BT is currently structured as four main lines of business -- Wholesale, Ignite, openworld and Retail. Godell believes that other European telcos could learn a lesson from this. The report says that European incumbent telcos like Deutsche Telekom and France Télécom must restructure along three horizontal lines of business -- networks, innovation, and retail -- to overcome their fundamental innovation, revenue, and profitability challenges. It says that restructuring internally along these lines and a gradual opening up of a telco's value chain, as BT has done, is the first step toward a new industry paradigm that Forrester calls 'layered telecom'. BT agrees that, despite the heavy criticism it sustained in 2001, it has performed better than some other incumbent operators. "We think one factor behind our success is the early recognition of our debt. We think we've tackled the problem of debt better than any other European operator," said the BT spokesman. A collective surge in investments and take-overs, during the heights of the stock market boom of the late 1990 and early 2000, has left Europe's telco industry with massive debts. BT, whose personal debt mountain neared £30bn, brought the situation under control by selling off some assets and by floating its mobile operations on the stock market last year. In contrast France Telecom is today in deep trouble, with debts of 70bn Euros (£44bn). Forrester warns, though, that if the break-up of BT is to yield benefits then it must be done voluntarily, not at the behest of regulators. "The odds are that unwilling incumbents would fight any breakup mandate for years and play the necessary games to derail the initiative on principle alone. Instead, regulators must encourage voluntary structural separation by granting incumbents that break up on their own terms full relief from their industry-specific regulatory burden," said Godell, who warns that regulators and governments have already made something of a hash of previous challenges such as local-loop unbundling and the distribution of 3G licences.
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