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An example of how a general management goes about the formulation of long-term policy and investment programmes, where rapidly changing technology is linked to rapidly changing needs in the market place, in a newly competitive environment, in a time frame extending over the next 15 years. British Telecom is in the middle of an investment programme that will transform analogue network into a digital system. The initial objective was to reduce operating costs, but market demands for new services require additional and substantial investment decisions, with the total running at the rate of ¿¿1 billion per year for atleast the next five years. The present `layered¿¿ network has been built up by adding services. As the `product life cycles¿¿ of the several technologies reach out into the future, new possibilities emerge such as mobile radio where the cellular network can be divided down to accomodate millions of subscribers and, in the longer term, the realisation of an all digital main network serving the business environment, with local intelligence in each subscriber's PABX. As an example of the pace of technology, a 15000 line exchange as now manufactured is based on the technology of about six years ago, and occupies 15 racks. With currently developed technologies, this can be reduced to 3 racks. Extrapolating to techniques of high-density wafer integration, by 1995 only two circuit boards will be required, a small fraction of one rack. The market needs are changing, and a wide adoption of electronic funds transfer by retailers will generate a heavy demand for short duration calls, increasing the processing load. The area of limited improvement is the production of software, where costs are being reduced by a factor of only two per decade.