Evolution of Techno-Economic Systems - An Investigation of the History of Mobile Communications

Doktorsavhandling, 2002

The purpose of this thesis is to contribute to the understanding of how techno-economic systems emerge and evolve and how such processes can be analyzed. To these ends, the history of mobile communications is investigated, seen as a complex techno-economic system with two rapidly evolving and interacting subsystems - mobile telephony and mobile data communications - which are described, dissected and compared in case studies. An interdisciplinary systems approach to the analysis of techno-economic change is proposed here. Its point of departure is the technical system, i.e. a set of artifact components and relations between them, characterized by sets of functions and properties (technical performance and cost parameters). Key relations between technical systems are complementary and competitive, and can be analyzed in a multi-level framework where the application (system of use) is a key unit of analysis. Linked to the technical systems are co-evolving actor systems (including e.g. buyers, sellers, standards organizations at different levels), technology systems (i.e. knowledge related to the technical systems) and institutional settings. This framework allows analysis of several key aspects in techno-economic change processes, such as the importance of complementary and competing relations, diffusion (including systematic errors in forecasting it), compatibility standardization, the evolution of applications, and convergence processes. The thesis includes a comprehensive and detailed investigation (based on unique access to documentation and interviewees) of the emergence and formation of land mobile telephony in the 1940s and land mobile data communications in the 1980s, as well as their subsequent standardization, diffusion and convergence until year 2001. Focus is placed on the network standards NMT, Mobitex, GSM and UMTS, including complementary systems (e.g. terminals and fixed networks) and competing ones (e.g. AMPS, DataTac, IS-95 CDMA, CDMA2000). Juxtaposing the developments reveals a number of similarities and differences regarding e.g. the characteristics of the applications, diffusion processes, expectations, and standardization processes. Among the main findings is that compatibility standards are crucial for realizing complementarities. Firms' and regions' abilities to influence and promote successful standards affect their competitiveness, notably during competition between incompatible standards. Many findings pertain to diffusion: for instance, diversity of applications slows down the process of generic technical systems diversifying into new applications, and accordingly the diffusion process. In addition, market diffusion does not "take off" or depend on a "critical mass", although this is a common perception; diffusion processes are surprisingly regular. However, expectations and forecasts of growth have been very wrong, with systematic errors and differences between the two cases studied. These differences can partly be explained as underestimations of complementary and competing system interdependencies at multiple system levels. Complementary and competing relations coexist and co-evolve and their relative importance often changes over time. Such relations need to be explicitly recognized when analyzing diffusion, compatibility standardization, convergence and other central techno-economic change processes. Based on these findings, the techno-economic framework is refined and revised.