ther factor deregulated well before those of others within the EC, and today such as competition, technology, regulatory controls and political there are two major suppliers (BT and Mercury) with many niche pressures. Figure 11.5 shows the price model in greater detail. In suppliers. Granting of licences to local telephone operators com- setting the price of a service the operator needs to consider the menced in 1992, and involved several cable television operators and objectives of his business, the costs of providing the service, and the utilities, who already had extensive telecommunications networks pressures on him, such as competitive and regulatory. for their own use (e.g. the Post Office, British Rail and the electricity supply authorities). 11.4.1 Pricing The early major steps in the development of the UK telecommuni- cations market were as follows: The prices set need to cater for several factors, such as: July 1991. The British Telecommunication Act was passed, 1. Entry strategy. When a new service is introduced there are which separated the telecommunications arm from the Post usually very few competitors. The temptation is therefore to set Office and created British Telecom (which was subsequently a high price, especially since the relative low initial usage will renamed BT). result in high unit costs for providing the service. Unfortunately Economic considerations 11/11 Business objectives Costs Competition Pricing considerations Regulations Entry Life cycle Responsive strategy pricing to change Market segments Services Figure 11.5 A price model the higher the price the lower the take-up, SO the price has to be whereas other calls are above costs, the PTO's profit increasing determined based on the need to rapidly build up a large number as the distance increases. of users and establish market share and economies of scale before the number of competitors grow. 11.4.2 Costs 2. Life cycle pricing. The price of a service will vary over its life cycle, typically as shown in Figure 11.6. At the post-comp