Strategic breakout in UK telecommunications: the case of Kingston Communications

Abstract

The progressive liberalization of the UK telecommunications sector has necessitated a strategic repositioning by its incumbent operators, British Telecommunications (BT) and Kingston Communications (KC), as they face up to increased competition within their traditional market places. This repositioning has stimulated a process of strategic breakout, a framework derived from the author's on-going examination of changes in the European telecommunications sector. Amendments in the regulatory framework governing the industry has enabled firms to move into geographic and product markets from which they were previously excluded. However, they still face a residual regulatory framework that sustains a commitment by them to their base market principally through universal service obligations. Such a scenario has the potential to create conflict and undermine strategic focus. This paper seeks to explore this conflict through the strategic repositioning of KC since its licence was last reviewed in July 1998. After exploring the process of strategic breakout, the framework is then applied to KC highlighting how the process, when interacting with the residual regulatory framework, creates the potential for strategic conflict. Copyright © 2002 John Wiley & Sons, Ltd.