The diffusion of VoIP (voice over internet protocol) fosters the process toward the info-communication industry

1
The diffusion of VoIP (voice over internet
protocol) fosters the process toward the
info-communication industry

• CECERE Grazia
• Phd student in economics
• Dime workshop  Distributed networks and the
  knowledge and the knowledge -based economy  2007
• Université Paris Sud 11, Laboratoire ADIS, France
• Joint Supervision University of Torino, Italy
• Visiting Student University of Sussex, SPRU,
  United Kingdom

2
Outline

• Technical characteristics of VoIP-modularity
• Analysis of VoIP economical characteristics, such
  as indivisible, fungible, cumulative and
  complementary in respect to internet protocol.
• Layer model
• Telecommunication industry toward the
  info-communication industry knowledge dynamics.
• Two main models of VoIP application and the
  criteria for distinguished them.

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Two main applications

• IP network Voice service providers are Internet
  Service Providers (ISP), technology applied to
  the broadband networks they offer free calls and
  other bundling services, examples are Iliad/
  Free, Talk-to-Talk, Vonage, FastWeb -1999 and
  2001
• VoIP software- service allows communication
  PC-to-PC, thus the communication is made thanks
  to free software downloading, such as Skype,
  Yahoo voice messenger - 2002 and 2003
• Incumbents have applied the technology only for
  enforcing the backbone- no new offers for
  consumers (less competitive)

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Objective

• The article shows how the VoIP technology is
  transforming the telecommunication industry into
  the info-communication industry. How these
  generate knowledge dynamics into the industry as
  it became IP based and how these changes generate
  welfare for the consumers.
• Evolutionary approach and knowledge economy

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1. Technical analysis

• Distinction among packet switching technology and
  circuit switching (traditional public switched
  network-PSTN)
• VoIP reduces the cost of communication
• VoIP could be considered as a module
• modularity- (Baldwin Clark, 1997 Steinmuller,
  2005)

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Economics characteristics of VoIP

• VoIP is coming from a general purpose
  technology (Bresnahan, Trajtenberg, 1995
  Verspagen, 2007) the internet protocol. For this
  reason, I assume that it has the same
  characteristics of knowledge indivisibility,
  cumulative, fungible and competitiveness.
• (Scotchmer, 2005, Antonelli, 2005)

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Knowledge dynamics
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Layer method static and dynamic analysis
Fransman (2002b), Fransman Krafft, (2002) avec
actualisation de lauteur
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Inter and intra layer convergence
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Some economics evidences

• Explanation into the resource based view
  (Penrose, 1959)
• Creation of economy of scale and scope (Davies ,
  1996, Maeda al. 2006)
• Vertical integration of production

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Info-communication industry vs. old
telecommunication industry

• Open innovation system
• Low barriers to entry many innovations
• Based on general purpose technology
• Innovation incentive new technologies and
  applications
• Rapid, concurrent, innovation

• Closed innovation system
• High barriers to entry
• Few innovations
• Fragmented Knowledge based
• Medium-powered incentives
• Slow, sequential, innovation

Fransman (2003)
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Criteria for categorizing IP network voice
service and Voice software-service
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Conclusions

• The Knowledge dynamics has been a vehicle of
  welfare for consumers
• Policy implication, VoIP diffusion fosters the
  widespread of broadband internet connection