Analyzing the Disruptive Potential in the Telecommunications Industry

Analyzing the Disruptive Potential in the Telecommunications Industry

Stefan Hüsig (University of Regensburg, Germany)
DOI: 10.4018/978-1-60566-194-0.ch007
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Abstract

This chapter covers an important issue in the area of telecommunications planning and technology management: The ex ante analysis of potential disruptive technologies. Due to the convergence of IT and telecommunications, an ever-growing onslaught of emerging technologies and new entrants with new business models are starting to eat up the incumbent’s revenues, profits, and market shares. The theory of disruptive technology (Christensen, 1997; Christensen & Raynor, 2003) helps managers, policy-makers and analysts to analyze emerging technologies, new business models, and new entrants in order to be prepared in advance, providing appropriate ways to react in a timely fashion to innovation- based opportunities or threats. In this chapter the theory of disruptive technology, the concept of disruptive potential and a method for applying this concept in a telecommunications planning and technology management context is presented. Finally, some examples of potential disruptive technologies in telecommunication which were analyzed ex ante are introduced with specific emphasis placed on the WLAN-technology.
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Introduction

The telecommunications industry has been undergoing a radical transformation since the beginning of the new century, creating new opportunities and new challenges for infrastructure and service providers (Christensen, Anthony, & Roth, 2004; Lia & Whalleyb, 2002). The formerly established integrated value chain is increasingly being deconstructed, industry borders are becoming increasingly blurred due to convergence between the Internet and telecommunications industry is being radically restructured with the entry of new players (Bores, Saurina, & Torres, 2003; Lia & Whalleyb, 2002). Unexpectedly, discontinuous technological developments in various areas of the industry and increasing market turbulence have added new dimensions to an already complex scenario. Many traditional business models, as well as related frameworks, tools, and methods have become obsolete. Therefore, the development of new conceptual frameworks for understanding these changes in the telecommunications and related industries; and the creation of new tools and methods for identifying opportunities and threats, and making new strategies is becoming a central task for academia. In the new environment of uncertainty and ambiguity managers, policy-makers, researchers and analysts are in need of improved and new theoretical based frameworks to gather and interpret information in another way to finally recognize the opportunities and threats emerging from discontinuities faster and more effectively.

So far the industries’ track record in innovation is quite mixed with 3G and the mobile Internet, Multimedia Messaging Service (MMS) or the attempts to transfer i-Mode to other contexts than Japan (Christensen et al., 2004; Hüsig et al., 2005; Lyytinen & King, 2002; Rao, Angelov, & Nov, 2006). Quite frequently innovations from outside the inner domain of the telecommunication industry are introduced by outsiders like Skype with Voice over Internet Protocol (VoIP) or Cisco Systems with their IP-routers which took and take away customers and revenues from the traditional incumbents in telecommunications (Christensen et al., 2004; Rao et al., 2006). Some traditional infrastructure suppliers in the telecommunication industry like Siemens or IBM already went almost completely out of this business with their circuit-switched technologies which were disrupted away by Cisco Systems – a new entrant with a new technology which the incumbents never managed to adopt effectively (Christensen et al., 2004). It seems that managers and analysts in telecommunications need better tools and methods to effectively identify and counteract disruptions like these. The theory of disruptive technology (Christensen, 1997; Christensen & Raynor, 2003) helps managers, policy-makers and analysts to analyze emerging technologies, new business models, and new entrants in order to be prepared in advance, providing appropriate ways to react in a timely fashion to innovation-based opportunities or threats. However, not many scholars have tried to apply this theory to the field of telecommunications (Christensen et al., 2004; Hüsig et al., 2005; Osterwalder, Ondrus, & Pigneur, 2005; Rao et al., 2006). Therefore, a more comprehensive and easily applicable method for identifying disruptive technology threats from an ex ante perspective had to be developed further, and is elaborated here. For managers, policy-makers and analysts in telecommunications a more applied version of the theory of disruptive technology in form of recently developed tool provides a better guideline for this important issue in the area of telecommunications planning and technology management.

In this chapter, we present first the disruptive technology theory, then the concept of disruptive potential, and a method of applying this concept in a telecommunications planning and technology management context. Finally, some examples of potential disruptive technologies in telecommunication which were analyzed ex ante are introduced with specific emphasis placed on the WLAN-technology.

Key Terms in this Chapter

Sustaining Technologies/Innovations: Technologies or innovations which have a sustaining impact on an established trajectory of performance improvement and give the known customers more and better versions of what they have valued up to now. They lead to innovations that allow the firms to provide their existing customers with better and more profitable products. Incumbent firms almost always ultimately master this type of innovation but are often unable to cope with disruptive ones.

Innovation: Changes in the technology of an organization.

Technology: The process by which an organization transforms labor, capital, materials, and information into products and services.

Value Network: The context within which a firm identifies and responds to customer needs, solves problems, procures input, reacts to competitors, and strives for profit.

Disruptive Technologies/Innovations: Technologies or innovations which disrupt an established trajectory of performance improvement downwards, or redefine what performance means. In the long run the initially inferior technologies from new markets or low end market segments typically introduced by new entrants become good enough to meet the demands of the mainstream customers of the incumbents, so that the incumbents are forced toward higher margin customer groups or out of the market entirely.

Entrants: New firms in a certain value network. Often entrants introduce potentially disruptive technologies in traditional value networks. Examples in telecommunications are Skype or Cisco.

Incumbents: Traditional and typically large firms which operate in an existing value network. Frequently their successfully manage sustaining innovations. Examples in telecommunications are BT, Vodafone, NTT, France Telecom or Deutsche Telekom.

Disruptive Potential: Concept and measure for ex ante analysis of the potential of emerging technologies to reach the end of the disruption process successfully. The degree of disruptive potential is measured by the relative number of disruptive characteristics fulfilled. The result gives an indication of how threatening the potentially disruptive technology is likely to be at a certain point in time.

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Table of Contents
Acknowledgment
In Lee
Chapter 1
Walter Distaso, Paolo Lupi, Fabio M. Manenti
In this chapter the authors provide evidence of the effectiveness of European National Regulatory Authorities in applying the basic principles of... Sample PDF
Static and Dynamic Efficiency in the European Telecommunications Market: The Role of Regulation on the Incentives to Invest and the Ladder of Investment
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Chapter 2
James E. Prieger, Daniel Heil
Regulatory policy in telecommunications must balance short-term efficiency (low prices) against the firms’ incentives to innovate, which have longer... Sample PDF
Is Regulation a Roadblock on the Information Highway?
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Chapter 3
Claudio Feijóo, José Luis Gómez-Barroso, Asunción Mochón
Wireless/mobile technologies are absolutely necessary for any agent who wants to participate in the new information and communication technologies... Sample PDF
Reforms in Spectrum Management Policy
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Chapter 4
Ricardo Gonçalves, Álvaro Nascimento
The deployment of Next Generation Access networks (NGAs) is likely to have a significant impact on the telecommunications’ value chain and... Sample PDF
Next Generation Access Networks and their Regulatory Implications
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Chapter 5
Carol C. McDonough
The United States’ wireless telephone industry has evolved from a minor segment of the communications industry to a major provider of voice, and... Sample PDF
The Impact of Government on the Evolving Market Structure of the U.S. Wireless Telephony Industry
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Chapter 6
Indrit Troshani, Sally Rao Hill
The adoption and diffusion of mobile services has achieved a spectacular growth in many countries around the world. However, regulators in these... Sample PDF
Shaping Regulation in the Australian Mobile Industry
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Chapter 7
Stefan Hüsig
This chapter covers an important issue in the area of telecommunications planning and technology management: The ex ante analysis of potential... Sample PDF
Analyzing the Disruptive Potential in the Telecommunications Industry
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Chapter 8
John B. Meisel, Timothy S. Sullivan
The local exchange telephone market is no longer considered to be a natural monopoly as a result of technological advancements. In particular, the... Sample PDF
Convergence of the Internet and Telecommunications
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Chapter 9
Moon-Soo Kim
Since 1986, the Internet has developed into a global network enabling users worldwide to connect to each other to exchange information and data. The... Sample PDF
International Internet Interconnection Service in Asia-Pacific Region
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Chapter 10
Dong Hee Shin
The purpose of this study is to examine cross-national data in order to identify possible factors related to the observable patterns of Mobile... Sample PDF
A Techno-Economic Analysis of Mobile Virtual Network Operators
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Chapter 11
Riku Laanti, Fred McDougall, Georges Baume
This chapter focuses on the internationalisation processes of national telecommunications companies (telcos) from small and open economies (SMOPECs)... Sample PDF
Evolving Value Networks and Internationalisation of National Telecommunication Companies from Small and Open Economies
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Chapter 12
Zulima Fernández, Belén Usero Sánchez
This chapter analyzes the role of non-market actions (NMAs) in the competitive position of firms in the European mobile telecommunications industry.... Sample PDF
The Effect of Non-Market Strategies in the Mobile Industry
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Chapter 13
Barney Warf
Fiber optics forms the pivotal telecommunications technology of the contemporary global economy, offering greater speed and security than other... Sample PDF
Spatiality and Political Economy of the Global Fiber Optics Industry
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Chapter 14
Hyun-Soo Han, Heesang Lee, Yeong -Wha Sawng
In South Korea, the home network industry has been the object of great expectations among the government and business community. Thus far, however... Sample PDF
Digital Convergence and Home Network Services in Korea: Part 1 - Recent Progress and Policy Implications
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Chapter 15
Hyun-Soo Han, Heesang Lee, Yeong -Wha Sawng
In this chapter, we proposed managerial implications and strategic alliance opportunities of the home network service providers in Korea. Based on... Sample PDF
Digital Convergence and Home Network Services in Korea: Part 2 – Business Models and Strategic Alliances
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Chapter 16
Brian Low, Wesley J. Johnston
Despite massive investment, few foreign firms doing business in China’s telecommunication sector can claim success. Such failures can be explained... Sample PDF
Mixing and Matching Organizational Network Legitimacy Practices to China's Telecommunication Market
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Chapter 17
Chin Wei Chong, Siong Choy Chong
This chapter aims to create a unified model capturing and generalising the different arrays of preliminary knowledge management (KM) implementation... Sample PDF
Preliminary Knowledge Management Implementation in the Telco Industry
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Chapter 18
Maria Major, Trevor Hopper
This chapter examines an implementation of an Activity-based Costing (ABC) system in a Portuguese telecommunications firm called Marconi. It is... Sample PDF
Activity-Based Costing in the Portuguese Telecommunications Industry
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Chapter 19
Antonios D. Kargas, Dimitris Varoutas
This chapter explains what organizational culture is and analyzes its importance for the management of any company. Organizational culture must not... Sample PDF
The Role of Organizational Culture to the Management of Telecommunication Companies: I. Background and Motivation
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Chapter 20
Antonios D. Kargas, Dimitris Varoutas
This chapter analyzes the importance of organizational culture through a set of strategies and enterprising practices in order to emphasize the... Sample PDF
The Role of Organizational Culture to the Management of Telecommunication Companies: II. Applications and Case Studies
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Chapter 21
Hannu Verkasalo
Many case examples in the mobile market have indicated that the success of mobile services (e.g. Internet browsing, email messaging or streaming... Sample PDF
Dynamics of Mobile Service Adoption
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Chapter 22
Moon-Koo Kim, Myeong-Cheol Park, Jong-Hyun Park
In communications services, the continued competitiveness and growth of a company depends vitally on customer value. In Korea’s maturing mobile... Sample PDF
When Customer Satisfaction Isn't Good Enough: The Role of Switching Incentives and Barriers Affecting Customer Behavior in Korean Mobile Communications Services
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Chapter 23
Jiayin Qi, Yajing Si, Jing Tan, Yangming Zhang
In the highly competitive environment, the real-time and dynamic customer demand analysis technology is required by the enterprise information... Sample PDF
Telecommunication Customer Demand Management
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Chapter 24
Jiayin Qi, Yuanquan Li, Chen Li, Yingying Zhang
This chapter proposes an integrated methodological system of telecommunication customer detainment management, including telecommunication customer... Sample PDF
Telecommunication Customer Detainment Management
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Chapter 25
Frédéric Morlot, Salah Eddine Elayoubi
We illustrate how a mobile data network operator can plan an upgrading investment to anticipate explosions of the demand, taking into account the... Sample PDF
How to Plan for an Upgrading Investment in a Data Network?
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Chapter 26
Georgios N. Angelou, Anastasios A. Economides
Recognizing the inadequacy of traditional quantitative cost-benefits analysis for evaluating telecommunications investments, researchers suggest... Sample PDF
Telecommunication Investments Analysis: A Multi-Criteria Model
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Chapter 27
Rebecca De Coster
Mobile networking refers to wireless technologies which provide communications between devices. Applications for mobile networking have a broad... Sample PDF
A Business Planning Framework for WiMAX Applications
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Chapter 28
Nicoletta Corrocher, Roberto Fontana, Claudia Parlanti
We provide evidence on the determinants of diffusion of Voice over IP (VoIP) applications in a sample of public and private organizations in Italy.... Sample PDF
Adoption of VoIP Applications in Public and Private Organizations
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Chapter 29
Richard A. Gershon
Today, innovation is much more about much than just developing new products. It is about reinventing business processes and building entirely new... Sample PDF
Intelligent Networking and Business Process Innovation: A Case Study Analysis of Home Box Office and Dell Computers
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Chapter 30
Stan Kurkovsky
Mobile commerce is a special area of electronic commerce that utilizes mobile wireless devices to conduct commercial transactions. Unique features... Sample PDF
Can M-Commerce Benefit from Pervasive Computing?
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Chapter 31
Katalin Tarnay
The purpose of this chapter is to provide a simple understandable approach to the basics of telecommunications management. This chapter is composed... Sample PDF
Basics of Telecommunication Management
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Chapter 32
Katalin Tarnay
In this chapter, the fundamentals of communication protocols are presented, and then a special application area, the telecommunications management... Sample PDF
Telecommunication Management Protocols
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Chapter 33
Marc St-Hilaire, Samuel Pierre
The cellular industry is evolving at a very fast pace. In fact, cellular networks have experienced significant changes over the last few years. In... Sample PDF
Cellular Network Planning: Evolution from 2G to 4G
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Chapter 34
Faouzi Kamoun
IP network connectivity is becoming so important for business that it is being compared today to basic utilities, such as water and electricity. As... Sample PDF
IP Address Management: Challenges, Solutions and Future Perspectives
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Chapter 35
Ran Wei, Zizhong Zhao
This chapter focuses on digital cable TV networks as a convergent network with telecommunications networks and the Internet that provides... Sample PDF
Digital Cable TV Networks: Converging Technologies, Value-Added Services and Business Strategies
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Chapter 36
Tobias Kollmann, Christoph Stöckmann, Carsten Schröer
The diffusion of a Web 2.0 product or services is, unlike to traditional consumer or industrial goods, not only based on purchase. Full acceptance... Sample PDF
Diffusion and Oscillation of Telecommunications Services: The Case of Web 2.0 Platforms
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Chapter 37
Phillip Olla
A fundamental goal of the wireless industry is to economically offer ubiquitous broadband access to a large number of people in diverse geographical... Sample PDF
The Diffusion of WiMax Technology: Hurdles and Opportunities
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Chapter 38
David Bell, Sunil Hazari
VoIP is the use of Internet protocols to provide telephone services that have previously been delivered over traditional telephone networks.... Sample PDF
VoIP Quality and Security Issues for Consumers and Small Businesses
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Chapter 39
S. S. Manvi, M. S. Kakkasageri
This chapter presents the emerging security issues in Vehicular Ad hoc Networks (VANETs) for e-business along with some of the solutions provided by... Sample PDF
Emerging Security Issues in VANETS for E-Business
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Chapter 40
Sotirios K. Goudos, Angeliki Z. Agorogianni, Zaharias D. Zaharis
Network planning and management in a large organization such as a university, is a complex task. A large university is an inherently demanding... Sample PDF
Telecommunications Network Planning and Operations Management in an Academic Environment: The Case Study of the Aristotle University of Thessaloniki
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Chapter 41
Károly Farkas, Csaba A. Szabó, Zoltán Horváth
The objective of this chapter is to discuss the applications, state-of-the-art technologies, planning methods and business models for wireless... Sample PDF
Planning of Wireless Community Networks
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Chapter 42
David Golightly
Technology has to be fit for purpose in order to deliver its promised business impact. An important component of this is making sure technology... Sample PDF
Human Factors for Business Mobile Systems
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Chapter 43
Mohamed Boucadair, Pierre Levis, Pierrick Morand
IP networks are the federative transport networks for a large set of emerging services. These services demand hard guarantees in term of the service... Sample PDF
Towards QoS-Inferred Internet
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Chapter 44
Mirko Luca Lobina, Luigi Atzori, Fabrizio Boi
IP Telephony provides a way for an enterprise to extend consistent communication services to all employees, whether they are in main campus... Sample PDF
The Playout Control Management: An Issue for the IP Telephony Service Providers
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Chapter 45
Nikolaos D. Tselikas, Georgia M. Kapitsaki, Dimitrios G. Makris, Iakovos S. Venieris
The role of open Application Programming Interfaces (APIs) and protocols for advanced service provisioning and the corresponding state of the art... Sample PDF
Open APIs and Protocols for Services and Applications in Telecoms
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Chapter 46
Lisandro Zambenedetti Granville, Ricardo Neisse, Ricardo Lemos Vianna, Tiago Fioreze
The management of telecommunication and data networks has been based on standards defined in historical contexts quite different than the current... Sample PDF
On the Management Performance of Networked Environments Using Web Services Technologies
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Chapter 47
Raquel Barco, Pedro Lázaro
In the near future, several radio access technologies will coexist in Beyond 3G mobile networks (B3G) and they will be eventually transformed into... Sample PDF
Automated Fault Management in Wireless Networks
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Chapter 48
Cajetan M. Akujuobi, Nana K. Ampah
Most of the existing networks (e.g., telecommunications, industrial control, enterprise networks etc.) have been globally connected to open computer... Sample PDF
Modeling Intrusion Detection with Self Similar Traffic in Enterprise Networks
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Chapter 49
Dimitris Kanellopoulos
This chapter presents high-speed networking technologies and standards such as Asynchronous Transfer Mode (ATM), Fast Ethernet, 10 Gigabit Ethernet... Sample PDF
High-Speed Multimedia Networks: Critical Issues and Trends
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Chapter 50
J. Joaquín Escudero-Garzás, Ana García-Armada
The goal of this chapter is to introduce the novel concept of cognitive radio (CR) for wireless telecommunications. Cognitive radios are a new type... Sample PDF
Emerging Telecommunications Technologies: Cognitive Radio
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Chapter 51
J. Joaquín Escudero-Garzás, Ana García-Armada
The aim of this chapter is to address the role of a novel concept in wireless telecommunications: Game theory. Game theory is a branch of applied... Sample PDF
Game Theory for PHY Layer and MAC Sublayer in Wireless Telecommunications
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Chapter 52
S. S. Manvi, L. B. Bhajantri
This chapter brings out various issues in M-Commerce and describes various agent-based product negotiation models in mobile commerce environment.... Sample PDF
Agent Based Product Negotiation Models in Mobile Commerce
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Chapter 53
James M. McKinion
Precision agriculture has been made possible by the confluence of several technologies: geographic positioning systems, geographic information... Sample PDF
Role of Telecommunications in Precision Agriculture
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Chapter 54
Franz Hartleb, Gerhard Haßlinger, Sebastian Kempken
An ongoing challenge in telecommunication is the integration of a variety of services on broadband access platforms at increasing transmission... Sample PDF
Network Planning and Dimensioning for Broadband Access to the Internet Regarding Quality of Service Demands
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Chapter 55
Gerhard Haßlinger
Service and content delivery over the Internet is currently supported by overlay architectures of different types. There is a trend towards... Sample PDF
Overlay Networks: New Techniques for Global Service and Network Provisioning
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Chapter 56
James Salter, Nick Antonopoulos
Distributed Hash Tables (DHTs) have been used in Peer-to-Peer networks to provide query lookups in typically O(log n) messages whilst requiring... Sample PDF
Optimising P2P Networks by Adaptive Overlay Construction
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Chapter 57
Susan J. Chinburg, George Scheets
The network carrier must utilize the full potential of existing physical infrastructure before any new investments can be considered. Much work has... Sample PDF
Designing a New Service Overlay on a Carrier Network Using the Efficient Frontier
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Chapter 58
Mohamed Zaki, Salah Ramadan
The cellular principle is an effective way to guarantee efficient utilization of the offered radio band. Although PCS networks use the cellular... Sample PDF
Combining Small and Large Scale Roaming Parameters to Optimize the Design of PCS
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Chapter 59
Kaiqi Xiong, Harry Perros
This chapter considers a set of computer resources used by a service provider to host enterprise applications for customer services subject to a... Sample PDF
Secure Resource Optimization in Distributed Service Computing
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Chapter 60
Jadranka Skorin-Kapov, Darko Skorin-Kapov
Due to the enormous proliferation of internet traffic, including video on demand and transfer of datarich documents, the use of optical networking... Sample PDF
Trends, Optimization and Management of Optical Networks
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