The Finnish Telecom Sector Facing Next Generation Standards - Indigenous Capabilities Versus R&D Alliances
1 INTRODUCTION 1.1 Background The Finnish telecom sector has come to the crossroads and now faces various possible paths to follow and challenges to master. The 1990s witnessed the emergence, internationalisation and rapid growth of Nokia, which, today, has a very strong position globally (and indeed in the Finnish economy as a whole). Nokia has also contributed to an outgrowth of a broader ICT cluster of related and supporting industries especially in the field of embedded software, mobile network equipment and operation, multimedia and components. A pivotal event in this context was the early focus given to the GSM standard in the late 1980s in Finland and the capabilities which were developed to overcome the related technological and market discontinuities (Palmberg and Martikainen, 2003). After the successful global inauguration of the GSM service, the Finnish telecom sector has set out on a development path towards the commercialisation of technologies related to third generation (3G) wireless standards, and especially the UMTS (the UMTS is a European incarnation of the W-CDMA standard). This is a logical path, given that the UMTS standard often is considered as a linear European outgrowth of the GSM standard. Nonetheless, it is as of yet unclear whether the UMTS standard will achieve the same momentum as the GSM. At present there is technological and market competition between different 3G standards, where the US-and Korean-backed CDMA2000, and possible also the Chinese TD-SCDMA are serious contenders to the W-CDMA. Some commentators also identify wireless VoIP and especially WLAN/WiMax as dire competitors to 3G standards with the potential to disrupt the ICT sector as a whole. Common to these competitors to the linear GSM-UMTS path is their origin in the datacom industry following the development of the Internet Protocol (IP) that underlies the Internet (Tan et al., 2004). The Finnish telecom sector has broadened significantly both technology-and product-wise, and developed into a coherent cluster of related and supporting industries. 2 However, one might suspect that a degree of path-dependency is observable in so far as the UMTS standard is a logical extension of the GSM standard, so successfully mastered in the past. Further, Nokia is now a global firm with lesser domestic ties. A key question is therefore if, and to what degree, the Finnish telecom sector indeed is overly focused within GSM based telecom technologies, especially at the expense of Internet-related 'new' technologies that hold disruptive potential. One way …