

- clearing &settlement

- POS- legal services

- manufacturers- wholesalers - maintenance- insurance- shippers &forwarders

- warrantee &guarantee providers

Source: Hawkins, R. (1998) Creating a Positive Environment for Electronic Commerce in

Europe. SPRU: Brighton, UK

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A more diverse and complex

industrial landscape is emerging

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Value chains are being

reconfigured• IP is altering the cost structure, and creating opportunities

• Reconfiguration requires focus: customer relationship, innovation or

infrastructure management (Hagel& Singer, 1999)

Source: Li & Whalley (2002: 462)

Deconstruction of the telecommunications

industry: from value chain to value networks,

Telecommunications Policy, Vol.2611

Complex relationships within the

new ICT ecosystem are emerging

• Fransman (2007)

– Divides the ICT ecosystem into: final

consumers, content & applications,

network operators & network

element providers

– Identifies six sets of relationships

between these four layers

– Highlights that the relationships are

multi-dimensional (information,

financial, product & innovation)

– Places ICT within its broader context

– Demonstrates the inherent

instability of the ecosystem

Source: Fransman (2007) Innovation in the new ICT

ecosystem, Communications & Strategies, 4th quarter

6 symbiotic relationships in the

simplified model of the new ICT

ecosystem

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An uneasy relationship

Telecommunications

infrastructure

Economic

activity

Enables

Encourages

development of

Electronic

commerce

EncouragesE-commerce requires

infrastructure, but

challenges how it is

funded

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From a fixed to mobile

telecommunications industry

Source: ITU (2008: 2) Trends in telecom regulation, Geneva, Switzerland14

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Broadband

Broadband

• Is linked to competitiveness

• Gives rise to a range of

socio-economic benefits (e-

health, e-education etc)

• With its adoption being

driven by a range of factors

(such as age, income,

education etc)

Labour productivity and broadband in

selected EU countries (2001-2004)

Source: OECD (2008: 27) The future of the internet

economy: a statistical profile, Paris, France.

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Broadband

Source: ITU (2008: 4) Trends in telecom regulation, Geneva, Switzerland

More a developed than developing country phenomena: A

broadband gap exists

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What drives the numbers of

broadband adopters?

Source: Derived fromWhalley &Howick (2008) Understanding the drivers of broadband adoption: the case of rural and

remote Scotland, Journal of the Operational Research Society, available at www.palgrave-journals.com/jors

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Next generation networks

Source: http://www.btplc.com/21CN

NGN

• IP-based, core networks

• Deliver capacity at reduced

costs cf. previous

technologies/network layouts

• Enable bundling and service

innovation

• But currently there is no

‘killer application’

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Does speed + services = profits

Source: Carter, C. (2007) Future broadband: Policy approach to Next Generation Access, OFCOM,

London 19

It’s a mobile world

Source: ITU (2008: 3) Trends in telecom regulation, Geneva, Switzerland20

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Mobiles facilitate the exchange of

information

Source: Jagun, Heeks& Whalley (2008) The impact of mobile telephony on

developing country micro-enterprises: a Nigerian case study, Information

technologies and international development, Vol.4 (4) Fall/Winter

Information is at the heart of

markets

• Absence, uncertainty & asymmetry

shape how markets develop and

whether trade takes place

•Mobiles can connect buyers with

sellers

•Mobiles save on some activities,

encouraging others

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3 Group

• A 3G ‘pure play’ new

entrant

– Initial ‘value added’

based strategy swiftly

abandoned

– Replaced by a volume

and price sensitive

strategy

– Some data services have

proved to be popular

– Launched mobile Skype

in 200922

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The 3 Group has experienced

declining APRU…12-month trailing average revenue per active user to 31 Dec 2008

Total Non-voice

Prepaid Postpaid Blended

total

%

variance

cf. 31 Dec

2007

ARPU % of total

APRU

UK &

Ireland

£15.77 £38.91 £33.37 -14% £11.25 33.5%

Italy €13.42 €43.50 €25.34 -14% €8.03 31.7%

Australia A$37.04 A$69.67 A$66.54 -3% A$20.76 31.2%

Sweden &

Denmark

SEK122.01 SEK396.77 SEK379.18 -12% SEK137.74 36.3%

Austria €15.11 €34.34 €33.04 -22% €12.00 36.3%

3 Group

average

€14.92 €43.88 €33.50 -16% €11.00 32.8%

Source: Hutchison Whampoa (2009) Annual Report 2008, available at www.hutchison-whampoa.com23

…but it is not alone.

Source: Global Mobile (2009) Despite maturing markets, certain operators succeed in

increasing ARPU in 3Q08, Vol.16 (2) 24

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iPhone

25

…but who benefits?Operators introducing the

iPhone have witnessed:

• Increased APRU

• Reduced churn

• Increases in market share

But

• Separating out the iPhone

effects from other factors is

hard to do in practice

Elsewhere

Apple

• Has created a lucrative but

evolving business model

• Has created a reference product,

which whilst not perfect is hard

to beat

Application developers

• Some have benefited from the

low cost/high volume market

• Lock-in through linking mobile &

fixed versions of

products/software

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Global average monthly residential

mobile broadband price, 4Q08

Source: Global Mobile (2009) Operators adjust strategy to increase popularity of mobile

broadband, Vol.16 (8)

27

Monthly fee for 1GB mobile

broadband contract, 3Q08

Source: Global Mobile (2009) Operators in Western Europe differentiate on price and

download limits in mobile broadband push, Vol.16 (2) 28

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Mobile banking

Source: Coyle, D. (2007) Introduction, The transformational potential of m-transactions,

Vodafone Public Policy No 6 29

Pioneers are to be found in

emerging markets

Well known examples include:

• Which business model?

• Ensuring inter-operability

between systems

• Shaping the regulatory and

liability framework

• Building and maintaining trust in

and acceptance of the

service/technology

• Encouraging the use of micro-

payments

Issues:

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Summary

Electronic commerce

• Is associated with many socio-economic benefits

• Exacerbates the existing challenges faced by telecom

companies

• Questions ‘traditional’ funding mechanisms used in the

telecoms industry

• Encourages the search for ‘killer applications’

• Highlights the uneasy (fraught) relationship between

infrastructure and content

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Contact details

Dr Jason Whalley

E: jason.whalley@strath.ac.uk

T: +44 (0) 141 548 4546

F: +44 (0) 141 552 6686

W: www.strath.ac.uk/mansci

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