Value Network Dynamics in 3G-4G Wireless Communications: a System Thinking approach to the Strategic Value Assessment Model

This article develops a map to analyze the dynamic forces that influence the structure and development of 3G (third generation) wireless communications value networks. The analysis builds on the Strategic Value Assessment Model (Fine, et al. [Fine, Charles H., Vardan, Roger, Pethick, Robert, El Hout, Jamal. Rapid-Response Capability in value chain Design. MIT Sloan Manage Rev 2002, 43(Winter): 69–75.]) and utilizes a qualitative System Dynamics mapping approach. The map focuses on the driving forces affecting user adoption of 3G services, focusing on customer dynamics, competitive dynamics, and technology dynamics. To analyze adoption of 3G services by customers, the articles maps the dynamics of (1) network investment and user population, (2) entry of service innovators as well as price competitors, (3) the effects of positive network externalities arising from a larger user population, (4) price compression as lower willingness-to-pay users adopt 3G services, (5) scale economies in terminal costs and prices, and (6) new content development as a draw to new users. Applying inductive systems diagrams hypotheses are integrated into a causal loop map and tested with data collected at 15 communications-industry workshops attended by 190 participants in Europe. The map aims to deepen the understanding of the possible evolutionary paths of the 3G wireless value network. The article seeks also to assess which future scenarios are plausible and what dynamic triggers might make them likely.