Strategic Challenges for the European Telecom Sector: The Consequences of Imbalances in Internet Traffic

Abstract

Abstract The current business model of European telecommunications operators is unsustainable. According to Liebenau, Elaluf-Calderwood, and Karrberg, the old model does not reflect new architectures for the provision of digital services. It is economically unfeasible, they say, to continue to promote the idea of a “dumb pipe” industry alongside a services and content industry. However, network neutrality requirements could stand in the way of application-based charging, significantly hampering market development. To survive, operators need a new multi-sided strategy built around different modular types of traffic in order to link their business models to emerging Internet value chains.