mand. In practice, the price may be set through two different mechanisms. One is value-based pricing, where a customer's willingness to pay is found in order to set a price. In this method, the value of a product to customers is analysed to determine a price which customers are willing to pay with an aim to maximise profits. The method of price setting Broadband Telecommunications Technologies and Management Subscriber/ End-user Broadband retail Content retail Equipment Service Content retail operator aggregator Capacity wholesale Content wholesale Equipment Content wholesale Access network provider operator Equipment Core network Content manufacturer operator producer/owner Figure 2.12 A business system diagram Customers Value Price Service Figure 2.13 Value-based pricing Service Price Value Customers Figure 2.14 Cost-based pricing applies mostly to environments where little direct competition exists and where a firm is able to set the price independent of other players. Based on this price point, the cost of product provision and service level may be found as illustrated in Figure 2.13. Such value-based pric- ing is applied for example to smartphones, particularly when they were first offered to the market in 2007 [12]. Cost-based pricing starts from the opposite side. It analyses a product, calculates the cost for producing it, adds a desired profit margin and arrives at the product price. Based on this price a certain basic value is proposed to customers who purchase the product. This method of price setting is illustrated in Figure 2.14 and generally applies to products which are offered to a very competitive market. In such environments value proposition differentiation between competitors is small, and prices generally fall to be equal to production cost and small mar- gins. A good example is feature mobile phones which differ minimally from vendor to vendor, and are sold at similar prices [12]. Technology, Business and Policy The two price-setting mechanisms can be associated with the value analysis model