The coevolutionary relationship of technology, market and government regulation in telecommunications

Abstract

The telecommunications industry has been undergoing tremendous technological changes, and owning to continuous technological advancement, it has maintained sustained prosperity and development. In this paper, the interplay between technology, market and government in telecommunications is discussed briefly, and then we introduce technology and government into the traditional SCP (Structure — Conduct — Performance) paradigm to develop an industry analysis framework called TG-M(SCP) (Technology — Government — Market (Structure — Conduct — Performance)). Based on this framework, we present the spiral co-evolution model which elaborates on the interaction mechanism of technological innovation with government regulation and market dynamics from the perspective of industry evolution. Our study indicates that the development of the telecommunications industry is the result of the coevolution of technology, government regulation and market forces, and among the three actors, technology is the fundamental driving force. Relative to the invisible hand (market) and visible hand (government), we conceptualize technology as the third hand, which fundamentally drives the development of telecommunications industry in coordination with the other two hands. We also provide several policy implications regarding these findings.