T207 08 27 2013 8 27 Introduction to Telecommunications Industries Management What is telecommunications Ways of defining it o Definitions of the words o Historical context within department o Educational goals for you Media arts and science department Industries Tcom media constantly evolve Video games Video tv movies Telegraph Telephone Books Comics Radio Satellites o Radio o Internet Porn o Social media The internet what is it trending toward Google To organize the world s information and make it universally accessible and useful What a business model The ability to gain access to both good and bad is ever increasing With advances in technology we are seeing the early stages of much more dynamic things Day 2 8 29 Preliminary options for business research fb aol google Disney Comcast sony Viacom clear channel Nielsen apple at t music movie television video games social media information dist tcom Basic business analysis Company s business model and history Profits revenues costs What is sold business or service Does it change Does adoption matter Who wants it and why Does it require infrastructure or a network Does it require other complementary products Are there economies of scale Competitors Direct competitors Indirect competitors how indirect o Degree of substitutability Different strategies o Price style and branding functional differences supply and distribution chain differences Customers battleground Demographics o Age socio economic status region education etc o Business vs individuals Psychographics o Culture attitude style values beliefs etc o Previous purchases Legal issues ip regulatory other Intellectual property o Patents copyrights trademarks trade secrets Competition regulation Torts suing someone o Privacy publicity product consequences etc Cultural issues Attitudes towards products and competitors products Cultural integration Cultural consequences Technological issues Evolution of product o Cost dynamics o Functionality and quality Adoption patterns Complementary products and their evolution Strategy options and analysis The telegraph history and business model 1830 40s What is it What does it do Sends message by Morse code o Dashes and lines Before this only could use postal service 20mi hr was fastest Telegraph travels roughly at speed of light needs transmitter points and receiver points to send message o have to wire the country needs investors essential concepts externality a cost of benefit that results from an activity or transaction and that affects an otherwise uninvolved party who did not choose to incur that cost or benefit o positive friend on fb o negative buy an item manufactured no one pays for pollution network effect effect that one user of a good or service has on the value of that product to other people When network effect is present the value of a product or service is dependent on the number of others using it economies of scale cost advantages tat enterprises obtain due to size with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output Often operational efficiency is also greater with increasing scale leading to lower variable cost as well o wal mart sells more products regularly can lower prices telegraph competitors Must perform the same analysis of each but just to a smaller extent Postal service was main competitor o People already in habit of using it Customers Military families moving out to find work land situations where America had to expand rapidly newspapers finding out news getting numbers out banks size of businesses began to change can only be as large as internal costs allow With telegraph you can alter your plans on the fly because they can coordinate themselves across different geographic locations Issues Patent slowly rolled out to be able to control how it was occurring Went from controlled by one specific company to lots Issue about whether or not message was issued properly and who was at fault Telecommunications monopoly was first monopoly Tech issue Clarity of telegraph efficient A natural monopoly One central coordinating system Have opportunity to exhibit monopoly powers and behaviors Western union bought election hays o Support candidate by controlling info in newspapers o Identified information being sent between candidates as places to target Centralized efficiency but abuse of market powers o Creating greater value to an entity that would be a nationwide service o Economies of scale 1 can do all is cheaper o Abuse of powers bc they could rig an election Dominant in railroad industry Exclusivity of news and later the associated press Rutherford b hayes 1877 1881 Railroads saved 2 5 years of work 9 3 Telegraph 1887 businesses 87 of telephone line patent granted in 1840 but lapsed well before western union achieved a national monopoly in 1866 no antitrust regulation how can a new market entrant compete 08 27 2013 9 3 The Telephone business model history competitors is it really only a company or is it an industry is it really a competitor to the telegraph o could be competiting technology in the long run the kronos effect o dominant industry player has a strong incentive to maintain its dominance by purchasing technologies to sustain their technology sustaining vs disruptive innovations o sustaining harmonic telegraph o disruptive changes telegraph telephone patent set of exclusive rights granted to an inventor or their assignee for a limited period of time in exchange for the public disclosure of the invention The legal device also exists to create and incentive for innovation by allowing he inventor to create a business around the innovation and to prevent others from attempting to free ride on the innovation assigned to first person that files non obvious legal issues the patent 1876 bell company bell hubbard and an assistant other inventors Elisha gray and a list of Europeans simultaneous discovery Patent fight Bell offered to sell patent to WU for 100k By end of 1878 WU had developed 56 thousand telephones Bell fell into depression until Theodore Vail Yet WU also had improvement patents and massive reserve of money power and influence The customers battleground Bell sues WU for patent infringement Jay Gould blindside finance attack o WU can no longer afford litigation with bell Non compete isolation of markets o Each agree to say out of each others business o WU gets 20 of income from telephone licensing fees Telegraph was mainly used