Value Chain in Telecommunications

[value chain diagram]

The diagram above illustrates the basic value chain for residential broadband providers. In terms of the three broad areas of innovations described in the previous section, the most important players are equipment manufacturers and network operators. The figures below show the major actors in each category along with their 2007 revenues.

[players and revenue tables]

The interaction between the operators and equipment manufacturers is complicated, dynamic, and situation dependent. Innovation in the sector is neither simply manufacturer-driven nor operator-driven. Rather, operators have a set of market imperatives and competitive pressures that lead them to seek specific capabilities from manufacturers. These needs may be communicated in informal interactions, in formalized requests for proposals, or collectively through various industry associations. At the same time, equipment manufacturers constantly strive to develop new products that anticipate coming needs, or give providers new capabilities. To a certain extent, network operators also do their own R&D, in part through collaborative consortia. The industry advances through the dynamic interaction of this push and pull.

[associations, research consortia, and standards bodies]