Competition in the European Mobile Phone Industry

Competition in the European mobile phone industry: Introduction of UMTS in Spain

Unique characteristics of the phone operator compared to traditional manufacturing sectors

Many of the fundamental characteristics differ between manufacturing and services. These include the following:

· Ability to develop and protect proprietary technologies: Imitation is simpler for a phone operator; manufacturing process/system patents are more difficult to obtain and protect.

· Incremental nature of innovation versus discrete technology transition: Because of competitive pressures and the relatively low cost of modifying service provision (compared to changes to manufacturing processes), services offered by phone operators can continually evolve.

· Technology Development. A key distinction is the nature of research and development. Manufacturing firms conduct a larger share in house, and the output of that internal activity is more likely to be a proprietary technology. For phone operators, little research occurs in house, and the development activity that occurs is primarily related to enhancing, redesigning, or reconfiguring others’ proprietary technologies. Whereas manufacturing firms license/purchase others’ technologies in the form of intellectual capital or equipment to be used to produce proprietary technology, phone operators would purchase others’ technology in the form of equipment to be modified and integrated into their operational system to deliver modifications to existing products. In addition, manufacturing firms strategically, through their research, introduce new technologically advanced products and processes to anticipate new consumer wants; whereas phone operators strategically, through information gathering, modify existing products to meet existing consumer needs.

Will the introduction of UMTS be