Embeddedness, power, control and innovation in the telecommunications sector

Abstract

In the present paper, relationships between embeddedness, power, control and innovation are examined in the context ofthe telecommunications sector. It is contended that in a tightly embedded, technology-intensive sector, technological and economic control are closeb intertwined. Consequently, the ability to appropriate economic rents is large& based on technological control. In an examination of the Finnish telecommunications sector, it is concluded that the power of the network operator was traditionally not based as much on value creation as on the control of critical resources. With the move to a network of networks in which access ceases to be a bottleneck, this situation has changed. It can be expected that existing focal networks with a strong power imbalance will be replaced. It is difficult to predict what form this process will take, however, as the pace of technological change is very rapid in the telecommunications sector.