Telecommunications companies worldwide must make "fundamental adjustments" to their business models if they are to survive in the complex and highly competitive new economy, according new research by the Universities of Newcastle and Strathclyde, UK.
A research paper published in a special issue of the journal Telecommunications Policy (1), urges companies to sharply examine and revise their pricing policies to encourage greater revenues and reverse the recent stock market slump in telecommunications shares.
Telecommunications companies form backbone of the new economy, which has been formed around the global technological revolution and needs sophisticated and many-folded communication links to function.
But the papers authors - Feng Li, Professor of E-Business at Newcastle University Business School, and Dr Jason Whalley of Strathclyde University Business School - say that although telecommunications companies provide the essential infrastructure for the new economy, most of these companies themselves are still operating on the very different principles of the old industrial economy. Traditional pricing models such as the cost plus profit margin model are still abundant - despite the fact that they do not suit the intensively competitive market where unit costs of telecommunications bandwidth are rapidly falling towards zero and profit margins are being increasingly squeezed.
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