92 B fraunholz and C Unnithan telecommunication company, Mannesmann Mobilfunk GmbH Both networks utilised the GSM standard and both used the GSM 900 MHz frequency band [28] Mobile services were first introduced as a duopoly under a license fee regime for a period of 20 years in 1989. The first private mobile phone license was a great success for the old economy business-Mannesmann. This was because the business was already desperate for a new line of business and had begun exploring/getting involved in high-technology areas such as automotive electronics. Mannesmann's early success attracted other businesses into the industry and, in combination with deregulation of the telecom industry, Germany soon had more than 20 service providers reselling DI and D2 services. However, the market for service providers did not prosper for long and soon after the first mergers and consolidations took place [29, 30 4. The concept of multiple service providers was introduced with the expectation that to have a de facto privatised mobile networl However, this did not work in the manner expected by the regulating office- which was then the federal ministry for the postal service. The concept was that there should be competition between the service providers. However, the prices at which the network services could be resold were very much determined by the network service providers and, therefore, the expected competition did not take place [29,30 The situation changed slightly with the introduction of the 1800 MHz networks The first license for the so-called'E-Netz'was granted in 1994. The second license was granted to O2 in 1998[29,30]. This improved the competition situation a little, but the limitations of reselling services at a virtually fixed price from the network operators did not help too much. This situation will not change unless the network operators will be forced to allow override so that the user has a free choice of operator. The current situation, however, still results in comparatively high prices for mobile communication when compared on an international scale [31] Critical Success Factor 1: Government policy on competition has a significant on the pricing structure of mobile network services in Germany With competition of four networks in place and a new 3G technology just round the corner,each of the network service providers are keen to secure a significant share of the mobile phone market [32]. In order to attract customers, there is a heavy subsidy on mobile phones. This results in cheap phones, to make the entrance into the mobile market easy for the consumer, by being able to get a phone virtually free and then pay a subscription fee around EUR 50 and a monthly line rental of EUR 10. The result of this policy by network service providers is that there are many(currently 58 million) mobile phone users registered, but hardly any of them use the phone and, if they do, it is a comparatively small turnover. These customers are expensive for the network service providers in the long term as they have to bear both the upfront costs of the phone, as well as administrative costs of sending out monthly statements and keeping accounts updated [33] Another result of this fierce war over customer subscriptions is a significant targetin f the youth market. Network service providers have identified the youth as a prime user for mobile services ranging from SMs, MMS to mobile calls. Many of the phone users in Germany today are under 18 years of age and have their parents paying the bill The parents are initially happy for their children to have a mobile phone, but once the y bills start rolling in there is trouble [16]. This often ge service provider because many parents view this as the responsibility of the provider This causes bad publicity and sometimes legal disputes 33]92 B. Fraunholz and C. Unnithan telecommunication company, Mannesmann Mobilfunk GmbH. Both networks utilised the GSM standard and both used the GSM 900 MHz frequency band [28]. Mobile services were first introduced as a duopoly under a license fee regime for a period of 20 years in 1989. The first private mobile phone license was a great success for the old economy business – Mannesmann. This was because the business was already desperate for a new line of business and had begun exploring/getting involved in high-technology areas such as automotive electronics. Mannesmann’s early success attracted other businesses into the industry and, in combination with deregulation of the telecom industry, Germany soon had more than 20 service providers reselling D1 and D2 services. However, the market for service providers did not prosper for long and soon after the first mergers and consolidations took place [29,30]. The concept of multiple service providers was introduced with the expectation that there would be sufficient competition to have a de facto privatised mobile network. However, this did not work in the manner expected by the regulating office – which was then the federal ministry for the postal service. The concept was that there should be competition between the service providers. However, the prices at which the network services could be resold were very much determined by the network service providers and, therefore, the expected competition did not take place [29,30]. The situation changed slightly with the introduction of the 1800 MHz networks. The first license for the so-called ‘E-Netz’ was granted in 1994. The second license was granted to O2 in 1998 [29,30]. This improved the competition situation a little, but the limitations of reselling services at a virtually fixed price from the network operators did not help too much. This situation will not change unless the network operators will be forced to allow override so that the user has a free choice of operator. The current situation, however, still results in comparatively high prices for mobile communication when compared on an international scale [31]. Critical Success Factor 1: Government policy on competition has a significant impact on the pricing structure of mobile network services in Germany. With competition of four networks in place and a new 3G technology just round the corner, each of the network service providers are keen to secure a significant share of the mobile phone market [32]. In order to attract customers, there is a heavy subsidy on mobile phones. This results in cheap phones, to make the entrance into the mobile market easy for the consumer, by being able to get a phone virtually free and then pay a subscription fee around EUR 50 and a monthly line rental of EUR 10. The result of this policy by network service providers is that there are many (currently 58 million) mobile phone users registered, but hardly any of them use the phone and, if they do, it is a comparatively small turnover. These customers are expensive for the network service providers in the long term as they have to bear both the upfront costs of the phone, as well as administrative costs of sending out monthly statements and keeping accounts updated [33]. Another result of this fierce war over customer subscriptions is a significant targeting of the youth market. Network service providers have identified the youth as a prime user for mobile services – ranging from SMS, MMS to mobile calls. Many of the phone users in Germany today are under 18 years of age and have their parents paying the bill. The parents are initially happy for their children to have a mobile phone, but once the heavy bills start rolling in there is trouble [16]. This often gets back to the network service provider because many parents view this as the responsibility of the provider. This causes bad publicity and sometimes legal disputes [33]