The Case of Cellular Mobile Telephony

Since their invention in the 1920s, mobile telephone services have evolved only gradually over time as a niche market unnoticed by most businesses and consumers. Yet, mobile telephony has revolutionised telecommunications in the 1990s. The international diffusion of mobile telephony took off in the 1990s when new digital technology was introduced and prices fell so that more and more private consumers could afford it. From an industry ridiculed as “Mom and Pop”-operator business in the United States (Calhoun 1988), the mobile telephone business emerged as one of the industries most valued by stock markets around the world. The International Telecommunications Union (ITU) now admits that against all former predictions mobile telephony is on its way to substituting fixed-line telephony. Mobile data communications is rapidly evolving as a totally new form of communications, transforming the daily life of most people in almost all countries. 116 Among several technical concepts, digital cellular mobile systems have become the global dominant design of mobile telephony. This case study will examine whether a country or a region adopted the dominant design earlier than others and, if this is the case, why it did so and what this has meant for the international competitiveness of companies in these countries. At first glance, there are two surprising outcomes of the world-wide mobile telephone industry: first, despite their technological knowledge advantage in radio technology, the United States have not become the market with the highest penetration rates that led the world into a new area of telecommunications. Second, Japanese manufacturers do not dominate the mobile telecommunications equipment market despite their advantage in electronics, miniaturisation of electronic devices, and their dominance in other telecommunications equipment sectors such as facsimile machines, consumer electronics and cameras. In contrast to the prediction derived from technological gap and comparative advantage theory, the Nordic countries, as I will call Norway, Sweden, Finland and Denmark, happened to be the markets where cellular mobile telephony was first widely adopted; these countries’ companies dominate the world mobile telephone equipment industry.