Last Updated 07 Jul 2020

PEST analysis of uk mobile network industry

Category Industries
Essay type Analysis
Words 1177 (4 pages)
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According to a report by Barry Collins (2006) 5, by 2006, there were 62. 5 million mobile phones being used in a British population of 60 million people. This trend of more mobile phones than people is set to persist; as at the last quarter of 2008, there were 76 million mobile phones to a population of 61. 4 million, implying more than one handset per person. Fashion, functionality, the need for separate phones for personal and business use amongst other factors have been the drivers of the trend. The MNO industry has typically contributed significantly to the economy.

In the financial year 1998/99, MNOs had an estimated combined revenue of i?? 5. 8 billion, and i?? 15. 6 billion in 2008. They also provide appreciable job opportunities in the UK6. According to Finlay (2000), the remote environment of an industry involves external factors and components that cannot be influenced notably by an individual business but can be the basis for changes that occur in the operating environment. Although the remote environment is similar for all industries, some industries may be affected more by particular factors.

It is for this reason a PEST analysis is carried out for the UK mobile operators industry to highlight those important factors that impinge on the industry. The following aspects are considered below; political/legal, economic, socio-cultural and technological. It is plausible to say that the mobile network operators industry is a highly competitive and therefore, regulated industry. MNOs in the UK are in general governed by regulations which are in the form of industry-specific laws and regulations affecting telecommunications services.

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MNOs are also subject to anti-trust/competition laws which affect all industries. The important directives, decisions and regulations by the EU as well as the UK communications regulator Ofcom are discussed below. The European Union (EU) Telecoms Regulatory Framework; the regulatory framework which was adopted in 2002 and has been applied by all member states of the EU consists of directives developed with an aim of ensuring and improving competition within the industry, protecting consumers.

The framework was further reviewed in 2007 3. 11 EU Law on Roaming Charges; Charges for using mobile phone services outside the location where the service was originally registered are an important source of income for network operators. Many mobile phone users find this a convenient service as they can use their already existing network provider when abroad, but often come back to receive higher than expected phone bills. The charges for the roaming service as at 2007 were worth i?? 8. 5bn a year to the European telecoms industry7.

In 2006, the telecoms commissioner called for legislation on roaming arguing that consumers paid an unjustifiable fees for using their mobile phone service abroad. In 2007, members of the EU agreed to force a slash on roaming charges and the legislation was backed by consumer advocates and campaigners. The law came into force in June 2007. The law required that users pay no more than  0. 49 per minute for placing an outgoing call while in another European country and  0. 24 a minute for receiving calls.

The legislation also required that wholesale charges - charge imposed by one operator on another for allowing calls to be made through its network - be capped at  0. 30 per minute during the first year after enactment of the EU law. Charges were to be capped further in the second and third years following the legislation before being scrapped8. Further proposed legislation in March 2009 called for billing for voice calls to be made by the second, for a further cap on voice calls from  0. 46 to  0.25 by July 2011, for cross-border text messages to cost no more that  0. 11 and a cap of  for wholesale downloading of one megabyte of data7.

Under these legislations since 2007, mobile operators have seen a slash in their estimated  8. 5bn income from the roaming market. It is thought by the operators' trade body that the law is anti-competitive. Protecting the consumers - mobile phone users - may continue to be an issue of concern for the future of the industry as more regulations may be effected. 3.

12 Spectrum Liberalisation; proposals by the office of communications (Ofcom) on the management/allocation of spectrum, has been a major issue of concern for the mobile network operators. Spectrum is a scarce resource important for wireless technology and in May 2000, O2, Vodafone, T-mobile and Orange paid over  22bn between them for spectrum licences to operate the 3G third-generation mobile phone services in the UK, through an auction9. These licenses were granted by regulators to the operators, stating frequency bands, services and technologies in a command and control manner10.

However, a new approach relating to spectrum management has been introduced. On the 29th of May 2006, the European Commission's Radio Spectrum Committee published proposals for spectrum liberalisation - an approach to spectrum management that puts an end to technological and service restriction on spectrum usage10. Ofcom believe that through spectrum liberalisation, mobile operators would be able to launch new technologies and services, competition would be encouraged and it will give opportunity for new entrants into the highly competitive industry11.

Ofcom proposed to make available to other operators, some of the 900MHz radio spectrum currently used by Vodafone and O2 and the 1800MHz used by the four providers listed above11. Having invested such large amount of capital for the license, liberalisation of spectrum may have a detrimental effect on the ability of the network operators to recover their investments12. Also, mobile virtual network operators such as Tesco who provide its services by utilizing spare spectrum capacity on O2's network may suffer consequences as the amount of spectrum available to them will be reduced13.

Termination Rates; network providers charge each other a fee known as the termination charge for receiving a phone call on its network. This charge is pushed on to the consumer who eventually pays. In the past, these rates have been high and variable amongst different MNOs as well as a high source of revenue for MNOs. MNOs attributed the high and variable rates to factors such as costs for infrastructure.

The European Commission (EC) however expressed concerns about what it considered unjustifiable rates and therefore called for charges to be slashed14. Ofcom on the 6th of April 2009 directed that rates be reduced by 21%, and a further reduction to follow in 2010 with an aim to equalise all rates15. 3. 14 Base Stations ; Human Health; member of the general public as well as interest groups such as Powerwatch and Friends of the Earth Scotland have shown concern about impact of radiations from base stations, transmitters and mobile phones on human health.

According to the mobile operations association (MOA), all mobile phone base stations in use in the UK, comply with the international health and safety public exposure guidelines recommended by the International Commission on Non-Ionizing Radiation Protection. It also states that over 30 scientific researches has been conducted and results have shown no negative correlation between mobile phone base stations which comply with the international health and safety guidelines and human health16,17.

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PEST analysis of uk mobile network industry. (2018, May 27). Retrieved from https://phdessay.com/pest-analysis-of-uk-mobile-network-industry/

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