Cable Vs. Dsl - Competing It Innovations and Lock-in from the Customer’s Standpoint
Abstract: Based on the question of technology choice between two competing IT innovations, research suggests bandwagon effects to explain adoption and diffusion of a single dominant technology (Leibenstein 1950). However, when neither direct nor indirect network effects exert an infrastructure-specific influence on the diffusion process – as in the case of German broadband competition between DSL and Cable infrastructures – bandwagon effects cannot explain the emergence of a single technology standard. Due to digital convergence and non-proprietary IP-infrastructures network effects work comprehensively for both technologies. Hence adoption patters should converge, when the two competing technologies are relatively similar in terms of performance and pricing. The quest is therefore to identify and measure consumer adoption mechanisms responsible for the continuous asymmetries in DSL and Cable adoption patterns. We show that information externalities may arise from high uncertainty involved in the purchase of IT services such as broadband. As a result a stable lock-in emerges and prevents significant competition between the alternatives by creating implicit switching costs.
