Making a Natural Monopoly Claes-Fredrik Helgesson
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Making a Natural Monopoly The Configuration of a Techno-Economic Order in Swedish Telecommunications Claes-Fredrik Helgesson AKADEMISK AVHANDLING Som for avlaggande av ekonomie doktorsexamen vid Handelshogskolan i Stockholm framlaggs for offentlig granskning fredagen den 15 oktober 1999, kI10.15 i sal Ragnar Handelshogskolan, Sveavagen 65 Making a Natural Monopoly The Configuration of a Techno-Economic Order in Swedish Telecommunications ~ STOCKHOLM SCHOOL OF ECONOMICS '17 EFl, THE ECONOMIC RESEARCH INSTITUTE EFlMission EFl, the Economic Research Institute at the Stockholm School ofEconomics, is a scientific institution which works independently ofeconomic, political and sectional interests. It conducts theoretical and empirical research in management and economic sciences, including selected related disciplines. The InStitute encourages and assists in the publication and distribution ofits research findings and is also involved in the doctoral education at the Stockholm School of Economics. EFl selects its projects based on the need for theoretical or practical development ofa research domain, on methodological interests, and on the generality ofa problem. Research Organization The research activities are organized in nineteen Research Centers within eight Research Areas. Center Directors are professors at the Stockholm School ofEconomics. ORGANIZATIONAND MANAGEMENT Management and Organisation; (A) ProfSven-Erik Sjostrand Center for Ethics and Economics; (CEE) Adj ProfHans de Geer Public Management; (F) ProfNils Brunsson Information Management; (1) ProfMats Lundeberg Man and Organisation; (PMO) Acting ProfJan Lowstedt Industrial Production; (T) ProfChrister Karlsson MARKETING Center for Information and Communication Research; (CIC) Adj ProfBertil Thorngren Center for Consumer Marketing; (CCM) Associate ProfMagnus SOderlund Marketing, Distribution and Industrial Dynamics; (0) ProfLars-Gunnar Mattsson ECONOMIC PSYCHOLOGY Center for Risk Research; (CFR) ProfLennart Sjoberg Economic Psychology; (P) ProfLennart Sjoberg ACCOUNTING, CONTROL AND CORPORATE FINANCE Accounting and Managerial Finance; (B) ProfLars Ostman Managerial Economics; (C) ProfPeter Jennergren FINANCE Finance; (FI) ProfClas Bergstrom ECONOMICS Center for Health Economics; (CHE) ProfBengt Jonsson International Economics and Geography; (IEG) ProfMats Lundahl Economics; (S) ProfLars Bergman ECONOMICS STATISTICS Economic Statistics; (ES) ProfAnders Westlund LAW Law; (RV) ProfErik Nerep Chairman ofthe Board: ProfSven-Erik Sjostrand. Director: Associate ProfBo SeIlstedt, A dress EFl, Box 650I, S-1 I3 83 Stockholm, Sweden • Internet: www.hhs.se/efi/ Telephone: +46(0)8-736 90 00 • Fax: +46(0)8-31 62 70 • E-mail [email protected] Claes-Fredrik Helgesson Making a Natural Monopoly The Configuration of a Techno-Economic Order in Swedish Telecommunications tI9 STOCKHOLM SCHOOL OF ECONOMICS ~,; EFl, THE ECONOMIC RESEARCH INSTITUTE Dissertation for the degree of Doctor of Philosophy, Ph.D. Stockholm School of Economics 1999 © EFl and the author ISBN 91-7258-521-8 Cover: Telegraph Administration' building at Jakobsbergsgatan 24 (Jeriko) as designed in 1909 by Aron Johansson (1860-1936). Design supplied by the Regional Archives in Uppsala. Layout by Jaana SimiHi. Keywords: Economic organisation History ofTechnology Natural Monopoly Networks Sociology of Industry Techno-economic controversies Technological change Distributed by: EFl, Stockholm School of Economics Box 6501, SE-113 83 Stockholm Tryckeri Elanders Gotab Stockholm 1999 To Celine and the memory ofLilian Acknowledgements I owe thanks to those very many people whose guidance and support, criticism and counsel contributed to the completion of this thesis. When I look further back, I recall that my first encounter with an electro-mechanic telephone exchange, complete with its characteristic clicking sounds, was in a small town outside Boras. I can also remember when, as a student, my thoughts first turned to the concept of natural monopoly, in the context of the then ongoing wave of deregulation. So many years later, this thesis may appear in retrospect to be the self-evident outcome of such early beginnings, yet this is not my view. As I said, I owe thanks to many that the work put into this thesis has come out the way it has. First, my sincere thanks to my thesis committee. To Lars-Gunnar Mattsson for exhibiting that precious quality of entrusting me to shape this study on my own, as well as for providing guiding constructive criticism along the way. To NHs Brunsson for his suggestions and for his incisive questioning and demanding commentaries which greatly helped me to clarify my thoughts. To Svante Lindqvist, while a member of the committee and thereafter, for his inspiration and for instilling a greater sense of discipline in my work. To Sven Widmalm, replacing Svante on the committee, for his sharp and insightful comments which greatly improved the text. Anders Lundgren has been both a supportive advisor and a friend throughout my doctoral work. It was he, together with Staffan Hulten, who was responsible for my becoming a PhD student in the first place. While working with them on various projects, they have both participated in shaping my views on what it means to do research and I am grateful for that insight. I further owe much thanks to Per Andersson, Karin FernIer, Mats Fridlund, Hans Kjellberg and Ivan Snehota who have read and commented on draft chapters on repeated occasions. Hans has also been a most valued friend and fellow traveller in my dootoral studies. Mats has similarly been an important friend and external colleague with whom to commiserate and share the hardships of completing a thesis. Karin has not only provided valuable and supportive comments, she has also applied the very much needed pressure on me to complete my thesis so that I may participate more actively in the new project we have together. vii viii When serving as opponent on a draft manuscript of this thesis, Hakan Hakansson had numerous challenging comments to make about what I had done, and not done, and provided useful guidance in revising the manuscript. Previous work related to this thesis has been presented on several occasions and I extend my thanks to those participating at the seminars at 'Vita Villan' in Uppsala, at the Department of Industrial Economics and Management at the Royal Institute of Technology, at the Department of History of Science and Technology at the Royal Institute of Technology, at the Stockholm Center for Organizational Research (SCORE), and at the Department of Technology and Social Change at Linkoping University. At these occasions I received valuable comments from, among others, Peter Andersson, Kerstin Jacobsson, Ame Kaijser, Thomas Kaiserfeld, Staffan Laestadius, Apostolis Papakostas, Jane Summerton, Kristina Tamm Hallstrom, Maria Sundstrom, and Alexandra Waluszewski. This study began as part of a research program within the Department of Marketing, Distribution, and Industry Dynamics at Stockholm School of Economics. In the last few years, the study has in addition become associated with the research center that grew out of the first research program, the Center for Information and Communications Research. This study has undoubtedly been shaped by this dynamic research milieu and I extend my thanks to past and present members constituting this compound collective: Gunnar Alexandersson, Monica Alfredsson, Per Andersson, Karolina Brodin, Ulf Essler, Ann-Charlotte Edgren, Torbjom Flink, Susanne Herz, Staffan Hulten, Dimitrios loannidis, Mikael Kaplan, Hans Kjellberg, Karl Oskar Kallsner, Anders Liljenberg, Mia Liss, Anders Lundgren, Lars-Gunnar Mattson, Bengt Molleryd, Lena Nordenlow, Anna Nyberg, Jaana Simila, Ivan Snehota, Kristoffer Strandqvist, Susanne Sweet, Magnus Soderlund, BertH Thorngren, Mats Vilgon, and Lena Wirdefeldt. This study assumed a specific direction during the two sessions I spent abroad. The four months at SCANCOR at Stanford during Autumn 1994 was a stimulating time. Being endowed to read, stroll and ponder in such a context was truly reviving and I was fortunate in being able to meet and discuss with some very stimulating scholars, including Jim March and Nathan Rosenberg. The classes held by Gabrielle Hecht and Paul David was furthermore very helpful in guiding my reading and in cultivating my interests. The subsequent four months spent at Centre de Sociologie de 1'Innovation at Ecole des Mines de Paris were as inspiring and bred many of the ideas that are in this study. The seminars and especially my discussions with Madeleine Akrich, Michel Callon, Sophie Dubuisson, and Alexandre Mallard, have been central in shaping this study. The Hans Werthen Scholarship from the Hans Werthen Foundation at the Royal ix Swedish Academy of Engineering Sciences (IVA), which made these two profitable sessions abroad possible is gratefully acknowledged. George Cook has put in a great effort improving the English of this thesis. In this, he has also pointed out instances where I had lost the thread and hence constituted an additional valuable commentator upon the manuscript. Jaana SimiHi has provided last minute help in several ways and the cover of this thesis is designed by her. My thanks to both. This thesis would have been totally different had I not been able to exploit the archives of the Telegraph Administration, its clippings archive, as well as the archives of LM Ericsson. I want to thank Keith Wiberg, Dick Lindgren, Eva Derlow, Alexander Huseby, Astrid Sandstrom and Roger Nyberg in assisting