PEST Analysis on UK Fixed Line Telecommunication industry - Essay Example

As and when this happens, BT will be superiorly poised to leverage its huge infrastructure to add to its revenues. (Prodhan G. and Biilingham E., 2009) Just like any other market, the UK market has two distinct group of consumers; business consumers residing in metropolitan cities who subscribed to high value services, and the vast mass market spread all over the country who are unwilling/unable to pay a premium for high value services. While BT has been able to obtain a legal ruling against imposition of Universal Service Obligation that would have required it to offer fixed-line connectivity to all UK households, any future imposition of similar clauses by the British Government may severely affect its profitability.

(Giles C., n.d.) However, the government also believes that Internet connectivity is core to the growth of the economy and given the severe recessionary conditions now, the government may decide to give a major thrust in increasing Internet connectivity. This may turn out to be a major boost to BT’s fixed line business. (Holton K. and Prodhan G., January 2009) Additionally, it has been indicated that BT will be free to have its own pricing strategy for the 21CN supper fast broad band network.

This will help BT increase its profitability. (Parker A. and Fenton B., February 2009) UK has a very stable and matured economy that has little scope for a rapid growth. While the national GDP in 2008 was about 1.8 trillion GBP, the growth rate of the economy in 2008 over 2007 was about 3%. The present crisis has hit the economy hard, and the UK economy is expected to shrink by as much as 2%. (UK output, income and expenditure 4th quarter 2008, February 2009). However, the government has responded by cutting VAT by 250 percentage points, from 17.5 to 15%. If BT can pass this benefit to the end users, it can expect to negate a part of the decline of business due to recession.

Additionally,