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Deconstruction of the telecommunications industry: From value chain to value networks

Li, Feng and Whalley, Jason (2002) Deconstruction of the telecommunications industry: From value chain to value networks. Telecommunications Policy, 26 (9-10). pp. 451-483. ISSN 0308-5961

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The telecommunications industry is undergoing a radical transformation, creating exciting new opportunities and new challenges for infrastructure and service providers. The established value chain is increasingly being deconstructed, with the entry of powerful new players and radical restructuring of the industry. Rapid technological developments and increasing market turbulences have added new dimensions to an already complex scenario. Many tested business models, as well as related frameworks, tools and techniques, have become obsolete. The paper uses recent evidence to illustrate the evolving telecommunications value chains and market structure, examine the underlying theoretical and practical reasons for such changes, and highlight the strategic implications for the various players involved. The paper concludes that some of the current changes in the telecommunications industry are very radical, and all players need to re-evaluate their strategies and market positions and make hard decisions as to where to go next. The value chains are rapidly evolving into value networks, with multiple entry and exit points, creating enormous complexity for all the players involved. Further research is urgently needed to map out the telecommunications value chains and value networks that are possible in the context of the new economy; identify the different players and the possible strategies and business models that they can adopt; develop new conceptual frameworks for understanding the current changes in the telecommunications and related industries; and create new tools and techniques for identifying opportunities and threats and for making new strategies.