Compatibility Standards And Industry Competition: Two Case Studies

Abstract

Case histories of two data communication interfaces provide evidence of complex strategic behavior in the setting of voluntary compatibility standards. These cases show how subtle differences in the design of standards development organizations affect incentives to cooperate, giving rise to systematic venue preferences. Dominant firms prefer more bureaucratic procedures offering greater protection for the status quo. The two interfaces, FDDI (under development in X3) and DQDB (under development in the IEEE) shed light on competition between the computer and telecommunications industries and the evolution of our communications infrastructure. They demonstrate the importance of standards for intra- and inter-industry competition.Voluntary compatibility standards and standardization, telecommunications, information technology and open systems, industrial organization, market structure and technical progress,

The Politics of Compromise

“…Lehr (1996) describes the case the ANSI-accredited X3 committee (now INCITS), where a simple majority was required to discuss and vote on a working document. In 1987, IBM was able to delay the proceedings on the Fiber Distributed Data Interface (FDDI) by repeatedly submitting alternative proposals that contained minor design differences from the leading project.…”

The rules of standard‐setting organizations: an empirical analysis

“…Empirical work on SSOs by economists and noneconomists alike has been dominated by case studies 8 . Most relevant to this work is Lehr's (1996) documentation of the intense jockeying between firms in projects at two standard‐setting bodies. Sirbu and Zwimpfer (1985) present a case study of X.25, which standardized “packet switching” over public networks.…”

Standards and standards organizations in the international free trade regime

“…Often it is contingent on business strategy or simply a matter of historical accident if a standard is adopted by an official or a private standards organization (cf. Lehr, 1996;Werle, 2001a). But the narrow definition of official standards in the WTO regime excludes most standards developed by private organizations although these private entities exist in abundance as has been indicated above.…”