Next Generation of Market Forces will Drive a New Round of Competition and Opportunities in the United Kingdom, According to New Study from Pyramid.

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 6, 1999--

The United Kingdom is in the initial stages of a third phase of competition in its communications market (following the 1980s duopoly and 1990s liberalisation) that will have the potential to fundamentally alter both the industry structure and the nature of market opportunities, according to a new market analysis report by Pyramid. This newest phase is the result of the combined forces of liberalisation on continental Europe, a growing importance of non-traditional revenue streams, and the availability of cost-effective, innovative technologies. "Communications Markets in the United Kingdom: Analysis of Data, Voice and Convergence Opportunities," explains that, in the short term, changes in the market will result in numerous services and equipment opportunities, the most salient of which are related to the provision of new data and Internet services deployed in fixed, mobile and transport networks. An executive summary of this report is available at www.pyr.com.

"The simultaneous liberalisation of many of the world's largest markets creates opportunities that far exceed the opportunity that was created in the isolated liberalisation of the UK," says Kevin J. Boudreau, Pyramid's Research Director for Western Europe. "Amassing only 2% of each European market would create a $4bn competitor, whereas achieving this market share in the UK leaves a competitor relegated to marginal status. With the liberalisation of regional markets, operators are now able to achieve scale across borders, making them better competitors in each individual market - including the UK."

Technology is also driving fundamental change in the market structure. While high-capacity transport technologies are causing network convergence in the core, numerous technologies such as packet-based private circuits, ADSL, cable modems and UMTS are precipitating convergence in access networks as well. Technology/cost arbitrage opportunities enabled by technology discontinuities have motivated many entrants to deploy facilities over key European routes.

Further re-shaping the UK market is a levelling of the competitive playing field as demand for new services begins to overtake the demand for traditional services. This trend de-emphasises the importance of traditional markets, and therefore, traditional players. The report forecasts that between 1994 and 2003, traditional services as a portion of all public networking revenues will have fallen from 66% to 51% as services such as Internet, enterprise data and mobile services grow in importance. By 2003, dial-up Internet service revenues (including PSTN dial-up) will nearly triple to over US$2bn, and mobile telephony revenue will grow to US$13bn as the pre-paid boom subsides and mobile data begins to grow. Over the same time period, business access revenues will increase from US$8.9bn to US$13.7bn, with leased line revenue growing to approximately 30% of the total.

"Communications Markets in the United Kingdom: Analysis of Data, Voice and Convergence Opportunities" is available immediately via the Web or in print. The release of this report marks Pyramid's launch of Western European Advisory Services, and is the first of six new market analysis reports on Western Europe. For more information, please contact our US headquarters.

Note to editors: for more information, please contact: Andrew Elrick; tel: [phone]; email: [e-mail].

About Pyramid:

Pyramid, a division of the Economist Intelligence Unit (EIU), is the leading authority on communications markets around the world. Pyramid's "whole-market" model analyses all the interrelated factors that influence performance of the market, the opportunities that exist within the market, and the lessons that can be learned from the evolution of market dynamics and growth. Intensive primary research and strategic intelligence comprise the foundation of our analysis and forecasting, enabling Pyramid to accurately quantify opportunity and risk. Pyramid provides custom consulting, continuous advisory services, and market analysis reports to over 3,500 clients world-wide. Additional information is available at www.pyr.com or by contacting our US headquarters.