Don’t get me wrong: I have lots of sympathy for the folks at Nokia. When your CEO publicly announces that the company has lost the plot strategically, it must be pretty disheartening. And yet, there was something quite exciting about Stephen Elop’s admission of failure…
As someone immersed in the ‘science’ of economic regulation, I have increasingly felt that regulators and other competition authorities expend far too much energy on the ‘static’ aspects of market definition and assessment, and too little time on understanding the underlying market dynamics – where are the new sources of competitive advantage emerging? Where and how is market power being exerted?
In fairness to Ofcom, the UK regulator seems to acknowledge the need for a new ‘toolkit’ in its assessment of the internet domain. For example, its September consultation on Traffic Management and Net Neutrality devoted quite a bit of attention to the (relatively) new analytical concept of two-sided markets, and how this might challenge traditional notions such as ‘market power’. But the Nokia story demonstrates that we’re only just beginning to understand how radically the economics of the communications sector have changed.
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