# Innovation's Dynamics in Mobile Phone Services in France

Abdelillah Hamdouch, Esther Samuelides

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Abdelillah Hamdouch, Esther Samuelides. Innovation's Dynamics in Mobile Phone Services in France. 2000. halshs-04139723

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Cahiers
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MSE

Innovation's Dynamics in Mobile Phone
Services in France

Abdelillah HAMDOUCH

Esther SAMUELIDES

2000.26

CENTRE NATIONAL
DE LA RECHERCHE
SCIENTIFIQUE
Innovation's Dynamics in Mobile Phone Services in France

Abdelillah Hamdouch* and Esther Samuelides**

* Abdelillah Hamdouch is Associate-Professor at the University of Lille (I) and researcher in CRIFES-MATISSE (University of Paris I-Panthéon Sorbonne). His research fields are industrial innovation and organizational economics.

e. mail : hamdouch@univ-paris1.fr

** Graduated from HEC School of Management, Esther Samuelides is lecturer and researcher in CRIFES-MATISSE (University of Paris I-Panthéon Sorbonne) where she is preparing a PHD thesis on the new characteristics of competition in the telecommunications industry.

e. mail : samuelid@univ-paris1.fr

Université de Paris I – Panthéon-Sorbonne. Maison des Sciences Economiques, 106-112, Boulevard de L'Hôpital. 75013 Paris. Tel. : 01 44 07 81 51 – Fax : 01 44 07 81 55
# Innovation's Dynamics in Mobile Phone Services in France

## Abstract

This paper follows recent research about the importance, the variety and the development of innovation in the service industries. We study the innovations which have appeared in the fast growing activity of mobile telecommunication services in France. These innovations have essentially been commercial, affecting tariffs, marketing formulas and the service-content, including the relationship to customers. Besides, carriers also reconfigured their organization in developing new working tools and innovative partnerships. The emergence and the diffusion of these innovations reveals a systemic and dynamic competitive process. The innovations' path appears specific to each carrier, although the imitation/innovation logic shapes the competition dynamics which prevails on similar service industries.

**Key words** : Competition, Market Dynamics, Mobile Phone Services, Service Innovations, Technological Innovations.

**JEL Classification** : L10, L21, L86, O32

## La dynamique d'innovations dans les services de télécommunications mobiles en France

### Résumé

Cet article se situe dans le prolongement de nombreux travaux récents, qui ont permis de souligner l'importance et la variété des innovations dans les activités de services et d'en formaliser les principaux processus d'apparition. Nous y étudions les innovations apparues dans un secteur de services en expansion très rapide, celui des opérateurs de télécommunications mobiles en France. Nous rappelons dans un premier temps les conditions d'émergence et de développement du marché, puis procédons à un examen détaillé des innovations apparues dans le contenu du service et dans l'organisation des opérateurs. En constatant l'existence de corrélations entre ces différents types d'innovations, on souligne d'une part la spécificité des trajectoires de chacun des trois opérateurs du secteur, et, d'autre part, la logique d'innovation-imitation qui structure la dynamique concurrentielle dans ce type de services.

**Mots-clés** : Concurrence, Dynamique du marché, Innovations technologiques, Innovations de services, Services de télécommunications mobiles

**Classification JEL** : L10, L21, L86, O32
Introduction

What characterizes the innovations developed by companies in the service industries?
Many works have recently been published on this topic. The major results are the following:
i) innovations in services concern both the introduction of new services (proposed to firms or to individuals) and the reconfiguration or improvement of generic services (Sundbo, 1993 ; Miles, 1994 ; Ruyssen, 1988 ; Djellal, 1998 ; Callon, 1999) ; ii) innovations in services are not only the effects of technological innovations in industries (as suggested in Teece, 1992).
Although such links of causality are evident, for instance with the introduction of bar-codes in supermarkets, automatic desks in banks or new medical tools in surgery, etc. (Greenan, 1996 ; Tannery, 1999), the inverse dependency appears when innovations in services transform the industries that use these services - for instance banks and telecommunications services - (see Gadrey, Gallouj and Weinstein, 1995; Lamouline, 1998 ; Bancel-Charensol, 1999) ; iii) the conception and development process generating service-innovations are less formalized: they are not always developed within companies' R&D facilities and are based on organizational and commercial skills rather than scientific knowledge (Callon, Laredo and Rabeha, 1997 ; François, 1998) ; iv) innovations in service-industries are as prone to affect the customer/supplier relationship as they are to transform the service (Eiglier and Langeard, 1987; Bressand and Nicolaï dis, 1988 ; Gadrey and Gallouj, 1992 ; De Bandt and Gadrey, 1994 ; Tannery, 1999).

In this paper we confront these results to the particular case of innovations in French
mobile phone services since 1987. The three French mobile carriers: Itineris (or France
Télécom Mobiles), SFR and Bouygues Telecom, have introduced indeed numerous
commercial and organizational innovations. We actually distinguish in this paper commercial
and organizational fields. Doing this, we adopt a different perspective from Ménard (1995),
dealing with organizational changes, or even Gallouj (1998) describing the innovations'
specificity in services industries. These authors do not recognize commercial changes as a
specific innovative category and consequently, do not precise the links between
organizational and commercial evolutions. Nevertheless we find relevant to distinguish the
service's characteristics (commercial field) and the more complex structure's mechanisms
(organizational field). Whereas organization covers resources allocation and coordination
mechanisms (Chandler, 1992), commercial trends directly affect the service's and the carrier's
image. With these different categories of organizational and commercial innovations we
establish a link between the service content and the company's structure. We examine the
following topics: are commercial innovations easier to develop? Are they more frequent than
organizational innovations? What are the connections between commercial innovations and
organizational evolutions, i.e. can a company develop innovative services or products without
changing its structure?

Organizational and commercial innovations in the mobile phone industry can be explained
by the specific nature of the competition on this market. Furthermore, the innovations with
respect to their nature and frequency reveal a specific competitive dynamics. Upon
examination of the interdependencies between the various innovations' types (be they
technical, commercial or organizational), each mobile carrier's trajectory can be reconstituted
as well as the industry's trajectory as a whole.

The paper is organized as follows. First, historical perspective is briefly established. Upon
examination of the organizational and commercial evolutions introduced in mobile phone
services in France, we show how commercial innovations have diffused in the whole sector
and explain the role of organizational innovations in the innovator/follower dilemma. Then,
we identify the interdependencies between the various types of service innovations. Finally,
the last section summarizes the main results of the paper.
## Historical perspective

Mobile phone services are marketed in France since 1987 because: i) new transmission possibilities provided by major technological innovations enabled signals transmission in situation of mobility such as digitalization, numerical compression and packet switching, ii) the deregulation process of the European telecommunications industry accelerated the market's liberalization. These technological and legal evolutions forced France Télécom to expand its available services and allowed companies to access to an already booming market.

From 1987 up to the arrival of the third player Bouygues Telecom, competition between the two carriers France Telecom Mobiles and SFR focused on the development of infrastructures to cover the most quickly the population and the territory in order to entice customers (primarily professional at the time) so that the cumulating of subscriptions induces lower prices for new customers. Indeed these evolutions were determined by the nature of competition in network industries, which is induced by the Increasing Returns Adoption 's logic (Arthur, 1989), a combination of scale economies, network effects (see Katz and Shapiro, 1985) and a learning curve phenomena. This specificity implies the following dynamic: the network's value depends on the territory's coverage and on the size of its customer base. The wider the network will be, the more the costs will fall, and consequently the network will be all the more enticing for new customers. Thus, carriers will increase their network's value and so on...shaping a virtuous cycle. Consequently the carriers' first objectives were in 1987 to expand their network's coverage. Besides, both companies tried to accelerate the conquest of new customers through pricing policies which were more and more differentiated (according to timing and call volume) but essentially not innovating. Bouygues Telecom's arrival in May 1996 has radically changed the nature of competition. The latter choose to target a still virgin market: the mass-market. Indeed, the incumbents had preempted the professional market which seemed the most profitable. To mark its differentiation,
Bouygues Telecom resorted to a technological innovation (the digital sound) and defined an innovative marketing policy specifically adapted to the mass-market. Meanwhile, France Télécom and SFR which were being progressively aware of the mass-market's potential had radically reoriented their strategy. The competition became more intensive, firstly through tariffs, then through the telecommunications services' diversification.

## Innovations development

To increase their differentiation, carriers were urged to innovate. Significant evolutions took place in the service's characteristics and in the carriers' structure. Table I hereafter illustrates this phenomena by giving a sample of the major innovations introduced in the French carriers' offer and organization. In the table, organizational and commercial innovations are set relatively to their application in the company. The categories of functions, tools, products or relations are more closely described in Hamdouch and Samuelides (2000).

### Take in table I

Most of innovations modified the service modalities because such changes immediately affected the user's evaluation of the service, and thus the carrier's image. The first innovation consisted in discriminating customers according to their communication time. The segmentation became more acute and the choice wider. Carriers offered for instance to low-consuming customers "Discovery" services to attract them to mobile telephone services. With the market growth (in consumers' number, in call frequency per customer and in time per call), companies offered formulas of up to six hours communication time. New services such as taxi or restaurant booking and on-line news became available. Indeed, as the mobile phone was becoming a mass market, customer needs were changing. In order to entice consumers who did not feel the need to use this technology at the beginning, an evolution in the service-content, a service-access facility and relevant pricing were required. Consequently, changes
were introduced at first in the fares: certain services such as voice-mail consultation became free; there was also time discrimination with off-peak hours. Carriers decided to market communication hours for a fixed subscription per month. Moreover, carriers designed new services in order to incite customers in trying mobile phone (promotions, temporary options) or they reduced the customer sunk cost: for certain formulas minimal communication volume and line establishment cost were eliminated. Customers could also choose a short-term relationship with a carrier by buying a certain amount of communication units through prepaid cards. Another important innovation was to sell the service with the terminal (which was often subsidized by carriers), so that the acquisition cost quickly fell and the service access's facility increased.

At the organizational level, the adoption of project-based management increased the carrier's flexibility. As technical, legal and marketing staff were gathered in task forces according to current topics, carriers were then able to quickly adopt or reject a project without reconfiguring the whole organization. As carriers' activities were switching from pure carriers to service reseller or internet access provider, reactivity was necessary. Carriers developed new activities or prioritized activities which previously appeared as minor. For instance carriers developed new facilities such as "International Partnership Departments" devoting specific staff to this activity. Carriers became also progressively aware of the distribution's and marketing's importance. When the sector was still mainly monopolistic between 1987 and 1992, phone services were more developed in exploring the new technologies' benefits than in taking into account consumer needs. The market scanning only occurred to plan the infrastructure's coverage (Vialle 1996 ; Lanza and Antonelli, 1999). As soon as the market opened to competition and rivalry focused on enticing customers, marketing took a key role to set companies' strategies: i) the selling staff represented a higher percentage of the whole staff than it had been in France Telecom before liberalization, ii) employees had to be trained to
acquire sophisticated marketing techniques, on line consumer assistance was developed and
activated 24 hours a day in order to solve first-users difficulties, carriers systematically
resorted to aggressive selling techniques such as direct telephone prospecting or sellers
keeping customers regularly informed of new services, the staff was trained in dissuading
customers from churning their subscription, iii) in some R&D projects, users and designers
gathered in order to co-develop new services according to user needs, iv) the marketing key
role even appeared in the organization chart which was split in facilities related to each
market target, so that the company was in a better position to design offers adapted to every
customer's category, which tends to have increasingly specific needs with the growing
services' variety. Carriers resorted to diversify their outlets through exclusive distributors
(which could belong to their own subsidiaries) as well as to independent distributors which
were also selling competitors' phone services. Moreover, there was also a move towards large
scale distribution which did not suppress specialized outlets and thus increased the
distributors' variety. This diversity was probably implemented in order to augment market
penetration by adapting outlets to each target-group. Carriers were trying various modes of
distribution to optimize the customer relationship. A distributor whose single activity was to
re-sell services was expected to be more creative in designing marketing formulas in so far as
it was closer to customers and specialized in selling. Some independent distributors had thus
control over pricing or service design as commercial incentives.

The reader perhaps wonders whether these numerous organizational and commercial
changes should be called innovations, especially because the above-mentioned organizational
changes, i.e. customers focused strategies, were often imitated from other industries.
However, innovation theoreticians have progressively considered incremental evolutions as
genuine innovations (Mansfield, 1968). They defined as well architectural innovations
occurring when companies introduce a new combination of preexisting product characteristics
(Henderson and Clark, 1990). Nevertheless, we do not think that every evolution is an
innovation. As in Schumpeter works (1912), we qualify as innovations changes that induce a
significant evolution in demand or in a carrier's market share. This implies a need to establish
indicators in order to determine causality between performance and innovation. Such research
concerns appear for instance in Greenan (1996) and François (1998), and are of significant
use for the study of service innovations.

Mobile carriers have developed various service innovations both in the commercial field
through the pricing, the marketing formula or the service's content, and in the organizational
field by developing new functions, tools or partnerships.

Commercial innovations and the competitive dilemma

The speed pace adopted by carriers to introduce commercial innovations and to imitate the
innovations introduced by their competitors can easily be explained by the preemption logic
previously described. Table II hereafter indicates that competitors react to innovations at the
very most in a few months. Nevertheless, this reaction time closely depends on the
innovation's nature, for instance whether it introduces global or incremental evolutions. Thus,
the first-movers are all the more imitated that they introduce incremental evolutions, that is to
say affecting only one service characteristic.

Take in Table II

Let's take for instance the pricing of each communication second, or the differentiation
between prime-time and off-peak hours. The diffusion of these evolutions within the sector
took only a few weeks. However, when a carrier introduced a new commercial formula, such
as a subscription per month for a fixed communication time, or a pack coupling the
subscription to the service with the terminal, this innovation was just as systematically
replicated but the imitation-time took a few months.
This difference in imitation time is related to the fact that incremental innovations in the service's content only require marginal adjustments to be duplicated by imitators, whereas new service concepts, more complex and requiring a heavier logistic, will imply a deeper reconfiguration of each company's organization or of its relationship with suppliers and distributors. A commercial innovation is all the more difficult to imitate that it requires an organizational adaptation.

Closer examination of Table II reveals that, whatever the level of rupture introduced by the innovation, the imitation is rarely an exact replication. The imitator generally introduces a slight permutation in the innovation so that it can differentiate itself from the competitor and thus projects an innovator's rather than imitator's image. For instance, the introduction by Bouygues Telecom of the unlimited free telecommunications on the weekends was followed the next month by SFR, who offered free telecommunications in the off-peak hours both evenings and weekends.

Imitation of commercial innovations generally occurs through incremental innovations that can be put in two categories: i) the addition of a new characteristic to the innovation introduced by the first-mover, ii) the reconfiguration of the first innovation, for instance in modifying the nature of services proposed in a initial bundled package. These incremental followers' innovations will further be imitated by competitors, including the carrier who had previously introduced the first innovation...

The mobile telephone industry is characterized through an on-going race between carriers for introducing innovations in order to maintain their market-shares. This trend does not constitute a strategic option but a necessity because of the increasing returns and networks effects prevailing on this industry. The dilemma innovator/imitator is besides more acute in this service industry than in others with slower growth. Indeed, even if imitation occurs quickly in the commercial field and consequently is prone to dissuade carriers to invest in
order to develop “servicial” innovations, the necessity to keep current customers and to attract
new-ones urges carriers to behave like first-movers. Given the exponential growth of the
market, which last year grew by 84% from 11.2 millions subscribers to 20,7 millions, and
therefore its saturation in a few years, a first-mover always has a substantial advantage over
its competitors. According to the logic of preemption in fast growing markets, every new
customer gained is not to be taken by the competitor (if we neglect the rate of churn),
especially when the subscription induces a long term relationship like in the mobile services’
subscription where the minimal term for a contractual relationship is at least of one year.

The role of organizational changes

As explained in the previous description of the innovations, organizational innovations in
mobile carriers' structures have developed marketing and reactive skills. They are less
apparent than commercial or technological innovations, because companies keep them secret
so that competitors can not replicate them. They are often planned by top-management
executives and implemented in the concerned facility by local executives. If some are directly
introduced such as a new sales incentives, most are not immediately effective like training to
required skills, new facility creation or partnership development. They also require specific
resources to be designed, adapted to the company and successfully implemented (Greenan,
1996) and can be costly, especially when the whole organization is affected.

Organizational changes contribute to a company's performance because they deeply affect
its functional process. In mobile phone services, innovations that enabled a carrier to scan
market trends and to achieve faster detection of consumer's claims or dissatisfaction
contributed to design new products. Scanning was also applied for watching competitors, so
that carriers could immediately react to successful rival services and prevent popularity's loss.
Consequently, organizational changes induced a faster diffusion of the evolutions introduced
in the service content or in the customer relationship. As soon as an organizational innovation was revealed through innovative service characteristics, competitors tried to adopt it though most were difficult to detect or hard to link with carriers' observed performances.

If the innovations led customers to express their needs and to develop new ones, an innovative supplier-operator coordination became necessary to inform carriers about new transmission technologies. As carriers became more market-minded, they needed to absorb technological innovations with the suppliers cooperation. The partnership related to the product named “pack”, which couples the terminal with the phone service, represent an instructive example of such a cooperation. Operators and suppliers worked together on terminal specifications or design and carriers could then inform suppliers on customers’ needs. Reciprocally, packs enabled carriers to sell ready-to-use services so that terminals were offered for free. Similar partnership benefits are explained in Von Hippel’s writings (1976), but what is striking in the mobile phone industry is that carriers became mediators between equipment suppliers and consumers because they were frequently in contact with customers through monthly invoicing, on-line services and assistance, or the design of various and renewable service options.

These phenomena can also occur in services which are as well demand-pull as supply-pushed (see Mowery and Rosenberg, 1979). In the mobile phone industry, to assimilate knowledge and know-how in organizational and commercial fields represents for a carrier a decisive competitive advantage because it enables the company to link together evolutions prone to intervene either in demand or in technology. A company's power in the mobile phone industry is determined by this coordinator's and intermediary's role whose efficiency varies relatively to organizational specificity. Organizational innovations are consequently necessary to keep a carrier's flexibility and reciprocally these innovations are generated and favored by flexible organizations.
Service innovations differ from technological innovations in industry. Commercial innovations frequently appear and introduce various degrees of changes (from slight permutations to radical innovations). A carrier frequently needs to resort to them in order to differentiate itself from its competitors and to quickly attract a booming market's demand. Organizational innovations enable carriers to adapt themselves to environmental evolutions or to increase their functional efficiency by affecting internal skills such as open-mindedness, rapidity, flexibility or creativity.

## Innovation's dynamics

We identify three major trends in the innovation's dynamics in the mobile phone industry:

i) There are connections between the different types of service innovations. For instance, it is difficult to see how some crucial innovations like the package of services or the pack could have been sold without the support of functional, operational or relational structures adapted to these kinds of products. Symmetrically, the organizational specificity determines a carrier's ability to perceive the opportunity of profitable offers by introducing innovative products or customers relations.

ii) The second type of articulations concerns the various spill-over and spin-offs of the innovations appeared, primarily at the commercial level:

- the generalization of a specific innovation to other companies / to other kinds of service,

- the reconfiguration of the previous services thanks to a new marketing formula, for instance carriers declined subscriptions relatively to their geographic coverage, the time of communications per month, and the associated services,

- the association of isolated innovations in new services, for instance the coupling of the pack and the prepaid card in some ready-to-use "kits",

- the dissociation of a global product in several elements enabling customers to benefit separately from each of them, for instance with the introduction of the "detailed invoicing"
clause optional to each subscription, whereas it previously represented the basic characteristic
of an offer specific to professional customers.

iii) The third type of connections between innovations in mobile phone services recovers two specific temporal dynamics. First, organizational innovations are progressive and cumulative. They are characterized by a gradual evolution towards organizations which are more oriented to the management of the customer relationship. Second, as for commercial innovations, the innovation process is both cyclic and cumulative, combining radical innovations and the introduction of incremental innovations in the gap between two radical innovations.

More basically, these three types of articulations take place in each firm's specific
dynamics. Indeed, as shown in Penrose (1959), historical and strategic factors generally affect
the trajectory of one company. In mobile phone, Itineris had to adapt France Télécom's
monopoly culture and its strategy to mobile phone and competitors' commercial
aggressiveness. SFR represented a challenger to France Télécom and had to reach quickly the
critical size in developing itself in both fixed and mobile phone services. SFR's parent-
company Vivendi was indeed willing to favor the convergence between media and
telecommunications. As for Bouygues Telecom, the third carrier, subsidiary of Bouygues
conglomerate, the parent-company's diversification had been radical and it needed to
substantially differentiate itself from the incumbents through innovation in order to break into
the market and benefit from the growth. These different historical paths are supported by
skills which are specific to each carrier: technological and logistical skills for France
Télécom, knowledge in network industries and commercial dynamism for Vivendi and at last
an adaptive culture to market fluctuations and commercial negotiation for Bouygues Telecom.

These specific skills condition the innovative ability and we can thus observe a continuity
in the innovatory trend of each carrier since 1996. Bouygues Telecom refined the fixed-rate's
concept, of which it claimed to be the innovator. It achieved the concept's diversification and the introduction of its characteristics in a whole range of services with the pack's creation, the mix "prepaid-subscription", the formula "free weekend communications"... SFR continuously reconfigured its marketing strategy to target some demographic sections of the population in focusing on price discrimination: "Friends" services – i.e. one hour of free communication between two customers who subscribed simultaneously –, "Essential" – formula devoted to women –, "Free ticket" for young people and unstable customers, "Off-peak hours" for private individuals and big consumers, "The Ones / the Others" mix of a professional' and a private person's subscription. France Télécom, the parent-company of Itineris, applied the characteristics of its fixed telephony's offer to mobile services, that is to say, it managed a combination of prepaid cards, tapering charges and global package of the services: from classical prepaid card to "Mobicarte", from the service "Primaliste" (pricing reduction in fixed telephony by calling specific numbers) to the option "Numéro Malin" for mobiles, from graded rates in fixed telephony to discounts in favor of Fixed-Mobile-Internet joint subscriptions.

We can conclude from this section that the capacity of mobile carriers to generate service innovations and to adapt their products and organization to competitors' innovations and strategies is supported by a specific innovations process management. The specific experience of each carrier had a decisive impact on the trajectory followed by these innovations.

## Conclusions

Innovations in mobile phone services followed specific paths in each firm. However, this peculiar trajectories are far from being isolated. Their interdependencies set them in a sector-based dynamic on which the innovation-imitation game prevails. The company's peculiar trajectory constitutes most of its competitive advantage. Although the innovation's imitation
by competitors tends to diffuse it quickly in the whole market. Indeed, imitation favors the creation of incremental or architectural innovations and besides urges the carriers to develop more radical innovations.

Finally, organizational and commercial innovations in the mobile phone service industry are far from being marginal or from representing tools of artificial differentiation. The constitution of broadband networks with the introduction of the Universal Mobile Telecommunications System (third mobile generation) gives opportunity for new services and for the new modes' and new structures' establishment, as do the fixed-mobile convergence and the introduction of "intelligent" terminals which provide access to more and more sophisticated services. The forthcoming evolutions in these fields will maintain the need for organizational and commercial innovations in order to absorb these evolutions, exploit them and at the same time continuously innovate in order to play a part in the game of preempting the market growth.

These phenomena may also apply to other booming service-industries, where technological and regulatory evolutions occur as quickly as in the mobile telephone industry. In numerous growing services industries, for instance in e-commerce or air transport, distribution, consultants and leisure industries, service innovation nowadays represent a must and the central focus in firms strategies. Because we are considering services and not industrial goods, innovating in the service content and conception as in the customer relationship does not only represent a variable among others to sustain competition, it is the main basis of competition.
<table><caption>TABLE I
Innovating in mobile telecommunication services</caption><thead><tr><th>Type of innovations</th><th>Examples in mobile telecommunications</th></tr></thead><tbody><tr><td>Organizational Innovations</td><td><p><strong>Functions</strong></p><ul><li>Department creation: Market-watchers, International Expansion, Operator-Distributors and Operator-Suppliers Coordination</li><li>Clientèles Division put upstream the organization chart</li></ul><p><strong>Tools</strong></p><ul><li>Commission-based sales</li><li>Real time measurement: market share</li><li>Refined indicators of churn and its causes</li><li>New profitability's and customer acquisition cost's indicators</li><li>Customers profile analyze</li><li>Real time new customer management</li><li>Decision-making software based on current customers</li></ul><p><strong>Relations</strong></p><ul><li>Project based organization</li><li>Distributor/ Supplier/ Operator Co-design</li><li>Subscriptions management granted to distributors</li></ul></td></tr><tr><td>Commercial Innovations</td><td><p><strong>Products</strong></p><ul><li>Subscription (credit of communication time per month)</li><li>On line services (information, booking, ...)</li><li>Packs of services (ready to use and purchasable separately)</li><li>Internet connection</li><li>Peak and Off-peak time discrimination</li><li>Previous caller identification</li><li>Pack associated with prepaid card</li><li>Free voice-mail consultation</li><li>A posteriori subscription billing</li><li>Free terminal upgrades</li></ul><p><strong>Relations to customers</strong></p><ul><li>On-going customer service</li><li>Telemarketing</li><li>Orientation towards the adoption of a more attractive pricing formula</li><li>Management of the companies telecommunication consumption</li><li>Replacement of defective terminals</li></ul></td></tr></tbody></table>
<table><caption>Table II
The imitation of commercial innovations</caption><thead><tr><td>Major commercial innovations</td><td>Imitation and improvement</td></tr></thead><tbody><tr><td>29/05/96<br><b>Fixed-rates</b><br>(Bouygues Telecom)</td><td>*12/11/96 Local Subscription 3h (SFR)<br>* 01/01/97 National Subscription 4h (Bouygues Telecom)<br>* 07/03/97 National Subscription 2,3,4H (Bouygues Telecom)<br>* 12/03/97 National Subscription one peak-hour and one off-peak-hour (Itineris)<br>* 08/09/97 National Subscription 1, 2, 3, 4 5H (Itineris)<br>* 15/09/97 National Subscription 1/2, 3, 5H with weekend hours (SFR)<br>* 14/04/98 National Subscription 2, 3,4,5,6,7,8H (Itineris)<br>* 10/05/99 Off-peak hours' extension to all subscriptions (SFR)<br>* 15/10/98 Formula "Optimum Subscription" (Itineris)<br>* 08/04/99 Carry-forward of minutes in the subscription (Itineris)<br>* 06/99 Mixed Subscription (Bouygues Telecom)<br>* 11/99 Free weekend communications (Bouygues Telecom)<br>* 29/11/99 Free off-peak communications (SFR)</td></tr><tr><td>25/10/96<br><b>Pack</b><br>(Bouygues Telecom)</td><td>* 26 / 05/97 Pack (SFR)<br>* 09/06/97 Pack Ola (Itineris)</td></tr><tr><td>19/03/97<br><b>Prepaid card</b><br>Mobicarte (Itineris)</td><td>* 06/10/97 Kit Mobicarte (Itineris)<br>* 10/10/97 Pack associated with prepaid card (Bouygues Telecom)<br>* 12/12/97 Pack with prepaid card (SFR)<br>* 25/06/98 Card Refill of 1H (SFR)<br>* 24/07/98 Card Refill of 15 minutes (Itineris)</td></tr><tr><td>02/03/98<br><b>Free voice-mail<br>consultation</b><br>(Bouygues Telecom)</td><td>* 09/03/98 Free Consultation for the service Ola (Itineris)<br>* 12/10/98 Free Consultation for the off-peak hours formula (SFR)<br>* 16/11/98 First minute free consultation of the voice mail for every formula (SFR)<br>* 08/03/99 Unlimited free voice mail consultation (SFR)</td></tr><tr><td>14/04/98<br><b>Rewards priming<br>consumer loyalty</b><br>(Itineris)</td><td>* 06/11/98 Service Alliance, with engagement over eighteen months (SFR)<br>* 12/98 Sesame Offer associating SFR and the 7 to cumulate points of fidelity (SFR)<br>* 10/05/99 Fidelity Offer, - 20F/month in case of engagement over 18 months (Bouygues Telecom)</td></tr></tbody></table>
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