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Strategic Alliances in Services of Audiovisual Entertainment Content in the Context

of Digital Convergence: Evidence from TV and Telephone Companies in Brazil
Luciana C. Lenhari, Ruy Quadros
Campinas University, Science and Technology Policy Research Department, Campinas, SP - Brazil
Abstract--The paper aims at analyzing the emerging strategic
alliances and partnerships between traditional and new agents
in the value chain of services of audiovisual entertainment
content (AEC) in the context digital convergence in Brazil. Such
alliances seek to accumulate relevant competencies for the
effective exploration of the emergent market of multiplatform
AEC: TV, IPTV, mobile phones, web, tablet. Our theoretical
framework is based on the literature on value chains and
strategic alliance management under the perspective of the
resource-based view (RBV). Research methodology has mainly
comprised in-depth interviews in television and telecom service
providers in Brazil which hold together from 50% to 90% of
market-share, depending on business segment. Research results
reveal that whilst the new strategic alliances and partnerships
are enabling television and telecom service providers to share
costs, revenues and accumulate learning and competencies in
order to change and expand their resource basis, this strategy is
empowering potential new competitors in the value chain. This
is a key management challenge to these companies in building a
new market for this service.

Since the 1990s, the convergence of TV broadcasting,
telecommunications and Internet services has been taking
place in several countries [1]. The Organization for Economic
Cooperation and Development [2] synthesizes this debate
showing that the road to convergence was built through an
increasing content digitalization, changes in the Internet
Protocol (IP)-based networks, the expansion of the access to
high-speed broad band, the availability of multimedia
communications and computer devices. Such convergence is
the result of several technology innovations in the electronics
and telecommunications industry [3] and enables
congregating over a same network different services, such as
TV over IP, TV over the mobile phone, voice over IP, the
landline-mobile integration etc. Many are the possibilities for
converging services and in this article we chose to focus on
the audiovisual entertainment content (AEC) service.
These new frameworks in TeleCommunications
(TeleCom)1 services have been threatening the conventional
boarders of TV networks and telephony activities and
showing its players the need for undergoing a rapid strategic
(re)positioning – by reviewing businesses and also
developing and acquiring resources and competencies to
effectively respond to this scenario. The decisions taken can
now define the capacity of a TeleCom company to survive in
The term TeleCom services is used in this paper as a way of designating as
a group the segments of Teleccomunicatons (telephony), Means of Social
Communications/broadcasting (television) services and Internet services.

its market of origin and in new markets, since such service
markets are being re(defined) in view of this convergence.
Until the coming of digital convergence, the borders
between TeleCom service activities were also distinctively
regulated in Brazil (and still are at the initial step toward
convergence). On one hand, the service of free-to-air TV
stations is regulated by the Código Brasileiro das
Telecomunicações (the Brazilian Telecommunications Code)
(Law 4.117/1962), and their resolutions are made by the
Ministry of Communications. On the other hand, the voice
service of telephony companies is regulated by the Lei Geral
Telecommunications) (Law 9.472/1997), which created
Anatel2 (the National Telecommunications Agency) and has
jurisdiction over control, conservation and repression acts
related to telecommunications. And the services of pay TV
stations are recognized as telecommunications, but its
regulation is not connected to that of free-to-air TV, and its
main restriction fell under the Lei do Cabo (the Cable Law)
(Law 8.977/1995) which limited this cable service to 49%
maximum of foreign capital. The Lei da Convergência (the
Convergence Law) (Law 12.485/2011) replaced the Lei do
Cabo, enabling foreign telephony companies to also offer
AEC to subscribers through their networks, with the creation
of the Conditioned Access Service. Now telephony
concessionaires are allowed to explore all kinds of TeleCom
services, and not only those related to the object of
Research on the AEC market within digital convergence
conducted by Lenhari [4] indicates developing key
characteristics of this process in Brazil. The current scenario
of free-to-air TV is underlined by the introduction of Digital
TV, whose high-definition, mobility and interactivity features
will lead to significant changes for its players, regarding both
the production and distribution of content and the possibility
of supplying “new” services in their networks. These players
also seek to occupy mobile and Internet screens to assure the
maintenance of advertising funds, which are their main
source of revenue. Accordingly, they already display their
schedule in the mobile models capable of receiving digital
free-to-air TV stations signals and also (re) exhibit a good
part of its schedule through their own Internet services, such
as, which is one of the portals with the largest
audiences of AEC Brazil.

Anatel was inspired in The Office of Communcations (OFCOM), an agency
that in independent in terms of competition and regulation of
communications companies in the United Kingdom.

Pay TV stations are reacting to the increasing competition
offering triple play packages, which correspond to the
integrated offering of telephony services, pay TV services
and access to the Internet. The largest company in this
segment in Brazil, Net Serviços, has had a significant
increase in its subscriber base since it began to deliver these
three services through one single technology (coaxial cable),
and it benefits widely from the Lei do Cabo. On the other
hand, with the approval of the Lei da Convergência, Telmex,
which controlled 49% of the company until then, will take
over its ownership interest and has announced that it will
invest greatly to expand its services.
Mobile telephony operators seek to profit from the traffic
of data created through video sent via networks. For such,
they have launched their own pay TV services, chiefly using
the same contents of traditional pay TV, such as Minha TV
from Claro (Telmex), Oi TV Móvel and TIM TV. With regard
to mobile telephony, an important event in place is the
implementation of the 4G network, technology which will
optimize the expansion and solidification of AEC services.
Telephony companies are also offering pay TV packages,
such as Telefônica TV Digital, via satellite and AEC
packages with Internet and DVD resources using the IPTV
platform, directly competing with traditional pay TV stations,
in addition to the triple play offerings.
AEC service is controlled and explored in Brazil mainly
by free-to-air TV companies, which are sponsored by
advertising. Right after them comes pay TV stations, and
most recently telephony companies have also began offering
AEC services. The country’s expansion of pay TV
subscribers by 273.5% from 2000 through to 2011 coincides
with the entry of telephony companies in 2008 into the pay
TV market. This should be further facilitated by Law
12.485/2011 [5].
Free-to-air TV in Brazil is mainly composed of national
family-owned businesses, which in the scenario of
convergence into digital AEC compete with large
multinationals such as the Telefônica Group and the Telmex
Group. A competition which is asymmetric in many ways,
such as in investment capacity, which is a relevant tool for
such businesses and that, in a certain aspect, is (and can be)
offset by market regulations, markedly influenced by free-toair TV stations. A recent example was the fact that Brazilian
Free-to-air TV corporations were excluded from the scope of
and discussion on Law 12.485/2011.
In view of this context, the purpose of this paper is to
discuss the new strategic alliances and partnerships that are
being underlined by traditional and new players of the value
chain of AEC services within digital convergence as a solid
road to build up the needed tools and skills to constitute a
new multiplatform AEC market: TV, tablets, the Internet,
mobiles etc.
To achieve the proposed objective this paper is structured
in six sections, in addition to this introduction. Section two
presents the theoretical framework chosen to analyze the
context presented, combining concepts of value chain

approach [6-9] with concepts of strategic alliances approach
[10], both under the perspective of a strategic analysis of
Resource-Based View (RBV) [11-14]. The principles of RBV
and how it is related to corporate strategies make it as the
appropriate theory to use as base for the findings and
identification of relevant resources and competencies that TV
and telephony companies need to use to gain competitive
advantages through strategic alliances and partnerships with
traditional and new players of AEC value chain in digital
The third section presents the methodological procedures
that guide the empirical research on which this paper is
based. Section 4, on TV stations, and section five, on
telephony companies, respectively summarize the key
components of the value chain and key partnerships
established by the companies in these segments until digital
convergence (subsection 4.1) and in the initial phase of
digital convergence (subsection 5.1), using as reference
academic and specialized literature of these two segments.
Following this and based on empirical research, each of these
sections discusses evidences of new roles and players of the
value chain of companies in both segments, as well as the
need for establishing new strategic partnerships and alliances
that are being designed to build the future market of AEC
services in digital convergence (subsections 4.2 and 5.2). The
final considerations section (section 6) has a joint analysis of
the companies of both segments and the strategic
characteristics that AEC alliances and partnerships have been
forming in digital convergence.
The construction of the theoretical framework knows as
Resource-Based View (RBV) was influenced mostly by
Penrose [15] and Selznick [16], among other authors [17-22].
Most researchers linked to RBV agree with the general idea
that sustained competitive advantages are conferred through
resources that are hard to be copied and relatively lean in
relation to their economic value. According to RBV the
competitive performance of a company is related to the
resources this company has and manages strategically, which
include both tangible assets (physical equipment,
geographical localization, access to raw material etc.) and
intangible assets (knowledge, patents, experience, decision
skills, relationship skills etc.). Intangible resources are
accumulated and embodied in individuals (skills and
knowledge) and organizational systems (routines, processes
and codified knowledge), and they are developed
distinctively among companies [25-27].
Although RBV can be considered an analytical approach
principally aimed at the inner structure of a company, in the
sense that the strategic approach is ideally seen as using as
base a resource portfolio analysis, the environment must not
be disregarded from the context in question [28, 29]. A way
of knowing the environment is through the analysis of the

value chain to identify the relevant external resources and
competencies [12].
RBV and most particularly Barney [12], uses as analytical
base the value chain and the definitions attributed to it by
Porter. However, considering the specificities of convergence
and AEC, and the nature of TeleCom services in Brazil –
where there are multinationals with operations in many
countries -, it was considered relevant to explore the
application of RBV also within the scope of global value
According to Barney [12], although it is possible to
characterize the resources of companies more broadly, it is
useful to think how each one of a company’s activities takes
place and affects its financial, physical, individual and
organizational resources. Based on this one can understand
the potential sources of competitive advantages of a company
in a more detailed manner. In fact, likewise the structure of
the five forces in Porter, “[…] it is considered that the basic
idea of value is continuously subject to a complex negotiation
that is played among employees, suppliers, distributors,
clients and business owners” [30].
For Porter [7] the value chain has to do with several
activities related with and developed by a company to fulfill
the needs of its clients, from the relationships with suppliers
and production and sales cycles through to the distribution to
the final consumer, with each phase of this cycle linked to
one another. These phases may lead to competitive advantage
in two different ways – optimization and coordination – and
may also reflect the need to coordinate activities. The skills
needed to coordinate phases usually reduce costs or increases
differentiation and according to Porter [6] these are the basic
types of competitive advantages that a company can have.
The global value chain concept by Gereffi [8] considers it
to be a set of interorganizational networks grouped around a
product that links consumers, companies and states within the
global economy stage [31]. For Gereffi, Korzeniewicz and
Korzeniewicz [32] and Gereffi [9] a value chain comprises
four key dimensions: the input-product structure (a set of
products and services linked to a sequence of value-adding
economic activities); territory (geographic dispersion or
concentration of companies in production and distribution
networks); the governance structure (authority and power
relationships); and the institutional structure (conditions
found in different scopes – local, national and international
and political initiatives).
When we observe the companies that provide television
and telephony services in Brazil (and the world) we can
verify that large groups or conglomerates control part or all
the production and distribution chain of products and services
in several areas, such as telecommunications, landline and
mobile telephones, radio broadcasting, newspapers and
magazines, publishing houses, news agencies, free-to-air TV,
pay TV, the Internet, software, advertising agencies, music
labels, studios, film production companies, distributors and
exhibitors and other audiovisual products [34].

Understanding which stages of the value chain of a
product a company operates is useful to identify the types of
resources a company will likely control. And the capacity
these resources have of creating competitive advantages can
be analyzed. However, even the companies that operate
within the same set of value chain activities can access these
activities differently. Consequently, they can develop
different resources and competencies related to these
The participation of companies in collaborative
relationships was recognized long ago, since they have a key
role in organizational learning [35]. Creating new knowledge
in interoperational collaboration enables the creation of new
knowledge, not available before to any collaborators [36, 37].
Tidd et al. [10], when discussing strategies to explore
external sources of technology innovation and acquisition,
emphasize a couple of reasons for companies to collaborate,
such as the reduction in technology costs or entry in the
market, the reach of scale economies, the reduction in the
time spent to develop and commercialize new products,
shared-learning encouragement etc. These authors also
discuss the different forms of collaboration: outsourcing,
licensing, consortiums, strategic alliances, joint venture and
network. For the purposes of this article, the focus is on
discussing strategic alliances.
Alliances can be used as an opportunity to learn new
market and technology competencies, i.e., as an opportunity
to absorb a partner’s knowledge, and within this scope it is
hard to measure the success of an alliance, since collaboration
is an intrinsically risky venture, and according to Tidd et al.
[10] less than half reach their goals. Besides, companies have
different expectations toward alliances and this affects the
way they evaluate their success.
An alliance tends to have different objectives, some
explicit, other implicit, and results can be planned or not.
Thus, any successful action must be multidimensional and
dynamic to capture the different objectives as they evolve.
For Tidd et al. [10] if learning is the key objective, partners
must have complementary skills and competencies, although
balancing forces is also important. In this sense, the similar
the partners are, the greater the possibility of establishing a
successful alliance.
These authors [10] also indicate that research on alliances
in the commonly called high technology industries, such as
software and telecommunications, seem to confirm that
access to technology is the most frequent reason for them and
access to markets seem to be the most frequent reason for
establishing collaboration in the computing, microelectronics,
consumer electronics and telecommunications industries. The
empirical research conducted for this article confirms such
trends in Telecommunications services.
In this paper, research has been conducted following the 3
i) to understand the context of digital

convergence, with which the investigated companies are
involved, with a focus on AEC service ii) characterize the
value chain, business models and regulatory aspects relevant
to businesses operating within the segments of TV and
telephony, and iii) discuss and understand the empirical
research based on the chosen conceptual framework.
Due to the singularities and newness of the phenomenon,
this research has been exploratory and descriptive, which
seemed most adequate to providing researchers initial
knowledge about the topic or research problem in
perspective. This was critical in the early stages of research,
as researchers do not have enough knowledge to formulate
specific questions and hypotheses [38, 39].
In order to address the main issue of this paper – which is
mapping out and analyzing the new strategic alliances and
partnerships pursued by the actors engaging in AEC services
value chains under digital convergence – this paper reflects
the findings of a comprehensive empirical exploratory study
conducted through interviews with managers and executive
officers who have been following the convergence process in
their companies
The empirical research has been based on interviews
conducted in companies belonging to bost investigated
industry segments. A semi-structured questionnaire was
applied in an intentional sample comprising eight companies:
three free-to-air TV stations (Globo, SBT and Band), one pay
TV company (Net Serviços) and four telephony companies
(Oi, Telefónica, TIM and Claro-Telmex). The interviews
were conducted from October 2008 through to March 2009.
The interviewed companies control from 50% to 90% share
in their respective market segment. Note that although we
only interviewed Net Serviços within the pay-TV segment,
the understanding of the competition in this segment includes
elements of interviews conducted with Telefônica and Oi,
which also explore pay-TV; of the interview conducted with
Globo, which also operates in the pay-TV segment through
Net itself and through Sky/DirectTV and also through Claro,
which is controlled, as Net Serviços is, by Telmex which, in
turn, also offers pay-TV services via satellite through
Interviews have explored interviewees’ experience in their
respective businesses in order to assess their expectations
with regard to the exploitation of AEC services in the context
of digital convergence and the vision they have in regard to
what the future of this service market will be. How should be
tackled the challenge of producing and distributing content
considering the need to supply distinctive media and
languages (AEC service multi-platform)?
The analysis and the findings from the qualitative research
was organized by industry segment. The companies
demanded secrecy and confidentiality, which were agreed to
with the interviewees and as such the companies were
identified by letters not to be recognized. The Television
companies (subsection 4.2) correspond to letters A, B, C and

D, and telephony companies (subsection 5.2) correspond to
letters E, F, G and H.
Data treatment and analysis was organized in order to
interpret, explain and categorize the materials collected so
that they could answer the main questions of research. Data
analysis consisted of a recombination of the evidence
collected in order to clarify, verify or refute the initial
objective of the study [40].
Additionally, academic bibliographical and specialized
research was conducted on the main phases of the value chain
of these segments, as well as on their key players and
partnerships before digital convergence. Such information
was also used as a base for the empirical research and is
presented in subsections 4.1 and 5.1, respectively. This
research helped understand some of the relevant resources of
companies in these segments and the urgency of the
convergence, and enabled comparing such resources with
those needed to manage new opportunities of strategic
alliances in the current convergence phase, based on the
empirical research (subsections 4.2 and 5.2). Some of these
partnerships are more clear-cut and others are more subtle
and difficult to grasp given the early (and still experimental)
stage of service development under convergent AEC.
The next sections (4 and 5) will explore collected data in
detail, while Table 1, in section 6, presents a synthesis of
main fieldwork findings.
A. Value chain and strategic alliances of TV stations before
digital convergence
Figures 1 and 2 show the steps of the value chains of freeto-air TV and pay TV that were predominant until
convergence took place and that are still valid at their initial
phase. However, some players and their roles in these chains
have begun to change, as will be seen throughout this and the
next sections. It is important to know the pay TV chain
because it has been the entry to telephony operators in the
AEC business. Firstly, it was more concentrated in content
distribution, but now efforts are being concentrated on
content production. On the other hand, bets by telephony
companies on advertising as a new source of revenue may be
a threat to the free-to-air TV business in the medium and long
terms, since it is its main source of revenue.
The value chain of free-to-air TV, according to the CPqD
[41] comprises four sequential phases (Fig.1), with
significant quality and audience share. A striking
characteristic of the free-to-air TV market in Brazil is its high
verticalization, i.e., the players which make up the television
networks concentrate several of the roles of chains within
their organizations, participating in several stages.


AEC Production

Distribution and


Fig. 1: Steps of the value chain of free-to-air TV
Source: Adapted from the CPqD, 2005.






Fig. 2: Value chain of the Pay TV segment
Source: Adapted from Turolla et al., 2008.

The value chain of the pay TV (Fig.2) differs from that of
free-to-air TV, although they are strongly interrelated and
interconnected, notably in the first phases of the production
process. The link between this chain and the consumer are the
pay TV operators which make feasible the entry of resources
in this chain and reach the first content link. As regards pay
TV, this paper focuses on the operators. The value chain of
the pay TV begins with AEC production and ends with sales
to subscribers of these contents formatted in programming
channels through schedules and specific topics by pay TV
operators. While the free-to-air TV model is vertical, the pay
TV model is horizontal [42].
It is in content production that an AEC idea is
transformed to be handled by the next player of the chain.
This phase comprises the phases of conception (creation),
production itself and post-production (the processing of
contents for television).
In the free-to-air TV step we can identify at least three
types of players: i) production centers of free-to-air TV
stations (mainly in Brazil) and which offer better
identification of the content with the country’s viewers; ii)
independent producers, in a very reduced scale and little used
until the first phase of convergence; in this model, TV
stations are responsible for content conception and the
independent producers only execute them. There is also
coproduction, conducted in partnership between independent
producers and TV stations; and iii) international producers,
such as Time Warner, Sony, News Corp, Viacom, Disney,
NBC Universal etc., and from these producers it is possible to
purchase finished products at lower prices, since the
amortization from investments are paid in the country of
origin. Other players can act in this phase, taking on roles
associated with one of these three main players. Examples of

these other players are screenwriters, editors, dubbing
studios, among others.
Free-to-air TV also has a phase of TV advertising
production. This type of advertising is one of the most
important ways of advertising products and services, usually
made by advertising agencies, due to the demand of
subscribers for communications plans. In view of this
demand, these agencies plan campaigns and broadcasting
mediums, negotiate prices for inserting advertisements in TV
stations and the production of commercials, when they are
contracted with independent producers. The “stock” of a TV
network (when compared to a manufacturing company), of its
affiliates or independent stations is based on the time left for
this stock to be inserted in commercials.
The chain of pay TV also begins with AEC production.
We refer to studios, national and international producers or
even the programmer of free-to-air channels. AEC producers
have two options: i) negotiate directly with the next phase of
the chain, i.e., the programmers; or ii) license their products
to exhibition rights distributors which sell to all segments of
the AEC chain, among which the pay- TV operator.
The program schedule phase comprises the storage and
organization of the schedule of programs, distributing them
and inserting advertisements, which is the main source of
revenue of programmers in the market and is organized per
viewers’ region and scheduled time. Programmers and
distributors are strategically located aiming to reach markets
that are geographically close and similar culturally, providing
scale gains by reaching operators and subscribers within a
same region. In most cases, programmers which cover the
Brazilian market also cover countries in Latin America.
Examples of such are: Fox Latin American Channels do
Brasil and HBO Latin America Group.

Packaging agents are the ones that purchase program
schedules, and negotiate with programmers the licensing of
program channel transmission rights. According to Turolla et
al. [42] this agent is not fundamental, but has emerged in
Brazil due to contracts internal to the chain, being controlled
in the country by the Abril group and the Globo group, as we
will see below.
Distribution and delivery in free-to-air TV comprises
the distribution of program schedules among TV stations
which belong to a same network (the distribution of AEC
from the main company to local/regional companies or
relayers). The capillarity produced from the delivery phase
adds significant value to the chain, since the free-to-air TV
stations reach approximately 99% of the Brazilian population.
In pay TV the distributors or operators are responsible for
selling program channel packages for subscribers and also for
the needed infrastructure, composed of different networks
and technology platforms (coaxial cable and optical fiber in
hybrid network, satellite and MMDS). Consumption
happens through receptors – TVs and antennas – in the case
of free-to-air TV, and TV sets and decodifiers in the case of
pay TV, through subscription.
We note that according to a study by Cruz [43], the
research conducted by the CPqD [41], which divides into four
steps the value chain of the free-to-air TV received several
critical opinions. These players saw such division as a threat
to their business model, since it used as base the view of
telecommunications on radio broadcasting. “This view used
as base the European model, in which several countries
separated network operations from services as from
analogous TV and separated network from content with the
introduction of Digital TV. Each of these activities is run by
different companies, which makes the industry no longer
Outcomes arising from pay TV operations in the United
States, such as the creation of independent channels and
productions, were not reproduced in Brazil. The model of pay
TV in Brazil was developed having the Globo and Abril
groups controlling the main steps of the value chain and
adding foreign components with the entry of foreign
corporations and large imports of contents, placing the
country in the route of global market. According to Torres
[34], the influence of the free-to-air TV model was
reproduced for the pay TV model, since the Globo Group
controlled 51% of Net Serviços’ stakes until regulation by
Law 12,485/2011 (the remaining 49% was controlled by
Telmex, which with the approval of said Law gained stock
control) and 24.99% of Sky/DirecTV, which most recently
was reduced to 7%, although it still has a seat on the board of
shareholders. These are the main pay TV operators in the
country, and despite the entry of telephony operators in this
business, they still have the largest market share in the
We also note two other characteristics that marked the
period before convergence of Pay TV with the market shared
between the Abril and Globo groups: the channel exclusivity
policy, such as Globosat (which belongs to the Globo Group

and produces AEC to several of the main Brazilian pay TV
channels), and the control over transmissions of the country’s
popular football tournaments. According to Torres [34], the
exclusivity policy can only be exercised in a framework of
cross ownership in the communications means, i.e., when
there is control over production and over distribution and
exhibition. According to this author, the lack of public
policies and of regulations to limit cross ownership and
monopolistic practices led these companies to make their own
rules, thereby oppressing competitors and the public interest
until convergence.
Since mid 2008, the advance of the pay TV market via
satellite of telephony operators made the channels with
Globosat contents also available in the schedules of these
new competitors. In face of their new audience these are also
used as a marketing strategy to sell packages of TV services
from telephony operators. Regarding Brazil, we can affirm
that this solid interface between radio broadcasting and pay
TV is a relevant tool in terms of scale within a context in
which the television business (AEC) is increasingly
competing with the business of large telephony
multinationals and the Internet.
Another movement seen in Brazil as of the 1990s are the
consolidations, mergers and alliances in the pay TV
businesses. They allow larger companies to absorb into their
businesses smaller regional companies, leading to rapid gain
in scale to benefit from the synergetic potential between
products and infrastructures – which is much benefited from
TeleCommunications market. Identifying opportunities of
consolidations and mergers is important to gain scale and can
also be regarded as an important tool of pay TV companies
that remains valid at this time of convergence.
B. Alliances and partnerships of TV companies in digital
Until digital convergence, establishing alliances and
partnerships was not a common practice by free-to-air or payTV companies. However, in this new context, they will need
to develop this resource. “We do not have a strong
partnership model, this is a competency we do not have.
“Our business is highly vertical [...] there is only one TV
manufacturer at the end of the value chain, but it is standard
business (until convergence).” (interviewee of company A).
On the other hand, it is important to consider that
investing in own production helped develop resources and
competencies in AEC throughout the history of Brazilian
radio broadcasting.
“Most of our production is made here, but we do not
exclude other possibilities, no one here is closed to new
ideas. We’ve already done many things with outside
producers [...] (interviewee of company C). Today it is
mainly own production, that’s how we developed our
competency. Brazilian TV was greatly influenced by the
radio and theater models. Since the 1950s,
competencies have evolved as technologies have
advanced” (interviewee of company B).

Considering that free-to-air TV in Brazil has and will
continue to have for quite a while content with high audience
ratings, it is most likely that free-to-air TV companies will be
able to benefit from negotiations for partnerships to distribute
and deliver exclusive premium content to mobiles, for
instance. However, this possibility has not yet been explored
“[...] we have not negotiated any free-to-air TV exclusive
content [...] (interviewee of company A). This type of
partnership can also benefit from one of the features of
Digital TV – mobility. Mobility leaves room for negotiating
partnerships with telephony operators, Internet service
companies and also companies from other value chains, such
as bus companies, banks etc.
Although most of the content is produced by the free-toair companies themselves, over the past years they have been
experimenting partnerships with independent producers in
some series and programs, some of which airing on prime
time of company A. Another example of partnership with
independent producers is that of company C, which from
2009 to 2010 prepared three projects in coproduction with
independent producers: a short fiction series, a short cultural
series and a documentary series. These partnerships planned
to use the resources of the Lei do Audiovisual (the
Audiovisual Law) (Law 8,685/93), which authorizes free-toair TV and pay-TV channels to invest 70% of their tax due on
funds sent abroad to co-produce works with AEC from
Brazilian independent producers. Company C has established
partnerships with telephony operators and Internet service
companies to provide contents, some of which exclusive,
from their pay-TV news.
We noticed in Brazil that company A is more verticalized
and closed to partnerships, whereas company B seeks greater
alignment with the business models of telephony operators
and Internet service operators in relation to AEC. Company A
awaits demand from telephony operators, while company B
seeks a more aggressive strategy of supply of AEC adapted to
the format needed to provide this content to new platforms.
Probably this positioning is encouraged by the positions these
companies have in their market, approximately 50% and 5%
share in audience ratings, respectively.
Nevertheless, we can identify in this case the beginning of
a partnership that can be intensified when we consider
multiplatform contents and the learning which needs to be
developed in this context. The scenario for partnerships in the
case of TV companies is opposite to that of telephony
companies, as shown in the following section.
Another model for negotiating partnerships that can be
intensified in convergence, thereby becoming more
advantageous to the business involved, is the model for
reality shows, such as Globo’s Big Brother Brasil, SBT’s
Supernanny or Rede Record’s Ídolos (inspired in the
American Idol format), since it involves free-to-air and payTV, the Internet and telephony companies, the latter as relay
channels. Within this program format, AEC can be followed
up on interactively and complementarily, through these four
means of communications.

“A great part of our business will depend on
partnerships [...] because all the interactivity of
television and part of the distribution will be made
through partners (interviewee of company D). I think
we are moving slower than we should. We should have
advanced a bit more in terms of negotiating with
telephony operators in several things. We have not
developed trust in each other, but inevitably
partnerships will happen [...] (interviewee of company
B). We didn’t produce any soap operas through these
partnerships, maybe it’s time to try something like this
[...]. Ours is not a culture of strong partnerships”
(interviewee of company A).
The relationship with the advertising market can certainly
be considered the most relevant resource and a differential of
the free-to-air TV companies in the competition that has been
taking shape in digital convergence. However, as mentioned
before, the competition for advertising funds will become
more intense. This type of relationship makes it easier to
negotiate and distribute advertising funds for TV companies
to also explore the business model from the Internet, besides
making it feasible.
“We have this high competency that will be fit to us in
this context of convergence, which is the relationship
with the advertising market. The company has a strong
relationship, a very important and trustworthy one, with
the advertising market [...] a telephony operator does not
build such a relationship overnight (interviewee of
company C). This is a rare resource, hard to copy. Our
organization is prepared and structured to handle this.
This culture we have - of building a relationship with the
market and with our advertiser - is very solid and we
work very well in this sense: ‘Oh, there’s a person from
Volkswagen that comes here [...] everybody knows that
they have to receive him well. The TV star, the soap
opera director are well received’. Also, our sales
department has to be competent to manage this.”
(interviewee of company A).
Regardless of the doubts about which Internet advertising
business model can be successful, free-to-air TV companies
already know that placing banners in contents is not so
alluring. Yet, they are studying new possibilities to negotiate
advertising in this vehicle, having as one of their references
the successful business model of Google, which is selling
advertising through key words searched by users.
This partnership with the advertising market also
encompasses the challenge of including in the business model
the share of advertising revenue from TV stars, soap opera
writers and other professionals involved in AEC production,
since the soap opera writers need to agree with inserting
advertising in their work. This stirs up a great discussion
which was mentioned by the interviewees of companies A, B
and C, because until then these professionals were hired to
produce AEC to be broadcasted in the TV screen and now

this same AEC can be edited and distributed to other types of
screens, and everyone wants a share in revenue.
“[...] the TV stars gain a lot with advertising and
advertisers also benefits from hiring them and
associating such TV stars with their brand and/or
product because attention given to an advertisement
with a celebrity in it is much greater than to one with an
unknown person. Consequently, the advertiser
purchases mush less insertions to have the same return,
the same result of brand recalling. For the company it
is not that beneficial, since it decreases commercial
income, but for the advertiser it is the right investment.”
(interviewee of company A).
We can affirm that the ability to manage a business model
based on advertising sales and broadcasting is, just as in the
case of AEC production, an important resource of Brazil’s
free-to-air TV segment. Such resource is strongly threatened
by digital convergence, because telephony companies and the
Internet are increasingly incorporating into their business
models the sales of advertisements as one more source of
revenue, in addition to subscriptions. With this they can gain
part of the advertisers and/or the value of advertisements
which until now had TV as their main means of exposure.
Another aspect to be mentioned is the partnership between
TV companies and suppliers of infrastructure, equipment and
devices. In Brazil, nearly all technology needed for the TV
business to happen is and has always been imported. As a
result, companies of this segment (basically engineers and
creation directors) developed skills to negotiate technology
with suppliers and to follow up on all technological
innovations from the main business centers: Japan, Europe
and the United States. They also follow up on how such
innovations affect the TV business in those places to thus
adapt, customize and/or develop internally the technologies in
search of a competitive edge. And this is possible, because
this competitive edge is not in hardware, but in software,
development and application. That is why technology
competencies are important in AEC production and also in
“The company we are closer to is Sony, because it is our
largest equipment supplier, but we haven’t established
any long-term agreement, we do not have access to any
advanced development center of theirs. We have nothing
of the kind. Our business with them is made on a
contract-by-contract, project-by -project, studio-bystudio basis.” (interviewee of Company A). “When we
bought this equipment, we automatically paid the
training, which is included in the value. Usually an
American or European engineer comes to Brazil to give
the training.” (interviewee of company B).
Digital convergence demands from TV companies the
need to negotiate lucrative partnerships, because now the
verticalized model alone might not be enough to keep and/or

gain market share in a context of competition not only with
other TVs, but also with the Internet, tablets, mobiles etc.
This competency needs to be developed in a way so as to
enable learning and lucrative operations of new medias by
these companies, and to assure the quality of the AEC
delivery to consumers. We also note that these companies
have a competitive edge whenever the quality of AEC
production is relevant in new strategic alliances that can be
established with the current and new players of this service
A. Value chain and strategic alliances of telephony
companies in the initial phase of digital convergence
Some of the key characteristics of the telecommunications
sector until the 1990s were the regulation of the industry
based on monopoly, strong vertical integration and the use of
technologies [44, 45]. However, the rising of competing open
technologies, the evolution of microprocessors, the
deregulation which happened in many countries and the
opening of the telephony services market in the 1980s are the
drivers of this market’s transformation. This scenario
challenged the business strategies adopted until then. As of
the 1970s, digitalization guided this industry toward growing
integration, whose acme was the expansion of the Internet in
the 1990s.
A characteristic shown by companies of this industry is
that operators, which previously focused on technology
development, now are focusing most of their efforts on the
development of services to serve their clients, leaving
technology development – including R&D activities – to
equipment suppliers. Another characteristic that stands out is
that many equipment and device suppliers are increasingly
dedicating their attention to systems integration and offering
of solutions for operations and services. This has
strengthened AEC strategic alliances between technology
companies and telephony service companies.
The main changes of the telecommunications industry,
mostly as of the 1990s, were synthesized in the industrial
mapping developed by Fransman [45], which is known as the
layer model (Fig. 3) and is widely used by experts in this area
of research. This can be considered a pioneering model in the
designing of a value chain for this industry.
The model has as base the Open Systems Interconnection
– OSI, which is the Internet technology based on the
Transmission Control Protocol/Internet Protocol (TCP/IP) to
create six layers and the levels of activities performed in the
industry’s value chain. Each layer handles a subsystem which
controls a certain economic activity. Companies have started
organizing themselves by similarity or even by
complementarity of resources needed for their activities.

Layer 6: Consumers
Layer 5: Application
( processed information)
Layer 4: Browsing and middleware
(information device)
Layer 3: Access provider
Layer 2: Network to circulate digital
Layer 1: Equipment and Software

Fig. 3: Fransman’s layer model for the telecommunications industry
Source: adapted from Telecomvisions, 2002 (

Usually, layers 1 and 2 dealt with the telecommunications
industry, but with the Internet and the TCP/IP standard, new
standards of data, voice and image transmission became
feasible through multiple and different networks, originating
new platforms of services available to the final consumer and
new competitors in the market. In terms of technology, the
initial layers are more dependent on hardware and network
logistics systems, whereas the final layers increase the
importance of software and application systems [46]. This
integration enables introducing a series of processes that add
value to services (multiservice structure). The new services in
telecommunications seek to combine traditional services to
data and image transmission based on packed-switched
systems technology, such as is happening with the
exploration of AECs. This becomes clear when we think of
broadband and third and fourth generation mobile phones.
With digital convergence, telephony services have
focused their businesses, principally AEC businesses, in layer
5. However, it is worth noting in this case that AEC offerings
depends on network availability (infrastructure), equipment,
browsing and access provider, i.e., for a consumer to receive
AEC in a certain place, all layers need to be available.
Accordingly, telephony service companies have infrastructure
– or its position in the value chain – as an important
technology tool mobilized in the pre-convergence phase,
providing them a strategic differential in the current context,
because it is the investments in New Generation Networks
(NGN) that will enable the solidification of new business
models for these companies in the convergence context.
The changes we described so far draw attention to the
important issue – most particularly to telephony services – of
needing to mobilize resources to manage increased
competition due to the entry of new players in the value
chain. In addition to those which entered from the new

technology platform that became a characteristic of the
service (as per the Fransman model), by focusing their
business on services and leaving to the large equipment
suppliers the responsibility for technology development, the
operators paved the way to the entry of such suppliers as new
competitors, as they have increasingly shown interest in
advancing on converging services, from which an important
one is AEC. Thus they also need to notably mobilize their
engineers and administrators, to learn and use, maintain and
adapt new technologies to their business models.
Focusing more specifically on telephony services
companies, the elements of Fig. 4 make up a value chain
whose purpose is to offer a service or product which adds
value to the client. The operator functions as the center of a
network with responsibility over the operating platform and
the infrastructure, through which other partners can
collaborate in offering products and services to clients.

Fig. 4: Value chain of telephony service companies
Source: Adapted from Tude e Martins (2003), based on the Teleco Tutorial
on <>, accessed
on March 3, 2010.

This network exists to fulfill the needs of clients, whether
individuals or entities. A client can be a subscriber, a final
user or both. Suppliers interact with the operator, providing
products and services, which are integrated by the operator in
such a way that they can offer their products and services to
the client. This cell includes what is known in the industry as
vendors, i.e., suppliers of equipment, software and solutions
to the operator, such as service providers to whom the
operator outsources services, and other operators which are
hired to provide infrastructure and/or connectivity and
network services.
The intermediary is responsible for performing functions
on behalf of the company with clients or suppliers. There are
three categories of intermediaries: sales, implementation and
information services. The complement cell includes the
competitors which offer additional products and services to
expand the capacity of the value network. In general,
complementary products and services are created using the
infrastructure provided by the telephony service company. An
example of this is the provider of value-added services. These
interactions are typical of the companies that seek innovation
in services [48], and within the RBV scope they are relevant
resources for telephony companies that are trying to boost
their businesses through AEC.
Based on the value chain shown in Fig. 4, in the
description of the steps and business models that can be
designed from it, we highlight three resources that telephony
companies have developed in the initial convergence phase:
the high capacity of investment in and management of
network infrastructures, enabling them to offer converging
services, and the capacity to price their products and services
through the capacity of identifying the products and services
which can have higher prices to clients.
B. Alliances and partnerships of telephony companies for
AEC services exploration under digital convergence
With digital convergence, the access to several goodquality networks of communications will become trivial,
according to a study by Telebrasil/Telesindibrasil [49],
transferring the creation of value to content. Therefore,
consumers will draw their attention to service providers that
offer the best of the news, their favorite sports games, films,
music etc. This research verified a trend of reduction in
revenue from access and availability and an increase in
revenues from services that offer contents that should be
more valued by clients.
“The voice service is still the flagship of the company, in
terms of market, and will probably continue to be for a long
while considering the Brazilian market” (interviewee of
company F). However, companies from this segment think it
is important to have alternatives for the market, moving
toward this converging context, notably toward AEC, since
they expect that in the future this service may become their
main source of revenue.
For the telephony companies, strategic partnerships stand
out as a key resource to explore AEC in digital convergence.

These partnerships can be established with content producers,
companies offering mobile applications, Internet service
companies etc.
“[…] in relation to the partnerships we believe that
with the technology boarders being torn down the
advantages of associating with the owners of specific
know how on these services is what is most important
[…] when we establish a partnership with Google we
know that their knowhow is very good, solid in some
topics and that we as a communications channel with
the consumer will act as an advancing agent […] and
we will be delivering to the client a service that is in
fact relevant, he can also use it in his mobile […] when
we establish a partnership with UOL, Brazil’s best
content provider, with the highest audience […] when
we make this content available in our mobiles we know
that we are providing relevant material to our user, we
are advancing the application of web content in the
mobile world. So this is the reasoning behind the
partnerships for content” (interviewee of company G).
According to those interviewed, normally these
partnerships are based on annual contracts, which can be
renewed. But we note that despite partnerships with content
producers being an opportunity, it can also be a threat.
It is an opportunity because these partnerships, until now,
are how telephony companies can acquire important
resources (knowledge and learning) to explore AEC. It is a
move which, depending on how these companies settle
partnership agreements, can help train internal human
resources of telephony companies for this service. But it can
also be a threat to operators because parallel to having access
to good-quality content they are also helping increase
audience ratings for the content producer, which might
strengthen this producer’s position as a potential competitor
against operators in the programming and distribution of
Content producers are interested in such partnerships
because they provide greater reach and audience for their
contents. However, telephony operators can regard them as a
threat since the content producers can themselves (and they
have capacity for such) distribute their contents, thus also
competing with them in these phase of the AEC value chain.
Easy settling such partnerships depends on the closeness
and the convergence of interests of these competitors with the
telephony companies. “The producers of international
contents, which have been in the market much longer than us,
look at us favorably. Ultimately, they have more people
paying for their content.” (interviewee of company E). These
companies see as a great advantage in the possibility these
partnerships provide of sharing knowledge and learning “[…]
knowledge usually comes from the partnerships […] we have
the expertise of the content producer, of those in the TV area,
and we add it to our experience in mobility […] so we make
this exchange” (interviewee of company H).

In addition to negotiating with large national content
producers, such as Globo, Band, and international content
producers, such as the large studios in Hollywood, the
exploration of AEC by telephony companies is also giving
space to independent producers of various sizes and also to
those specialized in the production of segmented content,
such as TV Timão – which is the TV station of Corinthians
Football Club – religious contents, small producers of games
etc. The interviewees declared that in general the offering of
content from producers is greater than what they can actually
“What I found interesting is that I thought we would
only receive projects of small to medium-sized
producers, but we also received projects from large
producers. The idea was to actually open a
communications channel that was more democratic, a
door to those who acted in the area, or a small
producer with an interesting idea and that would have
through this the opportunity of presenting a project”
(interviewee of company E).
The telephony service companies are also diversifying
their sources of revenue through advertising and sponsorship,
which are the main sources of revenue of the free-to-air TV,
as seen in the previous section. In addition to attracting
traditional advertising – and it is expected that good-quality
content naturally attracts advertising – another format that
can further explore this business in convergence is the
sponsoring of content, i.e., a company can sponsor an AEC
program or film in which its products and/or brands are
For the operators of the business based on advertising, it is
still a world to be explored and the scenario that appears
possible for this business is “[…] travelling, waiting, work
breaks, because people watch TV in their mobile to make
time go by, relax, update themselves, watch a program
different form what their family is watching, watch a program
with privacy” (interviewee of company E).
Another type of partnership that has been considered by
operators is advertising with interactivity, i.e., mobilizing two
expertises: mobility with interactivity and advertising through
“[…] we can establish partnerships in this area, for
things that are more segmented, campaigns, for
example, the advertiser can sponsor a mobile program
with content that is of his interest and/or with focus on
the product he wants to advertise, and the operator is
responsible for the interactivity part, for example, for
the part the user sends a text message” (interviewee of
Company G).
For telephony companies, one of the purposes of the
business models based on advertising or sponsorship for AEC
is to cheapen this service to the consumer and also encourage
the creation of business models targeted at specific consumer
niches. This business model can also be explored to reach the

clients in the C, D and E classes (Brazil’s mid-low income
and low income segments), who usually use prepaid mobiles.
“They (classes C, D and E) only have one TV set per
household, and they can have this TV experience in their own
mobile” (interviewee of company H).
Prepaid clients account for 80% of the subscriber base of
operators in Brazil3, and that is why today the maximum
experience they get is short videos, because including data
traffic for AEC in their mobile account is still a very
expensive service. Therefore, the inclusion of this segment
(prepaid) or at least part of it is a challenge for operators. On
the other hand, telephony operators are reaching these clients
with packages of pay-TV via satellite at more attractive
It is also important to emphasize the need for protecting
the privacy and the desire of the client of receiving or not
receiving advertising or sponsorship messages, which
according to some interviewees is closely related to the
influence and importance that an advertising message has or
might have with the client.
Mobile telephony operators are also organizing
themselves to “standardize” the way they will explore
advertising in the mobile phone. An example of this was the
launch in 2009 of a good practices guide for mobile
marketing, through a partnership with the Interactive
Advertising Bureau (IAB Brazil), an association between
agencies and interactive media vehicles with the Mobile
Marketing Association (MMA). This guide lists general
recommendations, concepts of metrics, a glossary and
standards, and will be updated as the market evolves and
demands customization.
“The closer we are to the user, the closer we get to
knowing how he decides what to purchase, and we
become more efficient in interacting with the user in
this case […] the option the user has of receiving or not
receiving advertising information is mandatory in our
company […] what will happen to a music producer, a
label which wants to market their CD? We’ll say: we
have three thousand users who love jazz, buy jazz
through their mobiles and who want to receive up-todates. Can you imagine how this can compete with a TV
campaign? […] and technology for such already exists
[…] the MMA coming to Brazil and the operators
participating with other content-producing companies,
advertising agencies, all this will produce standardized
definition and names that will also optimize this
business model for AEC. This skill we have of relating
to the user and paying attention to what he has to say is
what allows us to develop customized offerings and
solutions by niches, segments, different needs”
(interviewee of company G).
In Brazil, this is a prepaid phone service in which the consumer credits a
certain value to the operator, from which services and connections made are
debited. In this system the service charge is more expensive than in the
postpaid service (subscription), but there is no collection of subscription fee.

Up to now within the scope of digital convergence in
Brazil, free-to-air TV companies still have the largest share
of investments in advertising, i.e., 63.3% of the R$ 28.5
billion for 2011, followed by newspaper companies (12.1%),
magazines (7%), the Internet (5%) and pay-TV (4%). As
AEC business intensifies, it is likely that the advertising pie
changes, and this can affect TV companies. It is worth
mentioning that the strategic scope of multinational telephony
companies, and also of the Internet, not only includes the
Brazilian advertising market, but also the global advertising
market that in 2011 totaled US$ 464,3 billion [50].
The qualitative research under analysis of the selected
theoretical framework enabled us to understand that the

digital convergence process has been based on the evolution
of technologies and business strategies, and has led to: i) the
entry of new competitors in the market; ii) the increase in
competition among players which operate in different
businesses; and iii) the need to have AEC traditional
companies (TV) and new companies (telephony) collaborate
with traditional and new partners in this service.
Table 1 presents a summary of the main empirical
findings of this research, by stressing the major trends and
challenges in strategic alliances and partnerships at this early
stage of digital convergence for both TV and telephony
companies, considering the audiovisual entertainment content
value chain. Such partnerships and alliances have been
designed as a consistent way to build the skills and resources
required by the development of the AEC service market
under digital convergence

AEC service
Actors involved
Change trends and challenges for strategic alliances under digital convergence
Television companies
Telephony Companies
Free-to-air TV companies,
Remain focused on their own production of Strategic alliances and partnerships are key
independent content producers,
AEC, but need to build / refine skills to
to acquire and develop skills in AEC.
large global content produers (eg.
negotiate alliances and partnerships with
Hollywood movie studios), Internet other actors.
service companies, app
development companies,
electronic game developers and
traders, consumers/customers (eg.
at YouTube/Google) etc.
Indigenous (ex. Globosat) and
multinational pay-TV companies
Maintain fixed grid programming model
Adopt fixed grid programming model in
(ex. Fox e HBO) and Internet
but need to adapt their resources and
pay-TV and develop skills for AEC
service companies (ex. TV UOL,
expertise in order to also offer AEC
anywhere, anytime, in new media., YouTube/Google,
anywhere, anytime in new media.
Blinkx etc.)
Extensive business vertical integration
continues (producing, distributing and
Fee-to-air TV comapanies, payBuilding multi-platform distribution and
delivering), not only in traditional media,
TV companies, telephony
delivering skills, by means of buying out
but also in new media, but need to build /
companies, Internet service
specialized companies and hiring AEC
refine skills to negotiate new alliances and
and Delivery
companies, e-game companies,
partnerships with actors in the AEC multideviced suppliers etc.
platform chain and from other valuechains.


and device


Advertising companies specialised
in both digital and conventional
media (eg. Young & Rubicam,
DM9DDB, AdMob, AdWords e
DoubleClick/Google etc.) and
marketing and communications
areas in advertising clients
Large, global suppliers (eg.
Samsung, Huawei, Nokia, Sony

Mass consumers/ niche consumers

Keep their resources and skills to negotiate
advertising for traditional media, but they
need to build up skills in order to create
and adapt new advertising languages for
new media / platforms.
Deepening dependence on this chain link.
Political resources (strong influence on
regulation authority) may minimize risks
stemming from such dependency.
Expertise in AEC producing for the mass
market remains a competitive advantage,
but need to adapt and build skills for
greater interactivity in AEC for both
traditional and new platforms.

Building skills in order to negotiate with
traditional advertising market and
excelling in production of sponsored AEC.
Also mobilizing resources in search for
new languages and ways of exploiting this
market in new media.
Provision of network infrastructure
becoming an increasingly valuable
Mobilizing and adapting skills in
individual relationship with customers and
in AEC producing and distributing for
niche markets.

Seek to build competencies in AEC consumer relationship in new platforms.
Source: fieldwork

Considering the purpose of this article, the empirical
material sumarized in Table 1 suggests that some of
partnerships and strategic alliances stem from existing
businesses and value chain of television and telephony
companies, while others have been developed as new moves
under the convergence context. On the one hand, TV
companies have been seeking collaboration in order to
develop new AEC distribution and delivery options departing
from editing and / or producing its contents also for "new
screens" (tablets, smartphones and Internet). On the other
hand, telephony companies have been collaborating as a way
to build skills in order to enter and explore this market. In
both cases, they aim at developing shared learning in this new
AEC market they are building under digital convergence.
As seen in section 2, Tidd et al. [10] suggest various
possible forms of collaboration that business firms may
implement. However, they draw attention to the fact that no
form of collaboration is ideal, since they all possess
intrinsically advantages and disadvantages. Taking into
account the AEC service value chain features and changes it
is undergoing in the context of digital convergence (sections
4 and 5), it can be noted that the most common form of
collaboration is strategic alliances, since what is at stake is:
1) market risk and cost sharing, 2) market testing in order to
check under what conditions the convergent AEC will be
accepted by consumers and 3) flexibility in collaboration time
length. These features seem to be adequate to the current
challenge of defining what the new multi-platform services
will be in the coming years.
If AEC offerings in a convergence context is relatively
new and experimental [4], so are the partnerships being
made. TV and telephony companies still have not adopted
systematic and coherent management practices for these
strategic alliances, both regarding the adoption of routines to
source and select sources and partnerships and regarding the
preparation and management of partnership agreements.
The challenge of TV and telephony companies in this
convergence scenario, with regard to the management of
strategic alliances, lies on their managerial capacity to
understand the changes in AEC services and in consumers’
behavior and, consequently, source those partnerships that
can effectively contribute to the actual creation of value in a
digital convergence scenario. We must point out that the
continuing evolution of technology and the dynamism
inherent to the segments addressed herein will probably
continue driving new partnership possibilities.
Further research is needed in order to understand the
unfolding and implications of the context of digital
convergence addressed in this paper, both for traditional
companies (TV AEC) and for new entrants (telephony
companies). Yet, insights raised by this research in regard to
these segments can inspire business (re) positioning not only
for companies in the mentioned segments, but also those
segments that have been hitherto distant from this market,
which now stands as an alternative for revenue and value
creation. From a public policy point of view, it is clear the

need for regulators to monitor ongoing changes in order to
ensure a good level of competition between companies, to
protect and assure consumers’ rights and ensure the quality of




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