BT's Learning From Google
MARCH 28, 2006
http://www.lightreading.com/document.asp?doc_id=91605&print=true
LONDON -- 21C Communications World Forum -- BT Group plc (NYSE: BT -
message board; London: BTA) is taking a lead from Internet-based
competitors like Google (Nasdaq: GOOG - message board) and Skype
Technologies as it gears up for next-generation service trials.
Speaking at the 21C event here in London, Paul Reynolds, CEO of BT's
Wholesale division, which is responsible for the company's £10 billion
(US$17.5 billion) 21CN next-generation network project, said the carrier
was learning from its new competitors.
"Companies such as Google, Skype, and others are coming to the market with
radically different propositions and very different business models,"
Reynolds says. "Google has fewer IT people than BT, and has a market
capitalization of more than $100 billion. That shows the power of the
business models these guys have. Personally I believe that all of us in
established telcos can learn a lot from these guys, and we at BT are
already doing so." BT's market cap is currently $34 billion.
That learning process is feeding into the carrier's software-enabled
service development program called Web21C, which Reynolds says will be
unveiled in the coming months. He adds: "We will absolutely sell services
independent of network access, as well as be a network operator. If you're
only [delivering services] in software then that frees you in many respects."
In the meantime, BT is building out the new infrastructure, with Reynolds
keen to address the 21CN project's doubters. (See BT Takes 21CN 'Baby Step'.)
"Some were skeptical about 21CN when we first announced our plans, but the
manufacturing lines and software development labs are buzzing," and there
are "3,000 people working to receive and deploy the 21CN technology. It's
real and happening."
Much of that skepticism is linked to the aggressive timeline BT has
adopted, to switch off its PSTN by 2010, giving the whole project a
lifetime of just five years. "Some said it couldn't be done. Many of my own
people would prefer it if we were taking 10 or 15 years to complete the
transformation."
But Reynolds said the business case doesn't stack up over that sort of time
period, and that he's "starting to think that maybe five years is too slow.
We're already examining ways we can accelerate parts of our implementation."
Industry skepticism wasn't the only topic Reynolds felt compelled to
address: Many in the industry have been asking why BT has been shouting so
loudly about its plans.
"We have been very open about what we're doing, and this commitment to
openness is a radical departure for us, and sometimes we at BT struggle
with the concept
This open approach is partly about de-risking our 21CN
strategy and implementation."
But the BT man admitted later to Light Reading that building a high-profile
marketing campaign around the project has also had direct financial
benefits. Reynolds confirmed that 21CN has become a shop window for the
vendors involved, and that each of the lead suppliers had experienced a
positive knock-on effect from being named as 21CN suppliers, and that "has
enabled us to achieve lower prices." (See BT Closes 21CN Deals, Touts IPTV
and Vendors Sign BT 21CN Contracts.)
He described the process of bargaining the vendors down to rock-bottom
prices as engaging in "the most non-sympathetic vendor procurement process"
in the industry.
The way BT is paying the vendors is different, too. "They get paid when we
get paid" from delivering services, said Reynolds. In the past, suppliers
have been paid when the technology was delivered to the operators' door.
With that model, "all the risks were with the carriers. Not any more."
And while BT has named its eight main vendor partners, Reynolds revealed
that those core suppliers have behind them a network of more than 150
technology partners that are part of the process. He also extended a
lifeline to those vendors not yet involved by saying that innovative new
firms could still be included, either through the current lead partners or
as new suppliers. (See Infinera Numerates Its Numbers.)
Ray Le Maistre, International News Editor, Light Reading
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