Telecommunications Investment Research Articles

Macroeconomic Facts for Telecom Industry in MINT Countries

Abstract This paper proposes an overview of macroeconomic correlation between telecom investments and the GDP of MINT countries. MINT countries are Mexico, Indonesia, Nigeria and Turkey and the term has populated by Goldman Sachs, who has also created a relatively more referred term BRICS. The paper holds a specialized literature for each of MINT countries and then proposes a statistical model for correlation analysis, which is built on three well-known correlation coefficient calculation, Kendall's Tau, Spearman's Rho and Pearson's Product Moment Correlation. The results show a high correlation between the telecom investment and the GDP for each of the countries, but the correlation coefficient differs from country to country. For example the highest correlation monitored is in Nigeria with about 70% and the lowest correlation is in Indonesia with about 44%.

Modeling Complex Telecom Investments: A System of Systems Approach

This paper presents a complex telecom investment problem analysis using system of systems concepts. This is necessary due to problem's multidimensional nature with several interdependences, and the presence of uncertainty and competition. A genetic algorithm is implemented in MATLAB in order to optimize the objective function (operator's profitability) of the formulated nonlinear programming problem. This approach is capable of providing optimal policies (regarding, e.g., services pricing, inception of investment, or revenues reinvestment) in a competitive market helping future investors in decision making by using various emulated strategic plans as reference.

Nations or Sectors in the Age of Globalization: China's Policy Toward Foreign Direct Investment in Telecommunications

AbstractScholars debate whether states or markets drive economic policy in the context of internationalization. Unpacking the market–state dichotomy, liberal pluralists and institutionalists alike conduct sectoral analysis to examine economic policies and outcomes. They debate the relative importance of sectors versus factors and the impact of sectoral coalitions, structural characteristics, and institutional trajectories. Building on previous scholarship, this article argues that state imperatives, such as national security and technological advancement, are an important guide to understanding dominant patterns of economic policy, defined as state goals, government–business relations, and state methods. Beyond that, the organization of institutions and structural sectoral attributes influence the ways in which actual policy outcomes vary across sectors and time. Case studies of the liberalization and subsequent reregulation of foreign direct investment across subsectors of telecommunications in China substantiate this argument. Evidence from other industries further validates this explanatory model.

Seeking the links between competition and telecommunications investments

This paper empirically analyzes the relationship between competition and investments in the telecommunications industries of OECD countries. The impact of market opening on infrastructure investments is a critical ingredient for regulatory reviews, but the literature findings on this subject are quite mixed. The paper employs various methods to find out whether pro-entry regulation and competition had any significant effect. As a first investigation, we seek unknown breakpoints in countries׳ investment series. Market opening and unbundling obligations are found to be temporally associated with investment breaks only in some countries, and both upward and downward shifts are detected. In order to understand causes behind cross-country heterogeneity, a micro-econometric model of incumbent׳s investments is estimated. Neither unbundling obligations nor competition intensity, alone, have a significant effect, but they spur incumbent׳s investments in combination. Overall, our results support the view that competition does not depress investments at firm and country levels. Conditionally on their ability to foster competition, unbundling obligations play a positive role.

Before and After Joining the European Union: The Impact of Investments in Telecoms on the Visegrád Group of Countries and Baltic States

The limited resources of transition economies accentuate the need for formulating effective and efficient policies for investments in information and communication technologies. However, the empirical evidence required for sound decision making is scarce, thus prompting a call for studies in the area of macroeconomic impact of investments in information and communication technologies. Using two-time series data sets, one for the period from 1993 to 2003 and another for the period from 2004 to 2010, the impact of investments in telecoms on total factor productivity in the context of transition economies was investigated. Specifically, the focus was on a group of seven transition economies that is comprised of the Visegrád Group of countries (e.g., Czech Republic, Hungary, Poland, and Slovakia) and the Baltic States (Estonia, Latvia, and Lithuania). Results suggest that all the members of the Visegrád Group of countries and the Baltic States group exhibited overall growth in productivity. Further, a comparison of the two periods shows that the most significant difference between those periods is that the dominant source of growth in productivity in the later transition period (2004–2010) was the efficient utilization of the existing technology, while in the former transition period the growth was driven by technological changes.

Did Separating Openreach from British Telecom Benefit Consumers?

In 2005, Ofcom, then telecommunications regulator in the United Kingdom, implemented functional separation of British Telecom plc (BT), separating its wholesale and retail services. BT established a division within the company, Openreach, to provide equal access to its local access network and backhaul products. The tenth anniversary of this regulatory and corporate experiment is an appropriate moment to ask whether functionally separating Openreach from BT benefited consumers. We find that Openreach's creation generated short-run consumer benefits in the form of lower prices but also led to negative long-run effects, which outweighed the short-term price reduction. Our econometric analysis indicates that prices for broadband and residential fixed-line telephone services are lower than one would expect based on prices in comparable countries. However, telecommunications investment, customer satisfaction, and measures of the United Kingdom's global competitiveness in telecommunications have also fallen. In particular, the United Kingdom's investment in next-generation networks is lagging compared with the rest of the world.

The Role of Telecommunications Infrastructure In The Regional Economic Growth of Africa

This paper presents empirical evidence on how telecommunications infrastructure is related to economic growth in a panel dataset covering 44 African countries for the period from 1990 to 2010. A dynamic panel data approach model is employed, which suggests that telecommunications contribute in a major way to the economic development of the continent, after controlling for a number of other factors. Furthermore, the findings also show that investment in telecommunications is subject to increasing returns, demonstrating that an increase in telecommunications investment produces further growth. Therefore, telecommunications investment and services should be encouraged in the region.

Did Separating Openreach from British Telecom Benefit Consumers?

In 2005, Ofcom, then telecommunications regulator in the United Kingdom, implemented functional separation of British Telecom plc (BT), separating its wholesale and retail services. BT established a division within the company, Openreach, to provide equal access to its local access network and backhaul products. The tenth anniversary of this regulatory and corporate experiment is an appropriate moment to ask whether functionally separating Openreach from BT benefited consumers. We find that Openreach’s creation generated short-run consumer benefits in the form of lower prices but also led to negative long-run effects, which outweighed the short-term price reduction. Our econometric analysis indicates that prices for broadband and residential fixed-line telephone services are lower than one would expect based on prices in comparable countries. However, telecommunications investment, customer satisfaction, and measures of the United Kingdom’s global competitiveness in telecommunications have also fallen. In particular, the United Kingdom’s investment in next-generation networks is lagging compared with the rest of the world.

The impact of telecommunication revenue on economic growth: evidence from Ghana

Purpose – The purpose of this paper is to investigate the long-run impact of telecommunications revenue and telecommunications investment on economic growth of Ghana for the time horizon 1976-2007. Design/methodology/approach – The paper uses the Augmented Dickey Fuller and Phillips Perron unit root test to explore the stationarity property of the variables and the Engle-Granger residual-based test of cointegration to model an appropriate restricted error correction model. Findings – The outcome of the analysis produced mixed results. Telecommunications revenue does not contribute significantly whilst telecommunications investment does. Practical implications – Policy makers will have to deal with a conundrum; while designing targeted policies that will attract more telecommunication investment in order to maximize the corresponding revenues and the economic growth it brings in its wake, they must at the same time find ways and resources to grow the economy to a point or threshold where revenue from telecommunications can have the much needed impact on their economies. Originality/value – The study is one of the first that has investigated the line of causality between telecommunication revenue and economic growth unlike previous research that mainly focused on the impact of telecommunication infrastructure on economic development.

Where do Investments in Telecoms Come from? Developing and Testing a Framework of Sustained Economic Impact of Investments in Information and Communication Technologies

The framework of neoclassical growth accounting is widely used to estimate the impact of investments in information and communication technologies (ICT) on the macroeconomic bottom line. Results of multiple investigations presented evidence that investments in ICT have a positive impact on such measure of macroeconomic outcome as gross domestic product. Thus, it is not surprising that less developed countries of the world often turn to investments to ICT as one of the sources of a sustained economic development. But sustainability of economic growth is predicated on the sustainability of the sources of growth, such as investment capital and labor. The question of how annual investments in ICT are sustained is an important one, and yet it was not given much research consideration. This is, in part, due to the absence of a theoretically sound framework outlining mechanisms of investments → outcomes → reinvestments process. In this study, we synthesize a consistent with the framework of neoclassical growth accounting model allowing for investigating the process by which various microeconomic outcomes of investments in ICT are associated with re-investments in ICT. We test the proposed model using techniques of structural equation modeling with the data on investments in telecoms (a common subset of investments in ICT) in the context of transition economies. The results of the investigation support the notion of cyclical relationship between investments in ICT and economic outcomes [Qureshi, S. (2013). What is the role of mobile phones in bringing about growth? Information Technology for Development, 19(1), 1–4] and offer valuable insights to decision- and policy-makers tasked with the responsibility of improving the impact of investments in ICT.

Information and Communications Technology (ICT) and Trade in Emerging Market Economies

This paper examines the effects of information and communications technology (ICT) on international trade in emerging markets. Using panel data for 40 emerging market economies (EMEs) for a period from 1995 to 2010, we estimate fixed effects models of exports and imports on ICT and other control variables. Our ICT variables include the growth of telecom investment, international Internet bandwidth, Internet subscriptions per 100 people, and the number of Internet hosts per 100 people. We use the share of total exports and of total imports in GDP as the dependent variables. Additionally, we consider the GDP share of exports and imports for goods and services separately. The main control variables are: per capita GDP growth, population growth, and the GDP growth for the rest of the world. The empirical results overwhelmingly suggest that Internet bandwidth, Internet subscriptions, and Internet hosts have significant positive impacts on export share while all four ICT variables including telecom investment growth have significant positive impacts on import shares in emerging market economies. This result is robust across shorter sample period, a subsample of EMEs, alternative estimation method, and alternative model specifications. There are important policy implications of this result for developing countries.

Entry, Investment and Competition In Telecommunications and Media Markets

Entry, Investment and Competition In Telecommunications and Media Markets

Human Development and Macroeconomic Returns within the Context of Investments in Telecoms: An Exploration of Transition Economies

Previous investigations into macroeconomic impact of investments in information and communications technology (ICT), while primarily focused on developed economies, have yielded some important insights. For example, it was determined that: (1) the investments-to-revenues model works well only if a threshold level of ICT capital infrastructure has been developed, (2) it is not the quantity but the quality of the full-time ICT workforce that plays an important role in converting a stream of investments in ICT into revenues and in achieving a spillover effect of investments that is captured by total factor productivity (TFP). In this study we investigate the impact of human development, as measured by the human development index (HDI), on macroeconomic outcomes and TFP. The subject of the study is a group of transition economies, a set of highly related economies that has the Leaders group that has some of the characteristics of developed economies and the Followers group that has some of the characteristics of less-developed economies. Results of our investigation offer evidence that HDI has a statistically significant impact on GDP (gross domestic product) and TFP only in the case of the Leaders.

SK텔레콤 가치네트워크의 역동적 진화에 관한 장기사례분석

새로운 가치를 창출하기 위한 자원 확보는 기술과 시장의 불확실성이 높은 융합시장에서 기업이 살아남기 위한 필수조건이다. 이 연구는 융합환경에 직면한 이동통신사가 새로운 가치창출을 위해 필요한 자원들의 연결체인 가치네트워크를 어떻게 재구성해왔는지를 밝혀내고자 했다. 이를 위해 SK텔레콤을 분석 사례로 선정하여 1999년부터 2008년까지 SK텔레콤의 출자구조에 대한 측정을 통해 자원구성관점에서 SK텔레콤의 가치네트워크가 융합환경에 어떻게 적응해왔는지를 실증적으로 분석하였다. 연구결과 이동통신망의 고도화에 기반한 융합서비스 제공은 SK텔레콤의 수입원천에 구조적인 변화를 가져왔으며, 사업영역의 확장을 통해 SK텔레콤이 미디어기업으로 자리매김할 수 있는 원동력으로 작동하였다. 이 과정에서 출자구조로 측정된 SK텔레콤의 가치네트워크는 새로운 가치창출을 위해 동종 산업뿐만 아니라 이종 산업에 존재하는 보완적 자산을 역동적으로 재구성해가며 가치 지향적으로 진화했다. This study attempts to identify how the value network of mobile industry has evolved in the value creating process. The longitudinal case study on SK Telecom was conducted by measuring the SK Telecom's investment structure during from 1999 to 2008. Results show that the convergence services based on the advanced mobile networks changed the revenue structure, and enabled SK Telecom to reposition as a media company. For the value creation, SK Telecom's value network has flexibly adapted to convergence environment through dynamic asset reconfiguration.

Access regulation, entry and investments in telecommunications

This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In the case of resale based entry the entrant needs access to the incumbent network. Unlike the rival, the incumbent has always the option to upgrade the existing network to provide advanced services. We study the impact of access regulation on the type of entry and on firms’ investments. We find that without regulation the incumbent sets the access charge to prevent resale based entry and this generates a social inefficient level of facility based entry. Access regulation may discourage welfare enhancing investments, thus also inducing a socially inefficient outcome. We extend the model to account for negotiated interconnection in the case of facilities based entry.

What Drives Investment in Telecommunications Markets? Evidence from OECD Countries

Abstract Recent studies provide clear evidence that the quality of telecommunications infrastructure has strong impacts on economic growth. Especially in Germany there is a controversial debate how to stimulate telecommunications investment to foster the introduction of Next Generation Networks. To find appropriate policies to enhance infrastructure investment one has to get a thorough understanding of the determinants of infrastructure investment. Using a panel consisting of 30 OECD countries for the period 1990 to 2011 and taking account of possible non-stationarities in aggregate data, we investigate the main drivers of telecommunications investment on an aggregate level applying dynamic panel data methods. Our main finding is an inverted U-shaped relationship between per capita telecommunications investment and competition.

Competition and investment in telecommunications: Does competition have the same impact on investment by private and state-owned firms?

The liberalization of telecommunications is largely based on the premise that increasing competition will encourage investment. The hypothesis that liberalization promotes investment has received the most empirical support in recent research. However, a key question that has been largely ignored in the literature is whether competition has the same impact on investment by private and state-owned firms. We conduct an empirical study of the infrastructure investment of 20 incumbent telecommunications operators in OECD countries between 1994 and 2008, and we conclude that greater competitive pressure fosters infrastructure investment by state-owned incumbents but reduces investment by private incumbents.

Investigating the Impact of Investments in Telecoms on Microeconomic Outcomes: Conceptual Framework and Empirical Investigation in the Context of Transition Economies

We propose and test a conceptual model allowing for the investigation of the microeconomic impact of investments in telecoms. While the impact of investments in telecoms on the macroeconomic outcomes has been previously investigated, there seems to be no published research that looked at the microeconomic impact of telecom investments. The proposed conceptual model links investments in telecoms with microeconomic constructs that are closely associated with such measure of macroeconomic bottom line as GDP; this allows us to outline a more detailed path traversed by the impact of investments. We use structural equation modeling to test the proposed model in the context of a sample of transition economies comprising two groups differing in terms of economic development. The results suggest the existence of the context-independent paths that are common to both groups; however, there is evidence that some of the impacts of investments in telecoms are dependent on the level of economic development. The results of the investigation offer valuable insights to decision and policy makers tasked with the responsibility of improving the micro- and macroeconomic impacts of investments in telecoms.

Telecommunications investment and economic growth in ASEAN5: An assessment from UECM

This paper examines the impact of telecommunications investment on the economic growth of the ASEAN5 countries namely, Malaysia, Indonesia, Philippines, Singapore and Thailand, over the period 1975–2007. The unrestricted error correction model (UECM) and bounds testing approach are employed where a positive and significant long-run relationship is identified in the cases of Malaysia and Singapore. This is not the case for the other ASEAN5 countries. Granger non-causality testing indicates that telecommunications investment causes ASEAN5 economic growth but not vice versa.

Determinants of backward linkages of oil and gas industry in the Nigerian economy

This paper examines the determinants of backward linkages from the oil and gas industry in Nigeria. Secondary and primary data collected cover firms engaging in fabrication and construction; well-construction and completion, and control systems and ICT. Both descriptive and inferential statistical approaches were employed in the paper. Despite the widespread view that local content in the Nigerian oil industry is very low, there is a clear evidence for the existence of linkages – at least insofar as the three sub-sectors considered in this analysis are concerned. The paper shows that many of the linkages in the Nigerian oil value chain involve local firms, and that this has been a consequence of local content policies and investments in telecommunications and transport. Linkages have been held back by weaknesses in power and water infrastructure. The large investment in higher education in Nigeria suggests that skill-constraints have not been a major obstacle to linkage development in the three sub-sectors. The flow of labour to and from other sectors is indicative of learning spillovers, both within Nigeria and in the West African regional economy. Regression analysis shows that skills, policies, the quality of the national innovation system and their interactions are the major drivers of backward linkages. A number of policy implications to enhance linkage development in Nigeria's oil and gas value chain are identified.