Is the Internet
a maturing market?
If so, what does that imply?
TWo conceRns domInAte the current debates over U.S. Internet policy. The first is the relatively low level of U.S. broadband adoption.
Although the U.S. once ranked 4th
among industrialized nations in the
percentage of residents subscribing
to broadband, it has currently slipped
into 15th place. Concerns that the U.S.
may be losing its leadership position
in this key industry have spurred a se-
ries of governmental initiatives to ad-
dress the problem. The stimulus pack-
age enacted during the initial days of
the Obama administration dedicated
$7.2 billion for new investments in
broadband infrastructure. It also re-
quired the Federal Communications
Commission to prepare a national
broadband plan, which the agency
released to much fanfare this past
March. The plan is designed not just
to ensure that broadband is available
and affordable to all Americans, but
also to devise ways to address the fact
that a surprising number of house-
holds are not subscribing to broad-
band even when it is available.
The real question
is not if the nature
of competition and
change, but rather
how and when.
Interestingly, management literature exists suggesting that both developments may simply reflect the ways
the nature of competition and innovation can be expected to evolve as markets mature. If applicable to the Internet, this literature has the potential to
provide new insights into how to craft
broadband policy and what steps business managers might take to prepare
for the future.
Product Life cycle Theory
The best-known theory of market maturation is known as the product life
cycle. A central feature of every leading
marketing textbook, product life cycle
theory examines how the pattern of
demand growth affects the nature of
competition over time. Empirical research has confirmed that many, if not
most, markets follow the pattern predicted by product life cycle theory.
The predominant version posits
that new product markets pass through
four distinct stages shown in the prod-