BT 2015 Annual Report Download - page 54

52 BT Group plc
Annual Report 2015
andset and networ developent
he enlared roups operations will depend partl on the successful
deploent of continuousl evolvin telecounications technoloies.
elas in the developent of handsets and networ copatibilit and
coponents a hinder the deploent of new technoloies for the
enlared roup.
 uses technoloies fro a nuber of vendors and incurs sinificant
capital ependiture deploin these technoloies. here can be no
assurance that coon standards and specifications will be achieved
that there will be interoperabilit across s s and other networs
that technoloies will be developed accordin to anticipated schedules
that the will perfor accordin to epectations or that the will
achieve coercial acceptance. he introduction of software and
other networ coponents a also be delaed. he failure of vendor
perforance or technolo perforance to eet our epectations or the
failure of a technolo to achieve coercial acceptance could result
in additional capital ependiture b or a reduction in profitabilit of
theenlaredroup.
echnoloical chane and aret acceptance
he enlared roup a not succeed in ain custoers sucientl
aware of eistin and future services or in creatin custoer acceptance
of these services at the prices we would want to chare. lso the
enlared roup a not identif trends correctl or a not be able
to brin new services to aret as uicl or price-copetitivel as
itscopetitors.
hese riss eist in the obile telecounications area such as obile
data services or other advanced technoloies which are supported b
advanced sartphone products. he also eist in the non-obile
telecounications areas such as obile paent services based on
contactless technolo where there is a ris that dierences in the
reulator treatent of dierent operators based on their choice of
technolo could put the enlared roup at a copetitive disadvantae.
urther as a result of rapid technoloical proress and the trend
towards technoloical converence new and established inforation
and telecounications technoloies or products a not onl fail
to copleent one another but in soe cases a even becoe a
substitute for one another. n eaple of this is the ris that over-
the-top services bein those which are provided b a third part to
the end user device develop substitutes for s and s own products
and services. nother eaple is o a technolo that is alread
established in the business custoer aret and which has now reached
the consuer aret. he introduction of obile handsets with
o functionalit a adversel aect the enlared roups pricin
structures and aret share in its obile voice telephon business. f we
do not appropriatel anticipate the deand for new technoloies and
adapt our strateies service oerin and cost structures accordinl
theenlared roup a be unable to copete eectivel which a
have an adverse eect on our business and operations.
upplier failure
 has a nuber of suppliers identified as critical.  is also part to
a cople and critical networ-sharin arraneent with utchison
hapoa iited. he failure of this oint operation to full support the
enlared roups interests and oals or an aterial disruption to the
operation of s networ sharin arraneent could cause sinificant
har to the enlared roups business.
s deand for sartphone and tablet products increases around the
world there could be shortaes in the volue of devices produced
as a result of insucient anufacturin capacit lac of availabilit
of internal coponents such as processors or aor suppl chain
disruptions. his a result in delas in the suppl chain which in
turn a have an adverse eect on the enlared roups business
andoperations.
pectru pricin and reulation
eulators includin fco set annual licence fees for spectru bands
used b  for voice calls  and  services and  is a part to an
onoin consultation with fco in relation to this. n sinificant
increases in spectru pricin applicable to the enlared roup could
have a aterial adverse eect on its business and results of operations.
fco a after consultation var conditions in relation to spectru
licences.  will onitor an developents fro reulators relatin to
the allocation of obile spectru in the UK.
he scope and for of the reulation of wholesale services is reviewed
ever three ears and can include controls on the level of prices chared
for reulated inputs.
s technolo and aret dnaics develop and as the obile business
of  is interated into  then a wider rane of eistin reulations will
appl to the enlared roup and a broader rane of new andor odified
reulations a be directed at us.
etwor and licence investent
 as well as  to a lesser etent has ade substantial investents
in the acuisition of licences and  has invested in its obile networs
includin odernisin its  networ the uprade of its  networ
and the continued epansion of its  networ which was launched in
ctober 01.  epects to continue to ae sinificant investents
in its obile networs due to increased usae and the need to oer new
services and reater functionalit. t a acuire new spectru licences
with licence conditions which a include networ coverae obliations
or increased licence fees. ccordinl the rate of the enlared roups
capital ependiture and costs in future ears could increase and eceed
those epected or eperienced to date.
here can be no assurance that new services will be introduced accordin
to anticipated schedules or that the level of deand for new services will
ustif the cost of settin up and providin new services in particular
the cost of new spectru licences and networ infrastructure e for
 services and subseuent evolutions. ailure or a dela in copletin
networs and launchin new services or increases in the associated
costs could have an adverse eect on the enlared roups business and
operations and could result in sinificant write downs of the value of
spectru or other licences or other networ-related investents.
f the current econoic cliate worsens the enlared roup a decide
or be reuired to scale bac capital ependiture.  lastin reduction
in capital ependiture levels below certain thresholds could aect our
abilit to invest in our obile telecounications networ includin
additional spectru new technolo and our other businesses and
therefore could have an adverse eect on our future rowth and the
value of radio spectru.
ransission of radio waves
edia reports have suested that radio freuenc eissions fro
wireless obile devices and obile counications sites a cause
health issues includin cancer and a interfere with soe electronic
edical devices includin hearin aids and paceaers. esearch
and studies are onoin. he orld ealth ranisation has declared
that on the basis of current scientific nowlede there are no nown
adverse eects on health fro eissions at levels below internationall
reconised health and safet standards. owever the enlared roup
cannot provide assurance that research in the future will not establish
lins between radio freuenc eissions and health riss.
hether or not research or studies conclude that there is a lin between
radio freuenc eissions and health popular concerns about radio
freuenc eissions a discourae the use of wireless devices
ipairin the enlared roups abilit to retain custoers and attract
new custoers and a result in restrictions on the location and
operation of obile counications sites and the usae of the enlared
roups wireless technolo. hese concerns could also lead to litiation
aainst the enlared roup. n restrictions on use or litiation could
have an adverse eect on the enlared roups business and operations.