Modularization, structure and dynamics in the mobile industry

The mobile telecommunications industry is complex, involving many heterogeneous and interdependent technologies and actors. Over time, former hierarchies in the industry have become decoupled and platform ecosystems have emerged, consisting of a central platform surrounded by many complementors. It has been held that open technical connectors on platform interfaces affect a platform?s ability to attract innovation on the part of complementors, thereby fueling ecosystem innovation and growth. This thesis investigates how a platform actually emerges, and the role of platform interface openness in this development. The thesis is composed of three related research articles and an introductory part. Two articles are case studies of the emergence of platforms: on SMS application-to-person in Norway, and on the mobile number as a general-purpose identifier in Norway and in Pakistan. The third article is a multiple case study of five global platforms in the mobile telecommunications industry and the constitution and role of platform interface openness. The main theoretical lenses used for explaining the empirical findings are the platform ecosystem and the technological innovation systems approach. The case of SMS application-to-person in Norway (Article 1) describes the emergence of a platform ecosystem in the mobile telecommunications industry: many actors were involved in the decisions and events central to the further evolution of the platform?such as regulatory bodies, aggregators, and large users. Formal and informal institutions were significant in creating critical levels of trust and legitimacy, as shaped by regulations, the signaling of roles, transparency, and market sharing. Two-sided network effects were involved in spurring market growth; however, positive knowledge and systemic self-reinforcing effects were also important. Open technical connectors on the platform interfaces were seen as necessary, but not sufficient, for spurring further innovation. The positive self-reinforcing effects were even more important in the case of the mobile number as a general-purpose identifier (Article 2). Decisions and the shaping of formal and informal institutions strengthened the mobile number as an identifier. Gradually, the mobile number was incorporated into existing information infrastructure, further reinforcing its position as a relevant and useful resource. The case study of five global platforms (Article 3) found that platform interface openness involved more than technical connectors: the openness of a platform interface was highly affected by non-technical aspects such as rules for participation, documentation, and community building. The article shows that these non-technical factors in turn may have affected innovation processes such as knowledge sharing and legitimation and thus, the further growth of the platform ecosystem. These three related article demonstrate how the emergence of a platform ecosystem is a complex and unpredictable process involving many actors, beyond the platform and complementors. Actors and events affect each other and take the evolution of the ecosystem in a certain direction, due to distinct, positive self-reinforcing effects that are not only two-sided market effects. In addition, the many-faceted relationships that develop between the actors with regard to legitimacy and knowledge are central for enabling growth, as are the systemic feedback effects from incorporation into existing information infrastructures. The three studies show that there are many non-technical factors that affect platform interface openness; moreover, they indicate how such non-technical factors can affect innovation processes like knowledge sharing, legitimation, experimentation, and belief in business opportunities. These are processes that decades of empirical research have shown to be important for innovation and growth in technological systems. Combining the openness of platform interfaces with such processes can open up for a new understanding of the role of interface openness. This thesis contributes to the platform ecosystem approach by expanding our understanding of how a platform emerges, and the constitution and role of platform interface openness. It contributes to the technological innovation systems approach by introducing the phenomenon of platform ecosystems, along with the role that platform interface openness may play in innovation dynamics. Platforms managers could take advantage of new insights into structures and processes that affect the diffusion of their platforms; policymakers could use these insights to understand the effects of their institutional role better, and also how to assess, regulate, and incentivize such markets.

Telenor will carry out a project and PhD thesis with the research question: How does technology modularization affect the structure and competitive dynamics in mobile telecommunications ecosystems? Telenor is subject to changes in a complex and dynamic en vironment, and the relationship between technological modularity and industry dynamics is not well understood. The ambition is to increase the company's ability to predict changes to its ecosystem, and choose strategies for continued profits and growth. T he research will consist of empirical studies of subsectors in the mobile industry, and use of relevant theories. The methodological approach is empirical case studies. One ambition is to build a database where it is possible to perform network analysis . This will provide us with an overview of a sector, potential patterns and changes over time. Access to relevant data is a key challenge for this task. This approach will be combined with qualitative data that give deeper insight into the structures and dynamics. The questions will range from investigating the existence of a phenomenon, its frequency, and distribution and potential relationships between phenomena. We will use existing theory to focus the analysis. The goal is to accumulate new understa nding (theory). Telenor will use theories to enhance predictions, and to strengthen understanding of its the complex surroundings. Systems of Innovation (SI) is an established innovation theory, building on the finding that firms seldom innovate in isolat ion. SI is suggested as one theoretical perspective guiding the research. Ecosystem theories and network science will also be explored.