NEW YORK-With Andersen, the consulting firm, and Lucent Technologies Inc. as founding corporate sponsors, the London Business School has established a new Centre for the Network Economy.
The interdisciplinary research and teaching center will focus on four areas: how business models and economic activity are changing an interconnected world; the policy and strategy issues that arise as information becomes ubiquitous; the leadership and management challenges of responding to and capitalizing on rapidly changing technologies; the effect on productivity of new technologies and the network economy.
“The Internet bubble may have burst, but the network economy is here to stay,” said John Quelch, dean of the London Business School, in the announcement of the Centre’s formation.
An advisory board, comprised of academics from the school and executives of sponsoring companies, will aid the research agenda. The Centre for the Network Economy said it plans to invite a “small number” of additional corporate partners to join Andersen and Lucent.
Lucent already is collaborating with the London Business School on another initiative. In late November, the telecommunications equipment vendor announced it was awarding a total of $10 million in a five-year “Mobility Innovation Initiative” grant to the London Business School, Boston University School of Management and INSEAD in France. Its purpose is to research and develop new business models to understand the impact of mobility in general and third-generation wireless in particular on industry and organizational structures and on individual workers and consumers.
“The European carriers spent $150 billion on 3G licenses, and it will cost twice that to build out networks and acquire customers. The reason I took this on is to understand how one values and finances this opportunity, a question at the heart of interest by equipment vendors, operators and all other players, including content and application providers,” said Nalin Kulatilaka, professor of finance at Boston University.
“The grant came as it was realized the issue requires much better understanding of the value proposition. It is unclear whether value can be captured by telecom operators or by other players, like content providers.”
Kulatilaka, who is Mobility Innovation Initiative research director at Boston University, said the project has two goals this year. Looking forward, it will establish testing centers with partners operating under non-disclosure agreements to try real-world implementations of various advanced wireless data applications.
Seeking to learn from the past, the project also is taking a parallel track in which it examines historical precedents that may shed useful light on the current and future environment for wireless communications. “The Victorian Internet,” a book published in the United Kingdom about the invention and proliferation of telegraphy, is one such antecedent that may inform the debate going on today about the wireless Internet, he said.
“These kinds of transformations have happened before in network effect industries, like the telegraph, which involved hardware, networks and software, in this case, the Morse code,” Kulatilaka said.
“With the telegraph, voice was not thought of as an application. The first players to enter were railroads because they had the rights-of-way. Then came the electric power companies, Samuel Morse and Western Union.”
This fall, the Mobility Innovation Initiative plans to hold a conference, open to the public, which examines historical precedents in network effect industries.
