Predatory Strategies in Standards Wars: On Creating Fear, Uncertainty, and Doubt

Predatory Strategies in Standards Wars: On Creating Fear, Uncertainty, and Doubt

Tineke Mirjam Egyedi (DIRoS, The Netherlands) and Anique Hommels (Maastricht University, The Netherlands)
Copyright: © 2019 |Pages: 22
DOI: 10.4018/978-1-5225-9008-8.ch013

Abstract

In standards wars, FUD (fear, uncertainty, and doubt) is sometimes created to weaken an opponent's market position. Little is known about these strategies, their use in committee standardization settings, and how to respond to them. This chapter explores this phenomenon. It (1) identifies various FUD strategies, (2) their context of emergence, and (3) their effect on the dynamics of a standards war in a historical case study: the European standards war on digital mobile radio communication in the 1990s. The study highlights the need to distinguish “FUD as perceived” from “FUD as intended.” FUD strategies and case-specific characteristics of their emergence are illustrated. The chapter shows that perceived FUD polarizes and entrenches positions of warring parties thereby affecting the course of the standards war. The authors conclude that, given its impact, reflection by corporate standardization managers on (perceived) FUD, preclusion, counter-strategies, and the downscaling of standards wars is warranted.
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Introduction

In the early 1990s, several European member-states decided to replace their analogue radio systems for the police, ambulance and fire brigades by advanced digital systems. Their decision coincided with the aim of the Schengen Agreement to create a Pan-European network for public safety that would allow the police to use the same handset across national networks during ‘cross-border surveillance and hot pursuit’ (Schengen, 1990). It also concurred with activities of the European Telecommunications Standards Institute (ETSI). Supported by the European Commission, ETSI had started work on a standard for digital mobile radio communication in 1988. One of the objectives was to define a common air interface that would ensure that any standard-compliant terminal (e.g., handset) could run on any European network regardless of the network supplier. A number of countries considered the Tetra standard, as it was called, to be a promising means for achieving the Schengen aims.

However, in April 1994, the period in which ETSI was approving the air interface technology (TDMA) of the Tetra standard, an incompatible competing technology (FDMA) was gaining support among European countries. The latter technology had already been developed by a French company called Matra Communications and implemented in 1992 for the French gendarmerie. To improve access to the European market, FDMA advocates also attempted to get their technology formally acknowledged as an ETSI standard. Initially they seemed to succeed. Early 1995, however, ETSI dropped FDMA from the work program. This was a conspicuous decision, according to Bekkers (2001, p. 380), given the number of suppliers supporting FDMA and FDMA being the preferred choice of a number of public safety network operators. It was the beginning of a standards war.

Standards wars are fought in markets as well as in and between standards committees (Besen, 1991). The TDMA-FDMA war foremost took place in a standardization setting. It involved a committee standard of a formal standards body (i.e., an ETSI specification based on TDMA technology) as well as a de facto standard (i.e., FDMA technology implemented in products by Matra) that later became a consortium standard (i.e., the FDMA-based technical specification of Tetrapol Forum). It was a ‘rival revolutions’ type of standards war (Shapiro & Varian, 1999). In such wars, two factors determine the stakes and the dynamics. First, the rival technologies are incompatible (Shapiro & Varian, 1999). This was the case, for example, in technology wars between Blu-Ray and HD-DVD (Gallagher, 2012), e-purse systems (de Vries, 2006) and proprietary platforms (West, 2003), to name a few de facto standards wars. Incompatible technologies were also at stake in wars between committee standards, for example, in the field of wireless telecommunication (Lee, 2006) and for DVD formats (Dranove & Gandal, 2003).

Key Terms in this Chapter

Standards War: A situation in which two competing parties with incompatible standards (i.e., committee or de facto standards) and very high stakes fight for a dominant market share.

FUD: Fear, uncertainty, and doubt. Most often used in the context of someone “creating FUD.”

Affect: A psychological term for feeling, experience or emotion.

FUD Strategy in Standardization: A market strategy perceived to be designed to create unease among competitors and raise concern among users about the consequences of selecting a competitor’s standard, by exerting pressure—psychological, legal, or otherwise—and disseminating negative and/or incorrect information about the standard, the standards process or the standard’s likely market uptake, as a result of which the credibility of the competitor and/or the competing standard is undermined.

Predatory Strategies: Aggressive market strategies intended to undermine a competitor’s position.

Committee Standardization: The process of developing standards in technical committees of formal standards bodies, consortia, professional organizations, (inter)governmental agencies, etc.

PAS: Publicly available specification, a term used by standards bodies for a specific, accelerated standards ‘development’ trajectory. The procedure allows market-relevant and mature specifications, which were developed outside of the standards body, to become a formally recognized standard. 7 AU47: Endnote Reference 7

De Facto Standards: Popular products, technologies, etc. They dominate the market. Similar to popular committee standards (e.g., A4 paper format ISO 216 or Wifi IEEE 802.11g), de facto standards function as points of reference for consumers and producers; but, unlike committee standards, they were not created for that purpose.

Committee Standards: Standards that have been created and documented for common and repeated use.

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