Classroom Companion: Business

MVNO
Mobile Virtual Network Operator
NFV
Network Function Virtualization
NMT
Nordic Mobile Telephone
NP
Network Provider
O-T
Odlyzko-Tilly
OTT
Over-the-Top Services
PaaS
Platform-as-a-Service
PC
Personal Computer
PDF
Portable Document Format
PSTN
Public Switched Telephone Network
SaaS
Software-as-a-Service
SCTP
Stream Control Transmission Protocol
SDN
Software Defined Networking
SIR
Susceptible-Infectious-Recovered
SLA
Service Level Agreement
SMS
Short Message Service
SOA
Service Oriented Architecture
SRM
Stakeholder Relationship Model
TCP
Transmission Control Protocol
UDP
User Datagram Protocol
URL
Uniform Resource Locator
VCR
Videocassette Recorder
VHS
Video Home System
VNO
Virtual Network Operator
VoIP
Voice over IP
VoLTE
Voice over LTE
WoW
World of Warcraft
WWW
Word Wide Web
XaaS
Anything as a Service
Abbreviations

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© The Author(s), under exclusive license to Springer Nature 
Switzerland AG 2021
H. Øverby, J. A. Audestad, Introduction to Digital Economics, 
Classroom Companion: Business,
https://doi.org/10.1007/978-3-030-78237-5_1
1
The Digital 
Economy
Contents
1.1 
 Introduction – 2
1.2 
 Definitions – 3
1.3 
 Digitization
of the Economy – 8
1.4 
 Digital Economics – 11
1.5 
 Conclusions – 14
 References – 15
1

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2
1
 
n Learning Objectives
After completing this chapter, you should be able to:
5
Understand the size and versatility of the digital economy.
5
Explain how the adoption of Internet access and mobile telephony has enabled 
the digital economy.
5
Understand what is meant by digitization of the economy and how it is related 
to digitization of communication networks and production and storage of digi-
tal information.
1.1 
 Introduction
Information and communication technology (ICT) is everywhere around us—the 
Internet, smartphones, laptops, wireless networks, apps, and online video services 
such as Netflix and HBO. ICT has become ubiquitous, at least in the developed 
world. The pace of innovation in ICT is fast, and new technologies are emerging 
every year. Over the last few decades, ICT has changed how we work, how we 
spend and invest our money, and how we conduct our business. Telecommunications, 
finance, and media are industries in which ICT has significantly changed the busi-
ness landscape.
Spotify and other providers of online music services have radically changed the 
business models of the music industry, particularly, reducing revenue streams from 
CD retail. Since an increasing amount of music is traded online, the need for phys-
ical stores selling CDs has almost vanished. Worldwide sales of recorded music 
have decreased by 45% from 1999 to 2014. The year 2014 also marked the first year 
in which online traded music matched sales from physical formats such as CDs 
(Reid, 
2015
).
E-banking has radically changed how we—as consumers—approach banks and 
other financial institutions. Most activities involving personal finance are now con-
ducted over the Internet using smartphones or personal computers. For active 
e-banking users, there is no need to visit a physical bank to pay bills. Loans can be 
negotiated with the bank over the Internet. Cash is no longer needed to pay for bus 
or train tickets, car parking, or taxis.
At many airports, passengers check in automatically, put their baggage on the 
baggage drop belt, and pass through the gate to the airplane without the involve-
ment of ground personnel. All passenger services are completely automatic, except 
for the security control.
It is the increased use of digital goods and services, often as a replacement for 
physical goods and non-digital services, which is responsible for this evolution. In 
fact, digital goods and services are the essential building blocks of the digital 
economy. Even though digital goods and services have gradually changed the 
business world for some time already, we are just now seeing the beginning of an 
economic revolution as the full potential of the digital economy is about to be 
harvested.