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Frost and SullivanAddressing Regulatory Changes Through Organisational Change in a Converging Market. The BT Case

Frost & Sullivan, June 2007, Pages: 34

This Frost & Sullivan research titled Addressing Regulatory Changes Through Organisational Change in a Converging Market. The BT Case provides an analysis of the impact of BT's Enterprise Act undertakings on the company's organisational structure as well as its operations. In this study, Frost & Sullivan's expert analysts thoroughly examine the UK regulatory environment and its effects on the British incumbent telecom operator.

Market Overview

BT Group Avoids a Forced Divesture

In an increasingly competitive telecom scenario and a regulatory environment requiring fair and equal access to the national local access networks, incumbent service providers are being forced to review business operations to keep their companies intact. In the United Kingdom, a strategic review of the telecommunications market conducted by the British communications regulatory body, Ofcom, resulted in BT Group plc, the incumbent operator, offering to reorganise its business units.

'In 2005, BT Group voluntarily agreed to reorganise itself and separate its access network from its backbone network and wholesale as well as retail business operations,' notes the analyst of this research service. 'By doing so, BT avoided further investigation from Ofcom that might have resulted in the compulsory split of the operator into multiple companies.'

BT Group's Strategy: A Feasible Solution

Voluntarily committing to a functional separation restructure, BT Group has been successful in avoiding a forced divesture. It is the first company in Europe to be addressing regulatory requirements in such a novel manner.

'Implementing a functional separation strategy that secures compliance with the regulatory bodies' views on fair competition in the local access arena represents multiple organisational, operational and support services challenges to operators,' explains the analyst. 'However, currently, it appears that BT's strategy is a feasible one that can be regarded as an example to be emulated by other incumbent operators.'

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