Discussion Papers

Matthias Wolfgang Stoetzer

Der Markt für Mehrwertdienste: Ein kritischer Überblick
Nr. 69 / Juli 1991
(no longer available)

Summary

During the last 20 years many of new telecommunications services called value added services have emerged. They include online database access, electronic document interchange, electronic funds transfer, video conferencing and so on. With regard to the development of modern industrial economies they are claimed to be of central importance. The alleged dynamic development and strategic importance for other sectors of the economy in Germany resulted in the liberalization of this market, which at least partially was used to be a part of the traditional monopoly of the Deutsche Bundespost. In a similar way deregulation takes place at the level of the European Community.

This study offers a critical examination of the main problems an economic analysis of the market for value added services (VAS, in German Mehrwertdienste) is facing. First of all, the lack of a thorough definition of the term VAS has to be stated. Confronting the various definitions and boundary lines with the economic concept of the relevant market leads to the conclusion that the expression VAS subsumes a lot of totally different telecommunication services. Definitions and market segmentations are only conventions, that means they are not right or wrong a priori. Nevertheless they should be handled with care and developed on the ground of the intentions of the study one has in mind. Due to the problems of definition the empirical evidence concerning the volume of these markets varies considerably. Furthermore a critical examination of market studies dealing with the topic of VAS reveals that their methodological foundations are weak or even non existent. A comparison of different empirical studies indicates that in general the market volumes and forecasts are to optimistic. With regard to the Federal Republic of Germany it seems that the deregulation of 1989 was not followed immidiately by an enormous growth of the market. Up to now, it is an open question if this is only the result of a certain time lag or attributable to other influencing factors. In any case the liberalization is only a necessary and not a sufficient condition for the development of the VAS markets.

The problems of definitions and the empirical flaws of the studies on VAS are only partly due to the fact, that these markets were developing only very recently. Because of two factors these uncertainties will probably continue to exist. Firstly, the results of technological developments can hardly be figured out. But technological advances are determining the markets of telecommunication services to a great extent. Secondly, the success of many of these services on the markets, that means the adoption of these new technologies and services by the consumer is still an open question.

Discussion Paper is no longer available.

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