The Politics of Commoditization in Global ICT Industries: A Political Economy Explanation of the Rise of Apple, Google, and Industry Disruptors

Abstract

The global Information and Communications Technologies industry has experienced a rapid, radical reorganization of industry leaders and business models-most recently in mobile. New players Apple and Google abruptly redefined the industry, bringing a wave of commoditization to carriers and equipment manufacturers. Technologies, corporate strategies, and industry structures are usually the first places to look when explaining these industry disruptions, but this paper argues that it was actually a set of political bargains during initial phases of telecommunications liberalization, which differed across countries, that set the trajectories of development in motion. This paper shows how different sets of winners and losers of domestic and regional commoditization battles emerged in various ICT industries around the world. Carriers won in Japan, equipment manufacturers in Europe, and eventually, computer services industry actors rather than communications firms emerged as winners in the US. These differences in industry winner outcomes was shaped by the relative political strength of incumbent communications monopolies and their will to remain industry leaders, given the political system and political dynamics they faced during initial liberalization. The US computer services industry, which developed independently of its telecommunications sector due to antitrust and government policy, eventually commoditized all others, both domestically and abroad. This paper contends that a political economy approach, tracing how politics and regulatory processes shaped industry structures, allows for a better understanding of the underlying path dependent processes that shape rapidly changing global technological and industry outcomes, with implications beyond ICT.

Transnational over-the-top media distribution as a business and policy disruptor: The case of Netflix in Canada

“…The expansion of players from the computer industry into new industries radically disrupts existing business models (Kushida, 2015). Downes & Nunes (2014) call the process of innovation in which newcomers take advantage of digital and cloud-based technologies to offer consumers massively better, cheaper and more customized experiences from the moment of market entry big bang disruption.…”

Analysing the Impact of Regulation on Disruptive Innovations: The Case of Wireless Technology

“…At the same time, the appearance of Skype, despite of the undeniable significance of the innovation for the industry, has not destroyed the business of British Telecom, Deutsche Telecom or Telefonica. There are some concerns of the incumbents about Bcommodization^of their services (Larouche 2007;Kushida 2015), but it does not mean the loss of their places under the sun.…”

The Digital Disruption and its Societal Impacts

“…He believes that these types of applications are where the true value of big data can be realized. Kushida (2014) concentrates on the politics of ICT commoditization, i.e., he argues that national-level political and socio-economical dynamics influenced the rapid disruptions experienced by global ICT industries. His analysis suggests that local regulatory and technology choices played critical roles in shaping globally disruptive business models driving commoditization.…”