Free Essay: How Competition Influences Mobile Communication and Computing Infrastructure in Dominica

Introduction

Cable & Wireless is one of the dominant telecommunication companies in the Caribbean. It is a British multinational corporation that specializes mainly in the provision of telecommunication services (Beauchamp 2001). Its headquarters are located in London, the United Kingdom. Currently, the firm operates under the FLOW brand in Dominica (Thomas 2015). Like Cable & Wireless, Digicel is another multinational corporation with business interests in the Caribbean. Currently, the firm operates in more than 30 countries (Maierbrugger 2013). Most of its operations are in the Caribbean, Central America, and Oceania markets. About 14 million customers use the wireless services of the company (Maierbrugger 2013).

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For a long time, Cable & Wireless was the dominant telecommunications firm in Dominica. Its operations were more or less a monopoly in the market. However, things changed with the entry of Digicel in the Dominican market in 2006. The company had to deal with a competitor in a market that it had dominated for a long time. The current paper analyzes how intense competition creates opportunities for advancements in mobile communication and mobile computing infrastructure. The paper will focus on Cable & Wireless and Digicel and their operations in Dominica. The major objective is to analyze how the operations of the two firms have changed over the years as a result of competition.

How Competition Creates Opportunities for Advancements

Competition is an expected phenomenon in most sectors in the business world. Organizations have to come up with strategies aimed at helping them survive the rivalry from other firms fighting over the same customers (Pride 2016). Competition has a number of impacts on the operations of a firm. Some are positive, while others are detrimental to the survival of the firm. For instance, intense competition is likely to affect the sales made by an organization. Consequently, the profitability of the business is negatively affected (Tyler & Tabarrok 2013). In some cases, intense competition may drive the firm out of business. The forced exit is especially so if the business fails to capitalize on the benefits of rivalry or lacks the mechanisms to do so.

However, competition is not always bad to the organization. According to Stigler (2008), business organizations are forced to become innovative in order to survive competition (Heyne, Boettke & Prychitko 2014; Stigler 2008). As such, complacency is avoided. For instance, to deal with the competition from Digicel, Cable & Wireless may be forced to come up with new strategies aimed at retaining customers and acquiring new ones. In addition, rivalry may force the firm to develop self-awareness (Pride 2016). To this end, the management has to analyze the strengths and weaknesses of the business in order to effectively position it in the market. Cable & Wireless may use its strengths to catapult its business ahead of Digicel and other rivals in the Dominican telecommunications market.

Competition can also help a firm to achieve differentiation (Heyne et al. 2014). It is whereby firms strive to offer products that are of high quality compared to those of their rivals. The aim of this strategy is to stand out in the market. It is also noted that competition may help firms to learn from each other (Stigler 2008). What this means is that a firm may identify the practices that help a rival organization to stand out in the market and adapt it to their operations. Consequently, the operations of the business are improved.

A Short History of the Dominican Mobile Telecommunications Market before and after Digicel

Currently, the mobile telecommunications industry in Dominica is liberalized (Chard 2014). The liberalization can be traced back to the early 1990s. However, the General Telecommunications Law of May 1998 is what truly opened up the Dominican mobile telecommunications market (Frias 2007; Socias 2011). The law put in place the existing legal framework that supports and actively promotes competition in this sector.

According to Frias (2007), telecommunication in Dominica has a fairly long history. It started with the telegraph service, which was introduced in mid 1884 (Frias 2007). The service was provided by Societe des Telegraphes Sous, a French organization. The firm connected this island with other countries around the world. The provision of telephone services in the country started in the early 1900s (Socias 2011). The service was crucial to the welfare of the country to the extent that the government gazetted it as a public utility. By 1910, a number of telephone lines and telegraph stations were present in Dominica.

The global economic crisis that took place in the 1930s prompted the government to privatize the telecommunication market (Socias 2011). Most telephone and telegraph services installations were taken over by private investors. The first telecommunication firm in Dominica was formed in 1930 as a result of this privatization. CODETEL, as the company was known, made efforts to introduce international telephone services in the country. The company dominated the market for a long time.

The cellular services were introduced by CODETEL in Dominica in the mid 1980s. However, by mid 1990s, only a small percentage of Dominicans owned a mobile phone (Frias 2007). In spite of this, the telecommunication industry in Dominica was fairly developed compared to the situation in other Latin American countries.

The monopoly of CODETEL came to an end in the 1990s (Frias 2007). It was brought to an end by the introduction of the new telecommunication laws that improved and regulated competition in this industry. A number of companies started operating in this sector. On its part, CODETEL had to undergo a number of changes to cope with the competition. For instance, in 2004, it changed its name to Verizon in efforts to rebrand and merge with other firms (Dyer 2016; Sandle 2014).

Digicel launched its services in Dominica on May 2006 (Vulliamy 2011). It came into a market that was already crowded and liberalized. Consequently, competition in the Dominican mobile telecommunication industry went a notch higher (Cauley 2006; Hall 2012). According to Maierbrugger (2013), there are now several telecommunication service providers in Dominica. They include Altice, Claro, Digicel, FLOW (formerly known as Cable & Wireless), and Viva.

Changes in the Dominica's Telecoms Market due to Digicel's Entry

A number of changes have taken place in the Dominican telecoms market with the entry of Digicel. Some of these changes can be attributed directly to the entry of Digicel, while others are as a result of an indirect impact of this organization in the sector. One of these changes entails mergers and acquisitions between firms operating in the industry. For instance, in December 2006, Verizon Dominicana was acquired by America Movil (Maierbrugger 2013). The latter is a multinational corporation based in Mexico. One of the effects of competition entails a change in the business operations of firms operating in a given industry. Mergers and acquisitions are some of the changes that take place as a result of rivalry in an industry (Ebenstein 2015). The aim of such mergers is to strengthen the firms that come together to help them weather the competition in the sector.

Another change that has occurred in the Dominican telecoms market after the entry of Digicel is an increase in the number of mobile phone subscribers. For instance, according to Indotel, the country's telecom regulator, there were approximately 9 million subscribers in 2010 (Dyer 2016). The number represents more than 90% penetration rate. What this means is that the market has expanded in the recent past. The expansion can be attributed to, among others, competition brought about by new entrants, including Digicel.

Changes in the Operations of Cable & Wireless in Efforts to Keep Up with Competition

The major focus of the current paper is to analyze how competition has impacted on the operations of Cable & Wireless and Digicel in their efforts to survive in the Dominican telecommunications market. It is a fact that a number of factors, such as competition and technological revolution, have had significant impacts on the mobile telecommunications industry around the world (Wu et al. 2004). Some of these effects are limited to specific markets, while others spill off to different countries around the globe.

According to Hall (2012), the launch of Digicel in Dominica resulted in increased competition in the mobile telecommunication market. The competition was especially brought about by the company's introduction of various first-to-market products and services. Such introductions include free voicemail, call me services, and credit me (Cauley 2006). Existing firms had no option but to respond to this competition.

As already indicated, one of the impacts of competition is mergers and acquisitions. For instance, the cabling arm of the organization was acquired by Allnet in March 2007, less than a year after Digicel entered the Dominican market (Thomas 2015). One of the major aims of this acquisition was to help the company focus on the provision of its core services to the consumers. In late 2015, Cable & Wireless responded positive to a merger proposal from Liberty Global (Thomas 2015). The official acquisition took place in mid 2016. To reflect the new entity brought about by the merger of the two companies, the firm rebranded to LiLAC. The rebranding was to take place within a span of 6 months. A critical analysis of this move may be viewed as a reaction to competition in the market from such players as Digicel.

Another reaction closely related to merger and acquisition is demerger (Heyne et al. 2014). It is a situation where the management of a company divides the entity into different and separate legal entities. One of the major reasons is to reduce the operational costs of the business by reducing its footprint in various markets and industries (Heyne et al. 2014). In early 2010, Cable & Wireless Communication adopted this strategy. It demerged from the larger Cable and Wireless plc. The move was made about three years after Digicel made its entry into the Dominican telecommunications market. According to the management, the move was informed by the belief that the value of the business could be enhanced by separating it into two legal entities.

According to Tyler and Tabarrok (2013) and Pride (2016), another reaction associated with competition is rebranding. It is a situation where an organization makes an effort to change its name, its way of operations, and general organization. The aim of this move is to avoid complacency and revitalize the entity to help it deal with competition. In line with this, Cable & Wireless has since changed its name to FLOW (Dyer 2016). The company has being operating under this brand since 2015. Again, this may be viewed as a reaction to the competition brought about by Digicel to the Dominican telecommunications market.

Conclusion

In this paper, the author analyzed how intense competition creates opportunities for advancements in mobile communication and mobile computing infrastructure in Dominica. A comparison was made between Digicel Dominica and Cable & Wireless. It was revealed that o...