Table of Contents

Preface vii
Table of contents ix
Chapter
1 Introduction 1
1.1 Context 3
1.2 Exploring the nature of the project 4
1.3 The research problem and research question 11
1.4 Methodological considerations 14
1.5 Research design 24
1.6 Data representation and sources 27
1.7 Quality assurance 28
1.8 Notes 29
2 A stylized model of euphoria 33
2.1 Introduction 35
2.2 The principles of bubbles 35
2.3 A stylized model of euphoria 41
2.4 Summary and conclusions 53
2.5 Notes 54
3 Euphoria as part of a technological revolution 55
3.1 Introduction 57
3.2 The business cycle 57
3.3 Regularities in history 60
3.4 Theory of Reasoned History 62
3.5 The Great Surge model 66
3.6 Stylized model of Great Surges 70
3.7 Summary and conclusions 74
3.8 Notes 75
4 Industry development and the ‘development path’ 77
4.1 Introduction 80
4.2 Exploring the characteristics of the telecom sector 80
4.3 Revisiting the strategy and policy perspectives 89
4.4 Exploring the ‘development path’ of the sector 94
4.5 Industry development and industry structure 104
4.6 Summary and conclusions for the research focus 122
4.7 Notes 125
Table of contents
x
Chapter
5 The development path of the telecom sector before the bubble 129
5.1 Introduction 132
5.2 The drivers of industry development 133
5.3 The inhibitors of industry development 145
5.4 The development path of the telecom sector up to 1995 150
5.5 Summary and conclusions 168
5.6 Notes 171
6 The Internet bubble explained 173
6.1 Introduction 177
6.2 Application of the stylized model of euphoria 183
6.3 Application of the stylized model of Great Surges 240
6.4 Summary and conclusions 255
6.5 Notes 256
7 The impact of the Internet bubble on the development path of the
telecom sector 261
7.1 Introduction 264
7.2 The linkage between the ‘bubble and the path’ 264
7.3 Exploring the development path of the telecom sector during
the bubble period 1995-2002 268
7.4 The development path of the telecom sector during the bubble
period 1995-2002 289
7.5 Summary and conclusions 309
7.6 Notes 317
8 The implications for policy and strategy formation in the
aftermath 319
8.1 Introduction 321
8.2 Strategy and policy perspectives during the bubble period 322
8.3 Typical policy considerations in the aftermath of bubbles 327
8.4 The implications for the telecom sector 330
8.5 Implications emerging from the installation of the new technoeconomic paradigm 339
8.6 Implications for policy formation 344
8.7 Implications for strategy formation 350
8.8 Conclusions 354
8.9 Notes 355
Table of contents

xi
References 357

Annex
1 List of abbreviations and acronyms 371
2 Time line of events 377
3 Rail Road Mania in the 19th century 391
4 Downsizing in the aftermath 399
5 Filing for bankruptcy protection 403
6 Acquisitions in the telecom sector 409
7 Optical networks build-out 415
8 A telecom industry cycle 423
Summary 447
Samenvatting 451
Curriculum Vitae 455

Abstract

In this dissertation the impact of the Internet bubble on the development path of the telecommunication sector is being explored and explained. The insights obtained are used to provide recommendations for the formation of government policy and firm strategy in the aftermath. Periods of euphoria are a recurring feature of economic development and the brevity of our “financial memory” and our tendency to pursue quick gains will stimulate the development of future bubbles. While periods of euphoria are inefficient and even wasteful, when they occur as part of the diffusion of a new technological revolution the over-investments in the related infrastructure will provide the basis for reaping the benefits of the new techno-economic paradigm, including its productivity improvements. The process of Telecom Reform has fundamentally changed the “rules of the game” in the sector and has moved strategy formation to the forefront of corporate activity. The Internet bubble period is characterized by a quickly expanding range of business opportunities and an accelerated shift from circuit-mode to packet-mode and from fixed to mobile communication. In the period of frenzy “consensual vision” was taking over. In this euphoric period the incentives appear to have driven the behaviour of managers. The linkage of telecommunication to the diffusion of the new techno-economic paradigm is extending policy formation from Telecom Reform, to ICT policy and beyond. Many of the changes the paradigm shift has evoked are still very much emergent, and have not led to a full alignment between the technological, economical and social domains. Hence, the potential benefits are not yet realized. Therefore, it is recommended to revisit the current policy formation process against the back drop of the diffusion process of the “CT-driven” technological revolution. The prospect that upon an appropriate adjustment of the institutional environment a period of prosperity, a âgolden ageâ, may develop, should present a compelling “incentive for action” for all actors involved.

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