Strategy planning for technological discontinuities in a changing regulatory environment

Abstract

This paper describes an approach to the analysis of publicly available financial data for individual industries. These methods enable the analyst to assess past practices and the historical rate of technological diffusion during the transition period of discontinuous technological change. This assessment can provide a basis of comparison for current changes in their industry. These methods are applied to small rural telephone companies during the period of 1960 to 1996. Annual data is presented detailing the change from aerial distribution cable to buried cable by the roughly 600 rural telephone companies financed through loans from the Rural Utilities Services, a branch of the US Department of Agriculture. This change took place at a time when these companies were regulated public utilities. As such they were guaranteed profit and were not subject to competition. With the passage of the Telecommunications Act of 1996, and the expectation of nationwide competition in telecommunications services, these firms will be faced with a much more volatile environment, in which firms can fail. Measuring past events through this approach can accentuate critical business practices. This analysis of longitudinal data can provide the rural telephone companies assessment of the change in technology diffusion based on the new competitive forces, and provide direction to management as it attempts to sail in this new uncharted territory.