Understanding FMC by reconfiguring value chain of telecommunication market

Abstract

One of the big issues in the telecommunications industry is that of ``convergence``. Convergence between fixed and mobile networks, telecommunications and media, and telecommunications and finance has become a technologically driven reality. Development and innovation has facilitated the convergence of industries and has made boundaries between them increasingly ambiguous. It is in fact widely agreed that developments in technology will lead not only to a convergence of industries, but also to a break-up of old value chains. The value chain serves as an analysis model of industry process and is a proper analytical tool in rapidly changing circumstances. This paper attempts to provide a better understanding of convergence between fixed and mobile industries, by investigating changes in the value chains of the telecommunications industry. Through reconfiguring the fixed-mobile converged value chain of the said industry, it may be possible to set the guideline for future strategies and policies suitable for changing industry conditions. There are five types of value chain transformation logic, namely flowing backward, dismantling, integrating, eliminating and inserting. Flowing backward occurs when the starting point of value flow is the customer and not the product. Dismantling refers to a concentration on one specific sector with competitive advantages, while outsourcing less advantageous sectors. Integrating refers to a partnership that develops from a simple connection to a community that creates customer value. Eliminating means removing a specific value chain that is not efficient. Lastly, Inserting refers to the emergence of new value adding players. Based on the five types of value chain transformation, this paper draws a new type of value chain under the fixed and mobile converged circumstances. It takes into consideration that the content and application related sector has becomes larger than the network access related sector. Further, newly emer...