The French mobile services market, like the U.S. and U.K. markets, has a market share structure that some researchers might say is not yet “settled” in the sense of established and stable markets that follow a rule of three. The implication is that all those markets remain contestable.
In the French mobile market: Orange has about 37 percent market share, Altice has about 31 percent market share, Bouygues claims 16 percent share while Iliad (Free) has 16 percent.
The U.K. mobile market, after the O2 merger with Virgin Mobile, which should have that firm with about 30 percent share, followed by EE with about 27 percent share and then Vodafone at about 21 percent.
The U.S. mobile operator market likewise features one leader and two equally matched other contestants in early 2021.
Bruce Henderson, founder of the Boston Consulting Group is credited with a couple of foundational ideas about business, including the notion of the experience curve, which explains how the cost of products decreases with volume.
“Costs characteristically decline by 20 percent to 30 percent in real terms each time accumulated experience doubles," Henderson posited in 1968.
Among his ideas is market structure under conditions of competition. "A stable competitive market never has more than three significant competitors, the largest of which has no more than four times the market share of the smallest,” Henderson argued.
Henderson argued that stable and competitive industries will have no more than three significant competitors, with market share ratios around 4:2:1.
Those ratios also have been seen in a wide variety of industries tracked by the Marketing Science Institute and Profit Impact of Market Strategies (PIMS) database.
Such markets are stable precisely because the attackers cannot hope to unseat the market leader. This stable market structure is quite common in industries operate in markets largely free of regulatory constraints and major entry barriers (such as restrictive patent rights or government-controlled capacity licences).
There is, to be sure, it can be argued that the rules about market share in stable markets do not apply to telecom, as they might not apply in any market where market entry is restricted or where other large barriers to entry exist.
If regulation prevents the market from acquiring its competitive outcome, or because entry barriers are so high competition cannot occur, or both, telecom arguably would be an exception to the rules of three and four.
Still, a wider range of industries and markets once thought not to be subject to the rules of three and four arguably are now taking that shape. The emergence of “winner takes all” dynamics in social media, for example, suggests the rule of three might well apply in many parts of the internet ecosystem.
The issue is whether the relevant metric is usage, revenue or profit. The browser market, measured in terms of usage, fits the pattern.
E-commerce and smartphone markets do not yet have the settled rule of three and rule of four pattern.
Still, the point is that if connectivity service provider markets are subject to the rules of three and four, most mobile markets are not yet stable.
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