COMPARISON OF WIBRO AND TD-LTE THROUGH THE SOCIAL NETWORK ANALYSIS

Dong-hyu Kim, Heejin Lee, Jooyoung Kwak

Yonsei University, Republic of Korea

ABSTRACT Drawing on the social network analysis, this paper visualized the networks of WiBro and TD-LTE deployment in the global market. It also compared the two standards’ networks and found three differences: first, widespread deployment of WiBro in the global market; second, critical role of China in the TD-LTE network; and third, active participation of the world’s top telecoms gear vendors in the TD-LTE deployment. The authors concluded that these differences can be attributed to the failure of WiBro and success of TD-LTE, and drew some implications for a standard policy design. Firms, if trying to successfully deploy a new technology standard in the global telecoms market, should consider partnerships with players which have massive purchasing power, such as China Mobile. For a government, it may issue a license for the commercialization of a new standard to telecom service providers which are least likely to be affected by a possible cannibalization effect on the operators’ existing standard-based sales.

Keywords— WiBro, TD-LTE, Standard, Network

1. INTRODUCTION The standard competition between WiBro (Mobile WiMax) and HSDPA/LTE appears to be over. There is little doubt that LTE (Long Term Evolution) has become a mainstream standard in the global mobile telecommunications market. Mobile WiMax, also referred to as IEEE 802.16e, is a wireless broadband Internet technology, adopted as one of the ITU standards in Oct. 2007. Yet in South Korea, a country that pioneered the WiBro standard, the government has allowed TD-LTE to be used in the WiBro frequency spectrum, signaling to the market its admission of the failure of WiBro [1]. The WiMax Forum also has agreed to integrate elements of the TD-LTE standard into the platform, displaying a tacit admission that the telecoms market has moved on from the WiMax standard [2]. TD-LTE, by contrast, has gained currency, replacing the WiBro standard in the global mobile telecoms market. Time-Division Long-Term Evolution (TD-LTE), also referred to as LTE-TDD, is a 4G mobile telecoms technology, accepted as one of the ITU standards in Jan. 2012. As of July 2013, 59 TD-LTE networks are in deployment or planned to be deployed in the global market, including 18 commercially launched networks [3]. Many of the Mobile WiMax service providers, such as Clearwire

(US), UQ (Japan), Yota (Russia), P1 (Malaysia), have decided to provide the TD-LTE service in the global market. Against this backdrop, this paper probes into the following research question. What are the differences between WiBro and TD-LTE in the deployment process of the standards in the global market, which can be attributed to the failure of WiBro and the success of TD-LTE? To this end, this paper studies the effect of network composition of two standards (WiBro and TD-LTE) on the success/failure of these standards. For methodology, the study relies on the social network analysis to visualize the global networks of WiBro and TD-LTE and pinpoint key players in the networks. Furthermore, by comparing the networks of the two standards, it identifies the differences and discusses whether such differences are attributing factors for the failure of WiBro and the success of TD-LTE.

2. THEORETICAL BACKGROUND AND DATA COLLECTION

This paper relies on the social network analysis. It conceptualizes individuals or firms as nodes and their relations as lines, visualizes these interactions and assesses their effects [4]. The idea of social network was taken up by German social theorists such as Ferdinand Tonnies and Georg Simmel in their ‘formal sociology,’ “seen as a sociology of the ‘forms’ of interaction that carry and contain the diverse subjectively meaningful contents that motivate the actions of individuals” ([4], p. 8).

The social network analysis has been utilized not only in the field of sociology, but also in other areas of study. In the field of business, for instance, social network concepts such as structural holes have been used to identify factors affecting the probability of firms and industries. “Structural holes”, coined by Ronald Burt, exist where other nodes are connected only through a focal node, and industries that occupy structural holes are able to control the flow of information and capitalize on a larger portion of resources, leading to greater returns [5], [6].

Network composition has been considered a resource which may confer firms a sustainable competitive advantage [5], [7]. That is to say, a firm’s competitive advantage may rest on collaborative relationships its partners, such as suppliers. In the face of a technological change, suppliers’ capabilities affect a firm’s performance [8]. Particularly in industries where network externalities—the more people use, the more valuable to people—exist, such as mobile phone industry, a firm’s alliance partnership holds a critical role in winning a standard war [9], [10]. This means that the network composition of a focal firm

and its partners, such as suppliers, influences the success/failure of a standard in the market.

To assess the effect of the network composition of two standards on the success/failure of these standards, this paper probes into the global networks of WiBro and TD-LTE among telecoms service providers (including Internet service providers) and telecoms equipment vendors (excluding chip and terminal vendors). It focuses on the data of transactions among service providers and vendors, such as procurement contracts and memorandum of understanding (MOU) for collaboration. Chip and terminal vendors are excluded from the scope of analysis, since those do not usually make direct transactions with service providers with respect to the deployment of the standards.

For the collection of network data, the authors first examined industry reports published by the WiMax Forum and Global TD-LTE Initiative (i.e. global partnerships among industry stakeholders to promote the standards), and then identified focal firms holding a critical role in the global deployment of the standards (mostly equipment vendors). Anchoring on the focal firms, the paper collected network data through searching the firms’ homepages, blogs tailored to WiBro and TD-LTE, and relevant industry news and reports. For comparison of the two standards, the temporal boundary of data was set as two years after the adoption as an ITU standard. For WiBro, it was until 2009, and for TD-LTE, it was until 2013. The dataset consists of 251 telecoms service providers and equipment vendors in total. For WiBro, it includes 165 telecoms service providers (including Internet service providers) and 20 equipment vendors. For TD-LTE, it contains 52 telecoms service providers and 14 equipment vendors. Internet service providers are included in the WiBro dataset, since WiBro is a wireless broadband Internet technology. The dataset does not necessarily represent an entire web of the global deployment of the two standards, considering the network data was collected primarily from focal firms’ transactions that were publicly available. Yet it is sufficient to visualize the key actors’ networks of WiBro and TD-LTE and analyze the differences in the global deployment of the two standards. To minimize selection bias, the authors crosschecked the list of focal firms and their networks through various sources, such as industry reports and news articles, and verified that the numbers of the focal firms’ networks collected are generally correlated with the market shares of the focal firms.

3. RESULTS

3.1. Visualization of the Global Networks of WiBro and TD-LTE Deployment Drawing on the dataset, the paper visualizes the global networks of WiBro (Mobile WiMax) and TD-LTE (LTE-TDD). Figure 1 displays the network of the WiBro deployment in the global market, whereas Figure 2 exhibits the TD-LTE network. The size of a node indicates the number of lines adjacent to the node. Relatively large nodes

are key players in the networks as they are more involved in the global deployment of the standards. For Figure 1, the network of WiBro contains 185 nodes. Those consist of 20 telecoms equipment vendors (cluster at the center), 42 service providers in Europe (upper left), 51 service providers in Asia (upper right), 5 service providers in Oceania (right), 26 service providers in North America (lower right), 16 service providers in South America (lower left), and 25 service providers in Africa (purple, left). For Figure 2, the network of TD-LTE includes 66 nodes. Those are comprised of 14 telecoms equipment vendors (cluster at the center), 17 service providers in Europe (upper left), 23 service providers in Asia (upper right), 3 service providers in Oceania (right), 4 service providers in North America (lower right), 2 service providers in South America (lower left), 3 service providers in Africa (left). 3.2. Centralities of the Networks Table 1 and Table 2 provide the statistic results regarding centrality. Centrality shows the positions of individual nodes within the network. Whereas degree centrality measures the number of neighbors connected to each node, eigenvector centrality calculates the extent to which each node is connected to central neighbors. Degree centrality is defined as:

CD(ni) = d(ni) = Xi+ = where degree centrality, CD(ni), is equal to the degree of node i, d(ni), which is calculated by the sum of each row in the adjacency matrix representing the network [11], [12]. Eigenvector centrality is defined as:

Ci(α, β) = j Ri,j

where α is a scaling factor, β reflects the extent to which you weight the centrality of people ego is tied to, R is the adjacency matrix, I is the identity matrix and 1 is a matrix of all ones [13], [14]. For degree centrality, a node holds a critical role if it has more contacts, and for eigenvector centrality, it becomes of significance if it has many central contacts [15].

Table 1 lists top five central telecoms equipment vendors and top five service providers in the global network of the WiBro deployment. For vendors, Alvarion, Alcatel-lucent, Samsung, Motorola, and Huawei are listed as five most connected firms. Intriguingly, these five firms are almost coincided with the top five WiBro equipment vendors in the global market in terms of market share in 2008 and 2009, according to data from Infonetic Research [16]. This confirms that these five vendors, in deed, are central actors in the WiBro’s deployment in the global market. For service providers, Clearwire (US), KT (Korea), Sprint (US), UQ (Japan) and SK (Korea) are five central firms.

Figure 1. Network of WiBro (Mobile WiMax) Deployment in the Global Market (N=185) Note: 20 Vendors (Cluster at the Center), 40 Service Providers in Europe (Upper Left), 51 Asia (Upper Right), 5 Oceania (Right), 26 North America (Lower Right), 16 South America (Lower Left), 25 Africa (Left).

Figure 2. Network of TD-LTE (LTE-TDD) Deployment in the Global Market (N=66) Note: 14 Vendors (Cluster at the Center), 17 Service Providers in Europe (Upper Left), 23 Asia (Upper Right), 3 Oceania (Right), 4 North America (Lower Right), 2 South America (Lower Left), 3 Africa (Left).

Table 1. Degree and Eigenvector Centralities of WiBro Network

Vendors/ Service Providers

Degree Normalized Degree

Eigenvector Normalized Eigenvector

Alvarion 38 20.652 0.468 66.174 Alcatel-Lucent 35 19.022

0.455 64.415

Samsung 22 11.957 0.229 32.451 Motorola 19 10.326 0.05 7.121 Huawei 19 10.326 0.089 12.563 Clearwire (US)

6 3.261 0.075 10.629

KT (Korea)

6 3.261 0.059 8.32

Sprint (US)

5 2.717 0.08 11.287

UQ (Japan)

4 2.174 0.048 6.812

SK (Korea) 4 2.174

0.121 17.103

Network Centralization (Degree) = 19.571%

Table 2. Degree and Eigenvector Centralities of TD-LTE Network

Vendors/ Service Providers

Degree Normalized Degree

Eigen-vector

Normalized Eigenvector

Huawei 18 27.692 0.395 55.793 China Mobile (China)

16 24.615 0.394 55.735

Nokia Siemens 14 21.538 0.326 46.135

Ericsson 12 18.462 0.260 36.829 ZTE 9 13.846 0.204 28.905 Alcatel-Lucent 7 10.769 0.181 25.562

Softbank (Japan)

7 10.769 0.247 34.877

Mobily (Saudi Arabia)

5 7.692 0.173 24.512

Bharti AirTel (India)

5 7.692 0.201 28.429

STC (Saudi Arabia)

4 6.154 0.192 27.104

Network Centralization (Degree) = 24.038%

It is interesting to note that among the key players in the WiBro network are Korean firms (i.e. Samsung, KT, SK). This shows that Korea was not only a forerunner in the international standardization of WiBro [17], but also a core player in the penetration of WiBro into the global market.

In Table 2, five central telecoms equipment companies are Huawei, Nokia Siemens, Ericsson, ZTE and Alcatel-Lucent, while five central telecoms operators are China Mobile (China), Softbank (Japan), Mobily (Saudi Arabia), Bharti AirTel (India) and STC (Saudi Arabia). Notably, there are three Chinese firms in the list (i.e. China Mobile, Huawei, ZTE). This demonstrates that China positions itself at the center of the TD-LTE diffusion in the global market. Furthermore, the central actor list of TD-LTE includes China Mobile and Bharti AirTel, the world’s largest mobile operator and fourth largest mobile operator in terms of connections. As of Q1 2013, China Mobile retains 726.31 million subscribers, whereas Bharti AirTel 259. 84 million [18]. This may help explain the global attention gravitating toward TD-LTE. 3.3. Findings through the Comparative Analysis 3.3.1. Widespread Deployment of WiBro in the Global Market Drawing on the comparison, this paper finds that the widespread deployment of the standard does not necessarily assure its success in the global market. The juxtaposition of the two graphic images of WiBro and TD-LTE networks indisputably demonstrates that the WiBro standard extensively permeated into the world’s market for two years following the approval as an ITU standard in 2007. This widespread diffusion is, in part, attributable to the fact that Internet service providers were involved in the WiBro deployment, since WiBro was originally developed as a wireless Internet service. Yet despite its global penetration, WiBro failed to sustain in the market, being replaced by TD-LTE. In contrast, TD-LTE has been deployed in limited regions. It has yet to fully make inroads into the markets of North America, South America and Africa. For North America, it is considered due to LTE-FDD which has established its strongholds in the region. In the US, for example, the major telecoms carriers, such as Verizon, AT&T and T-Mobile, already provided LTE-FDD services. For South America and Africa, their mobile telecoms markets are not sufficiently mature to commercially launch the 4G technology in earnest. Notwithstanding its relatively inadequate deployment, TD-LTE has been recognized as a potential competitor to LTE-FDD, gaining momentum in the world’s market [19]. 3.3.2. Leading Role of China in the TD-LTE Global Deployment By comparing the centralization indices of the two networks, this paper finds that the TD-LTE network (24.038%) is more centralized than WiBro’s (19.571%). It

indicates that the connections of nodes are more concentrated on a smaller number of the key players on the top in the global network of TD-LTE deployment. Those influential players are the Chinese firms, especially China Mobile and Huawei, demonstrating a prominent role China played in the penetration of TD-LTE into the global market. It is notable that China Mobile is one of the top central actors in the TD-LTE network. China Mobile is the world’s largest mobile telecom operators. Its enormous installed base can work as a competitive advantage [20]. In fact, its massive purchasing power attracts the attention of equipment vendors across the globe. In June 2013, for instance, China Mobile launched a massive TD-LTE tender, i.e. a plan to buy 207,000 base stations, sparking a race among equipment vendors around the world, including Ericsson, to grab a slice of the deal [21]. This put an emphasis on the role of China Mobile in the global telecoms market. For WiBro, in contrast, notwithstanding South Korea’s spearheading role in the international standardization, other countries’ firms, e.g. Alvarion and Alcatel-Lucent, more engaged in its global deployment than the South Korean enterprises, e.g. Samsung, KT and SK. More interestingly, KT and SK, Korean telecom operators, held a relatively passive role in the global diffusion of WiBro, as compared to the commitment of China Mobile in the TD-LTE deployment. 3.3.3. Vigorous Participation of the World’s Top Telecoms Equipment Vendors in the TD-LTE Deployment Huawei, Nokia Siemens, Ericsson, ZTE and Alcatel-Lucent hold a central role in the TD LTE network. Those firms, in fact, are the world’s five largest telecoms gear companies, measured by 2011 revenues [22]. Those companies have also participated in the Global TD-LTE Initiative (GTI) Partner Forum, which was launched in 2011 to promote TD-LTE. This indicates their commitments in the TD-LTE deployment.

The active engagement of Ericsson, Nokia Siemens and ZTE in the TD-LTE deployment is, in particular, notable, as those firms did not take any part in the WiBro network. The sales revenue of Ericsson in 2010, for instance, was 203 billion SEK (approx. US$28.42 billion) [23]. This was nearly 380 times larger than that of Alvarion, the most central actor in the WiBro network [24]. For the number of employees, Ericsson retained 90,261 workers by the end of 2010, over 125 times bigger than that of Alvarion [23], [25]. This shows that more influential players are positioned in the TD-LTE network. Moreover, those firms are keen producers of LTE-FDD gear. Technically, TD-LTE and LTE-FDD equipment share the same hardware platform and high portion of software module [26]. The compatibility of TD-LTE and LTE-FDD technology was likely to facilitate the participation of the global top vendors in the TD-LTE deployment.

4. DISCUSSION The comparison of the WiBro and TD-LTE networks first identifies the widespread deployment of WiBro in the global market, including South America and Africa. The price competitiveness and fast data speed of WiBro were likely to be attributing factors for its global market penetration, particularly in developing countries. As of 2004, the price of a base station of WiBro was estimated to be 130 million KRW (approx. US$113,500), which was cheaper than that of W-CDMA, a 3G mobile telecoms standard [27]. As for downlink peak data rate, WiBro was 46 Mbit/s, almost twice faster than HSPA, a W-CDMA-based 3.5G technology [28]. Despite its extensive deployment, WiBro cannot effectively compete with the existing mobile standard HSDPA/LTE-FDD in the market. It has now been replaced by TD-LTE. By examining the network of TD-LTE, this paper confirms China as a central player in its global deployment. China Mobile’s role is, in particular, essential. For example, FierceWireless, a European wireless industry newsletter, reported in Dec. 2013 that telecoms network vendors, such as Ericsson and Alcatel-Lucent, were expected to benefit as China Mobile obtained TD-LTE licenses [29]. It demonstrates that China Mobile’s massive purchasing power, in effect, draws the world’s top telecom equipment vendors into the deployment of TD-LTE. The Korean largest telecom operator SK, in contrast to the leading role of China Mobile, was rather passive in the commercialization of WiBro, although Korea was active in its international standardization. SK maintained their competitive edge in the Korean market by focusing on the HSDPA standard, a competing technology with WiBro. This incumbent firm was concerned about the introduction of voice services into WiBro due to its potential cannibalization effect on the existing HSDPA-based services [30]. In fact, the absence of voice service was regarded a critical hindrance to WiBro market revitalization [31]. Experts also believes a lack of incumbent firms’ engagement is a critical factor contributing to the failure of WiBro in the Korean market [32]. This case is consistent with Herderson’s finding that incumbent firms are significantly less productive than entrants in their attempts to introduce radical innovation for fear of cannibalizing their existing technologies [33]. This provides an implication for a government which attempts to successfully launch a new technology standard in the mobile telecoms market. It should take into consideration a possible cannibalization effect on firms’ existing technology-based sales, and issue a service license, drawing on the standard, to telecom operators which are least likely to be affected by such an effect. 5. CONCLUSION AND FUTURE RESEARCH PLAN

This study, relying on the social network analysis, visualized the networks of WiBro and TD-LTE deployment in the global market. It also made a comparison between the two standards’ networks and identified three differences: first, widespread deployment of WiBro in the global market;

second, critical role of China in the TD-LTE network; and third, active participation of the world’s top telecoms gear vendors in the TD-LTE deployment. From analyzing these differences, this paper drew some implications for a standard policy design. Firms, if trying to successfully deploy a new technology standard in the global telecoms market, should consider partnerships with players which have massive purchasing power, such as China Mobile. For a government, it may issue a license for the commercialization of a new standard to telecom service providers which are least likely to be affected by a possible cannibalization effect on the operators’ existing standard-based sales. For a future research, in-depth interviews with people who engaged in the deployment of WiBro and TD-LTE in the global network are needed to validate this paper’s finding and complement some of the factors the authors might have missed. It should focus on drawing more implications for a standard policy design.

6. ACKNOWLEDGEMENTS This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2011-330- H00002). Thanks to professor Yong-hak Kim, Yonsei University and reviewers for constructive comments.

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