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IUB TEL-T 207 - T207 Lectures

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8/27: Introduction to Telecommunications Industries & ManagementWhat is telecommunications?Ways of defining it:Definitions of the wordsHistorical context within departmentEducational goals for youMedia arts and science departmentIndustries (Tcom & media constantly evolve)Video gamesVideo -> tv, moviesTelegraphTelephoneBooksComicsRadioSatellitesRadioInternetPornSocial mediaThe internet: what is it trending toward?Google:To organize the world’s information and make it universally accessible and usefulWhat a “business model”The ability to gain access to both good and bad is ever increasingWith advances in technology, we are seeing the early stages of much more dynamic thingsDay 2 – 8/29Preliminary 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/tcomBasic business analysisCompany’s business model and historyProfits = revenues – costsWhat 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?CompetitorsDirect competitorsIndirect competitors: how indirect?Degree of substitutabilityDifferent strategiesPrice, style, and branding, functional differences, supply and distribution chain differencesCustomers (battleground)Demographics:Age, socio-economic status, region, education, etcBusiness vs. individualsPsychographics:Culture, attitude, style, values, beliefs, etc.Previous purchasesLegal issues (ip, regulatory, other)Intellectual property:Patents, copyrights, trademarks, trade secretsCompetition regulationTorts: (suing someone)Privacy, publicity, product consequences, etc.Cultural issuesAttitudes towards products and competitors’ productsCultural integrationCultural consequencesTechnological issuesEvolution of productCost dynamicsFunctionality and qualityAdoption patternsComplementary products and their evolutionStrategy options and analysisThe telegraph: history and business model (1830-40s)What is it? What does it do?Sends message by Morse codeDashes and linesBefore this only could use postal service (20mi/hr was fastest)Telegraph travels roughly at speed of lightneeds transmitter points and receiver points to send messagehave to wire the country, needs investorsessential concepts:externalitya 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 benefitpositive – friend on fbnegative – buy an item manufactured & no one pays for pollutionnetwork effecteffect 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 iteconomies of scalecost 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 wellwal mart sells more products regularly, can lower pricestelegraph:competitors?Must perform the same analysis of each, but just to a smaller extentPostal service was main competitorPeople already in habit of using itCustomersMilitary, 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 allowWith telegraph you can alter your plans on the fly, because they can coordinate themselves across different geographic locationsIssuesPatent slowly rolled out to be able to control how it was occurringWent from controlled by one specific company to lotsIssue about whether or not message was issued properly and who was at faultTelecommunications monopoly was first monopolyTech issueClarity of telegraph, efficientA natural monopoly?One central coordinating systemHave opportunity to exhibit monopoly powers and behaviorsWestern union bought election – haysSupport candidate by controlling info in newspapersIdentified information being sent between candidates as places to targetCentralized efficiency but, abuse of market powers?Creating greater value to an entity that would be a nationwide serviceEconomies of scale – 1 can do all is cheaperAbuse of powers bc they could rig an electionDominant in railroad industryExclusivity of news, and later, the associated pressRutherford b. hayes 1877-1881Railroads – saved 2.5 years of work9/3 Telegraph1887: businesses 87% of telephone linepatent granted in 1840 but lapsed well before western union achieved a national monopoly in 1866no antitrust regulationhow can a new market entrant compete?9/3 The Telephonebusiness model & historycompetitorsis it really only a company or is it an industryis it really a competitor to the telegraphcould be competiting technology in the long runthe kronos effectdominant industry player has a strong incentive to maintain its dominance by purchasing technologies to sustain their technologysustaining vs. disruptive innovationssustainingharmonic telegraphdisruptive – changes telegraphtelephonepatentset 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 innovationassigned to first person that filesnon-obviouslegal issues – the patent 1876bell companybell, hubbard, and an assistantother inventorsElisha gray and a list of Europeanssimultaneous discovery?!Patent fightBell offered to sell patent to WU for 100kBy end of 1878, WU had developed 56 thousand telephonesBell fell into depression… until Theodore VailYet WU also had improvement patents, and massive reserve of money, power and influenceThe customers (battleground)Bell sues WU for patent infringementJay Gould blindside finance attackWU can no longer afford litigation with bellNon-compete & isolation of marketsEach agree to say out of each others businessWU gets 20% of income from telephone (licensing fees)Telegraph was mainly used for business and newsTelephone shifts more to


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