1st Week

DTPS

1. Digitalization of Data

   1. Transformation of analog data

   2. “native” digi data (mails, tweets)

2. Digital transmission

   1. Packet- based internet

   2. fibre based broadband

   3. 5G mobile

3. Digital Processing and storage

   1. server farms (hardware)

   2. cloud storage (user facing)

Information and Communication Technology

The number of components in integrated circuits would double yearly (later: every two years).

But, we may be reaching physical limits.

IPDU

1. ICT Infrastructure

   1. Hardware manufacturers

   2. Backbone operators (AT&T, and Deutsche Telekom)

   3. Internet service Provider

2. Providers

   1. Operation Systems

   2. computing platforms (AWS, Azure)

   3. apps, Software, Storage

3. Digital Maketplaces

   1. Interface between User and Provider (Amazon)

4. Users

1. Content provision

2. cloud storage

3. digital payments

4. advertisers and data aggregators

5. social media sharing

6. OS support

7. wired/wireless access.

COECU

1. Content rights

2. onine services

3. enabling technology services

4. connectivity

5. User interface

1. Media (Video, Audio, Book) rights owners Ex. BBC, Time Warner

2. User-generated content Ex. Text, images

CGSET

1. communications (Whatsapp, facebook)

2. General (Yahoo, Wikipedia)

3. Search (Google, Bing)

4. Entertainment(YouTube, Netflix)

5. Transactions (Amazon, Ebay)

SBA

1. support technology for web-hosting, web-design/development Ex. Google Cloud, AWS)

2. Billing and payments (Paypal, Alipay)

3. Advertising (online ad agencies/ networks, TP ad servers)

CIR

1. core network (AT&T, German Telekom)

2. Interchange (LINX (London Internet Exchange), AMS-IX)

3. Retail internet access (Orange, Vodafone, AT&T)

1. Applications like Software and Internet browsers Ex. SAP Ecosia)

2. Devices like PC’s Smartphones (HP, Samsung)

Technology = how data is processed, transmitted, stored.

Topology = how elements are linked

1. From vertical integration to interoperability

2. From monopoly to competition

3. From separate service channels to convergence

Previously separately transmitted services (voice, TV, music) are now transmitted together via internet (packet-based networks (wireless/fibre))

1. In-House

2. Commons-Bases

3. Crowdsourcing

1. Industries: “tradional” + physical goods and services like Apple, Ford etc.

2. Definition:

   1. Production is undertaken by employees or by other firms in a subcontracting model

   2. Contractual relationships are permanent, and assets belong to the firm(s) involved

1. Production in the digital Economy like Uber, Amazon etc.

2. Definition:

   1. Production is undertaken by (at most) loosely organized individuals who are not employees of the platform

   2. Made possible by ICT

is a special kind of peer production, Examples: open-source software, bug bounty hunts

1. Centrally organized

2. For specific projects

1. Constant returns to scale

2. Decreasing returns to scale

3. Increasing returns to scale

   1. More inputs lead to a more than proportional increase in output

   2. Typical of network industries (telecoms, electricity, water), with huge fixed costs and low variable

      costs

• A fixed cost F to develop

• Zero marginal cost to copy

-> decreasing average cost, i.e. Increasing returns to scale

-> With zero marginal cost, additional users are costless

• Decreasing average cost creates wedge between revenue and cost -> Profits increase without limit

• More usage, e.g. search, feeds back into improved quality of results (Google is much better for rarely used search term than Bing)

1. Penetration pricing (low prices to drive high early demand)

2. Bundle pricing (different services are sold together, to create scope) -> Amazon Prime (Music, Video, Fast delivery)

3. Zero pricing

-> The bigger firms are, the more profitable low or zero prices become!

With strong returns to scale or scope, firms with more customers are stronger

-> Necessity to fight for scale, even if short-run profits are negative

-> Endogenous barriers to entry, since late-comers will be unable to catch up

=> Leads to Winner-take-all markets (persistent (quasi-)monopolies of some companies with global reach), Examples: Amazon, Google, Meta