The Battle Within: An Analysis of Internal Fragmentation in Networked Technologies Based on a Comparison of the DVB-H and T-DMB Mobile Digital Multimedia Broadcasting Standards

The Battle Within: An Analysis of Internal Fragmentation in Networked Technologies Based on a Comparison of the DVB-H and T-DMB Mobile Digital Multimedia Broadcasting Standards

Håkon Ursin Steen (University of Oslo, Norway)
DOI: 10.4018/978-1-4666-2160-2.ch005
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Abstract

This paper addresses the concept of internal standards fragmentation in networked technologies - occurring when two or more products remain non-interoperable for an intended service, even though being perfectly compliant to the same core interface compatibility standard. Two main sources of internal fragmentation are identified (“configurational” and “competitive”). A case study is done on the historically observed internal fragmentation within the DVB-H and T-DMB mobile digital multimedia broadcasting standards. It is argued that internal standards fragmentation has important consequences hitherto unaddressed in the literature, including potentially undermining the effects of interoperability and economies of scale expected to follow from the adoption of a single standard. Implications for research, policy and practice are discussed, and advice for further research is provided.
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Literature Review

The basic matter for the economic literature on standards competition (often referred to as “standards wars”) is to investigate whether or not the market settles on efficient standards – and further: whether or not public policy intervention is justified from a social welfare point-of-view (David & Greenstein, 1990; Stango, 2004). Important contributions are descriptions of how standards choice is dependent on prior historical events (Arthur, 1989) and how historical events can lead to the market locking in on (supposedly) inferior standards (David, 1985). Other important contributions are describing the effects of “the existing installed base” of users having adopted a standard (Farrell & Saloner, 1986), and how direct and indirect network effects (existing adopters’ added utility of having a new user adopting a standard) influence competition outcomes (Katz & Shapiro, 1994). Particularly for “interface compatibility standards” (whose received definition is not unproblematic and is therefore discussed in the next section) is that it is generally recognised that uniform uptake (meaning a resolved standards war) of a single standard leads to economies of scale and interoperability of products, whereas fragmented uptake (meaning an unresolved standards war) of non-compatible standards negatively impacts these issues (Grindley, 1995).

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