In 1981 the British Telecommunications Act separated BT from the Post Office and began the process of liberalization. Consequently in 1982, Mercury, an ancillary of Cable and Wireless, was certified as a national fixed line network operator became a competitor of BT.
In 1983 the government declared its duopoly policy which stated that the only telecom service providers for fixed lines in the nation would be BT and Mercury for the coming 7 years. (Summanen, and Pollitt, 2003p.2)
In 1982 the government planned to privatize BT. In 1984 the plan was executed and BT was privatized: 50.2% of its stakes were sold to the public. The creation of Oftel under the Telecommunications Act 1984 after BT’s privatization, finally led to the separation of its regulatory and operational functions. The privatization of BT in 1984 showed signs of a new structure of the telecom industry that could fare better in a competitive framework than in the public sector. The need for investment in the operations and services and customer orientation was acknowledged. (BT’s response, 2005, p.7)
The duopoly stage of BT, from 1984 to 1990, led to a soft landing into competition. Even though BT sold its manufacturing units shortly after its privatization, the number of employees grew from1984 to1990. (Summanen, Pollitt, 2003, p.4) In 1987 Iain Vallance was selected as the chairman of BT. The initial reorganization of British telecom as an integrated telecommunications corporation was made in the early 1990s.
In April 1991, BT came up with a different business structure, which was the outcome of a yearlong reorganization. BT’s new establishment concentrated on definite market sectors to satisfy the needs of a variety of customers- individuals, small companies, and MNCs. At the same time, the objective of achieving a leading position as a global telecommunications operator was laid down.