Microsoft Word - Strat Man Case Write Up - Wireless Communication

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The author mainly focuses on an economic analysis of wireless communications by evaluating the two available alternatives.
First is related to licensing and spectrum property and second to wireless communications, in order to evaluate the tradeoffs between property rights in spectrum and open wireless networks. It also explains that open wireless networks are likely to be better at optimizing the ability of users to communicate without wires than could spectrum property based systems. The open wireless network approach shifts the focus from infrastructure rights and focuses on an efficient creation of market in the end user equipments through greater deployment of the equipments in the networks. Analyzing on the basis of various factors:

Social costs (equipment costs, displacement costs and overhead costs): On the basis of social costs involved in both the approaches, we get that they are less in case of open network systems.
Capacity: In open network systems both the capacity and the capacity for growth are higher.
Innovation: Adopting an open wireless system can create an environment for innovation. Welfare Optimization: Open systems being more agile can provide optimum welfare to the end users.
Security: Open networks being more robust and breaking into it might result in the collapse of the entire network, thus are having better security. Pricing Bandwidth: Spectrum approach will only have this advantage in case of peak utilization moments. Thus, the spectrum approach is not that efficient. This advantage is also dependent on pricing based QoS services in wired networks. But in case of open network systems, the pricing is highly variable, and this changing price system makes it more efficient as compared to spectrum approach.

In the article it has been mentioned that the transaction costs in case of spectrum theory is higher than that of open wireless approach. But the open systems have a higher indirect transaction costs. Hence it can be concluded that...
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