Market Mettle » KnowBT

BTwatch May/June 2010 — supplier activity summary

AB — Wed, 23 Jun 2010 17:25:37 +0000

See the BTwatch 2010.05 Report for more details.

Unit	Supplier	Activity	Page
BT Business	Nuance	Natural language call-steering	21
BT Engage IT	Next Generation Data Limited	Data centre	7
BT Fleet	National Mobile Windscreens	Vehicle glass service partner	12
BT Global Services	BigFix	Service delivery platform	28
BT Global Telecom Markets	TynTec	SMS hubbing technology	23
BT Group	Open-source software	Adoption	11
BT Group	Microsoft	SharePoint collaboration platform	12
BT Retail	OnLive	Cloud gaming	14
BT Retail	OpenPeak	Home hub terminal	15
BT Retail	Arqiva	DTT capacity	16
NGI (BT Italia)	Alvarion	WiMAX expansion	29

About BTwatch

Issue: 2010.05
Covering: May/June 2010
Published: June 2010
Next issue: July 2010

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.

BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
BTwatch provides comprehensive analysis and insight into everything relating to BT, including its Divisions -- BT Retail, BT Wholesale, BT Global Services, and BT Openreach -- and its European and wider international operations. Also covered in-depth are strategy, financials, and associates and investments (such as Tech Mahindra).
Our ‘watch' report services are repeatedly described by clients and end-users as the single most valuable source of third-party sales intelligence, and are considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more, the reports represent both tactical tool and strategic reference, providing input and even a springboard for corporate planning, reporting, and meetings.
A ‘must-have' for sales teams focused on high-value sales, maintaining strategic relationships, and managing extended sales cycles. Just one nugget, insight, or validation can pay for the service many times over.
Pricing is typically USD $4.2k / EUR 2.8k / UKP £2.5k per year for a workgroup or small/midsize account, and can be tailored to meet your specific needs and situation. Copies of individual reports are also available, priced from UKP 500 (USD $825 / EUR 560). Multiple purchasing options available, including payment cards.
Delivered electronically 10-12-plus times a year, with back issues also available, providing unparallelled reference and insight into major events, strategic initiatives, financials and KPIs.
Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7183-0111.

BTwatch issue 2010.05 Executive Brief

AB — Wed, 23 Jun 2010 11:40:31 +0000

Executive Brief from BTwatch, issue 2010.05. Click through for: an Extract from this month’s report; the Issue Snapshot; or to contact us for more information about the full 40-page issue, this industry standard monthly report service, and ongoing subscription access.

The European Union broadly backed Ofcom plans to enable BT Group to offer a virtual unbundled service for fibre through Openreach. However, the European authorities stressed that this should be seen as a stop gap measure until full physical access to the BT network becomes viable. In a potentially significant development, the EC also called on Ofcom to more closely regulate the product’s pricing on a cost basis, rather than using the less restrictive equivalence of inputs basis as planned. [pp.8-9.]
BT announced a strategic agreement with OnLive, a gaming company that streams live video games into the home, with BT the exclusive UK partner. The “cloud based” gaming service could be streamed to home computers or televisions. BT also became a small shareholder in the US company, which is not expected to launch a UK service until spring 2011 at the earliest. [p.14.]
BT Global Services launched a BT Virtual Data Centre in Brazil, offering major corporations and government bodies a “dynamic and virtualized infrastructure platform”. Customers will be offered access on a “try & buy” basis, but there are practical restrictions on the type of data stored using the infrastructure as-a service offer. BT is thought to be commercialising internal virtual data centre systems for the new offering, which is supported by NetApp. [p.27.]
BT committed to an additional £1bn fibre investment that will see Openreach attempt to bring a form of fibre connectivity to two thirds of the UK population by 2015. The investment, which will be contained within ongoing capex levels of around £2.6bn, is dependent on the economic environment, but nevertheless represents a clear sign that momentum is building, and that the economics of the rollout are becoming more viable. Meanwhile Greater London is expected to see fibre connectivity available to 87% of homes and businesses in time for the London Olympic Games in 2012. [pp.33,35.]
BT GROUP released its results for FY09-10, which were warmly received amidst signs that cost cutting programmes are beginning to improve the bottom line, although genuine growth still remains elusive. Full coverage of the results and the accompanying Investors Day are to feature in the upcoming special BT Report .
BT is said to be planning to dispose of its 31% stake in Tech Mahindra by the end of the current financial year, but is holding out until Satyam is fully integrated in the expectation of a higher valuation. [p.4.]
BT became more deeply embroiled in a pay dispute with the Communications Workers Union, as a revised two year salary deal failed to prevent the union commencing a vote on strike action. BT is offering CWU members a 2% raise this year, followed by 3% in 2011, plus cash bonuses, but the union is holding out for 5% in 2010. BT is reportedly looking to bring in support from contractors Carillion and Telent, and return management to frontline roles, should a strike be called. [pp.5-6.]
BT settled a legal dispute with chipset maker MediaTek over alleged unauthorised use of BT patented technology. [p.7.]
The adoption of open source software within BT was reported, and the executive responsible acknowledged that initial internal resistance had to be overcome, but now the methodology is being used more frequently to drive innovation. BT is also aiming to improve internal communication on projects through wider use of social networking through deployment of Microsoft’s SharePoint. A contract bid management system is also being introduced using the Microsoft software. [pp.11-12.]
BT RETAIL efforts to more proactively engage with customers through social networking sites drew criticism in a newspaper report, with claims that practices are “Big Brother ish”, amidst suggestions that they may breach data protection and customer privacy obligations. [p.13.]
There were suggestions that manufacturer OpenPeak is involved in the creation of a new “smartphone for the home” from BT, although the telco indicated that much of the development in the proposed new device is being conducted internally. [p.15.]
BT signed a deal with Arqiva that will see it provide digital terrestrial television capacity for BT to broadcast Sky Sports services. The telco is appealing to the regulator to have the remainder of BSkyB’s sports channels included in mandatory wholesaling arrangements, although currently it would not have the channels to broadcast them. [p.16.]
Project Canvas was cleared by the Office of Fair Trading, which said it had no grounds to consider the activity of the initiative as it was not a merger. Canvas partners’ framing of its services in terms of an open platform showed that the lessons of the previously blocked Project Kangaroo had been learned, according to broadcasting rivals. BT is working with MIT on developments for BT Vision that could see the service become an example of “social television”. [pp.17,19.]
Nuance Communications won a contract to provide natural language call steering solutions to BT Business. [p.21.]
tw telecom, a Time Warner Cable spin-off, was named as a customer for Cisco Telepresence conferencing services using the BT Global Video Exchange platform. [p.21.]
BT GLOBAL SERVICES signed a new deal with Olympic Broadcasting Services London, to deliver broadcast and media network access for the London Games in 2012. The work is said to be in addition to that entailed in BT’s role as the event’s Official Communications Services Partner. [p.23.]
BT Onevoice , BT’s unified communications offering, was in the spotlight with the introduction of a version of the service featuring new voice solutions from the telco’s Ribbit subsidiary. Onevoice Ribbit is expected to help virtually extend the scope of internal communications networks through a private cloud. Cisco also highlighted its role as a platform provider for the international launch of the Onevoice offering. [pp.24,25.]
BT named mobile interaction service provider TynTec as a partner within its BT Global Telecom Markets portfolio, while BigFix, an IT infrastructure management specialist, is to provide Global Services with a service delivery platform for its BT MobileXpress product. [pp.23,28.]
Asia-Pacific was named as a key investment destination for BT Global Services, as it aims to return to growth. A further 300 staff could be added to BT’s regional operations as it chases market share in a growing £8bn market. BT additionally hopes to partner local firms looking to expand outside the region. BT is also expanding the availability of its Radianz hosting services for financial services customers in Singapore, in partnership with one time investment StarHub. [p.29.]
BT WHOLESALE won a contract extension to provide white label telephony and broadband services to Scottish & Southern Energy. [p.31.]
A global version of the IP Exchange offering was launched by BT Wholesale. This enables VoIP and TDM calls to be connected seamlessly and is already in use with 100 service providers in the UK. The potential for offering services to mobile operators delivering IP originated GSM text messages was flagged. [p.32.]

About BTwatch

Issue: 2010.05
Covering: May-June 2010
Published: June 2010
Next issue: July 2010

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.

BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
BTwatch provides comprehensive analysis and insight into everything relating to BT, including its Divisions -- BT Retail, BT Wholesale, BT Global Services, and BT Openreach -- and its European and wider international operations. Also covered in-depth are strategy, financials, and associates and investments (such as Tech Mahindra).
Our ‘watch' report services are repeatedly described by clients and end-users as the single most valuable source of third-party sales intelligence, and are considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more, the reports represent both tactical tool and strategic reference, providing input and even a springboard for corporate planning, reporting, and meetings.
A ‘must-have' for sales teams focused on high-value sales, maintaining strategic relationships, and managing extended sales cycles. Just one nugget, insight, or validation can pay for the service many times over.
Pricing is typically USD $4.2k / EUR 2.8k / UKP £2.5k per year for a workgroup or small/midsize account, and can be tailored to meet your specific needs and situation. Copies of individual reports are also available, priced from UKP 500 (USD $825 / EUR 560). Multiple purchasing options available, including payment cards.
Delivered electronically 10-12-plus times a year, with back issues also available, providing unparallelled reference and insight into major events, strategic initiatives, financials and KPIs.
Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7183-0111.

BTwatch, issue 2010.05 snapshot

AB — Wed, 23 Jun 2010 11:40:29 +0000

Snapshot of BTwatch, issue 2010.05. Click through for: the Executive Brief from this month’s report; an Extract from the issue; or to contact us for more information about the full 40-page issue, this industry standard monthly report service, and ongoing subscription access.

Table of Contents
Index
About Vodafonewatch

4 BT Group

4 Associates and investments
4 BT still planning Tech Mahindra sale
5 Employment
5 CWU strike threat intensifies at BT
5 Tech Mahindra
5 Tech Mahindra named Convergys partner
6 Management hard-line faces executive pay backlash
6 5,000 figure put on predicted job cuts
6 Awards and accreditations
7 Legal
7 BT settles dispute with MediaTek
7 Operations
7 NGD data centre uses fully renewable energy
7 Awards and accreditations
7 Cardiff IDC wins green award
8 Regulation
8 EC backs Ofcom plan to require BT to share fibre access
8 BT Fleet
8 IT
9 EC requires cost-based pricing restrictions
9 Suppliers
9 BT clearance of Chinese software acceptable in India
9 People
9 Society
11 Systems
11 BT looks to open source adoption
11 Sponsorship
12 BT to rollout SharePoint social networking for staff
12 Suppliers
12 BT Fleet selects National Mobile Windscreens

13 BT Retail

13 Customer service
13 Proactive customer contact reopens privacy controversy
13 Directories
13 BT cuts size of phone book…
13 …and sees value in traditional business
14 Digital Home
14 BT ties with OnLive for cloud gaming
14 Fixed-line
14 Price rises predicted for fixed‑line calls
15 BT linked to OpenPeak for new home “smartphone”
16 Television services
16 BT signs Arqiva for DTT capacity
16 BT appeals Ofcom BSkyB ruling
17 OFT clears Canvas, but TV distributors unhappy
19 BT Vision ponders internet development
20 BT Vision launches Film Club
21 BT Business
21 BT Business selects Nuance solution
21 An important element of continuing transformation
21 BT Conferencing
21 BT and Cisco partner Time Warner unit for telepresence
21 BT Business
22 BT Ireland
22 Sutherland on BT Ireland

23 BT Global Services

23 Contracts
23 BT trumpets Olympic broadcast role
23 Products and services
23 TynTec added to Global Services portfolio
24 BT pushes VoIP as Ribbit integrated into Onevoice
24 Ribbit
25 Cisco highlights Onevoice role
25 Awards and accreditations
25 Forrester recognises BT managed services
27 BT VDC launched in Brazil
27 Contact centres
28 Suppliers
28 BTGS selects BigFix platform
28 Contracts
29 BT International: Asia-Pacific
29 BT to recruit to capture growth in Asia Pacific
29 Livingston on Asia expansion doubts
29 BT International: Europe
30 BT Diamond IP
30 Interop selects BT Diamond IP
30 BT Radianz
30 BT expands Radianz in Singapore

31 BT Wholesale

31 Contracts
31 Scottish & Southern Energy signs renewed contract
31 Managed services
31 Orange linked to IPTV after BT switch
32 Products and services
32 BT launches global IP Exchange

33 Openreach

33 Fibre
33 BT commits to additional fibre investment
33 Reaction
33 Network
35 London fibre to reach 87% by Olympics
36 BT announces fibre-based broadband launches

37 Index

Index

A
Alcatel-Lucent, 5
Alvarion, 29
Analysys Mason, 33
Arqiva, 16, 17
AT&T, 5, 14
Autodesk, 14
B
BigFix, 28
Borland, 11
British Broadcasting Corporation (BBC), 17
British Paralympic Association (BPA), 11
BSkyB, 16, 17
- Sky Sports, 16
BT Group, 4, 5, 6, 7, 8, 9, 11, 12, 14, 15, 16, 17, 21, 24, 29, 31, 33
- Asia
- – Tech Mahindra, 4, 5
- BT Diamond IP, 30
- BT Fleet Partners, 8, 12
- BT Global Services, 23, 24, 25, 27, 28, 29, 32
- – BT Brazil, 27
- – BT Global Telecom Markets, 23
- – BT Global Video Exchange, 21
- – BT International, 29
- – BT Italia, 29
- – BT Onevoice, 24, 25
- – BT Radianz, 30
- – NGI, 29
- – One Source for Cisco TelePresence, 21
- – Onevoice, 24, 25
- – Onevoice Ribbit, 24
- – Radianz Proximity, 30
- – Virtual Data Centre, 27
- BT Innovate & Design
- – Ribbit, 24, 32
- BT Retail, 13, 14, 15, 16, 19, 31
- – BT Business, 21
- – bt.com, 21
- – BT Conferencing, 21
- – BT Directories, 13
- – BT Engage IT, 7
- – BT Fusion, 15
- – BT Ireland, 22
- – BT Mobile, 28
- – BT Vision, 14, 16, 19, 20
- – Digital Home, 14
- – Tariffs, 19
- – The Phone Book, 13
- BT Wholesale, 31, 32
- – IP Exchange, 32
- Executives
- – Balaam, Martin, 7
- – Benjamin, David, 13
- – Brasnett, Jonathan, 28
- – Buckley, Warren, 13
- – Croxford, Ivan, 21
- – Dooley, Michael, 30
- – Edwards, Dave, 7
- – Fitzpatrick, Brian, 31
- – Gallindo, Sérgio Paulo, 27
- – Gower, Andy, 19
- – Livingston, Ian, 6, 15, 29
- – Nicholson, Andy, 30
- – Patterson, Gavin, 14
- – Rejali, Cameron, 32
- – Ruston, Jeremy, 11
- – Scott, Peter, 12
- – Selly, Clive, 11
- – Sutherland, Graham, 22
- – Sutton, Neil, 24
- – Watson, Marc, 16, 20
- – Webb, Duncan, 12
- – Wittgreffe, John, 6
- Ex-executives
- – Moiin, Hossein, 9
- – Verwaayen, Ben, 19
- Openreach, 9, 14, 33, 35
- Strategy and Operations
- – 21CN, 9, 31
- – BT Innovate & Design, 6, 9, 11
- Telefocus, 9
C
Cardiff International Data Centre, 7
Carillion, 5
Carphone Warehouse, 17
Cisco Systems, Inc., 21, 24, 25
Communications Workers Union, 5, 6
Competition Commission, 17
Convergys Corp., 5
Cyber-Rights, 13
D
Datamonitor, 29, 32
E
European Joint Research Centre, 7
European Transport Safety Council, 8
European Union, 8
- European Commission, 7, 8, 9
F
Facebook, 12, 13
Film4OD, 20
Football Association
- Premier League, 16
Forrester, 25
France Télécom, 31
- Orange, 31
Frontline Technologies, 29
G
Google, 19
- YouTube, 13
H
Huawei Technologies, 9
I
Indian Institute of Science, 28
International Paralympic Committee (IPC)
- Paralympic Games, 23, 35
Interop Las Vegas 2010, 30
Intranet Benchmarking Forum, 8
ITN, 6
ITV, 17
J
JPMorgan Chase, 14
- JPMorgan Cazenove, 14
L
Latitude, 21
M
Mahindra Satyam, 4
Massachusetts Institute of Technology (MIT), 19
Maverick Capital, 14
MediaTek, 7
Microsoft, 5, 12
- Windows 7, 12
MIT, 19
N
National Informatics Centre (India), 28
NetApp, Inc. (Network Appliance), 27
Next Generation Data Limited, 7
Next Generation Data Limited
- NGD Europe, 7
Nokia, 9
Nokia Siemens Networks, 9
Nuance Communications, 21
O
Ofcom, 8, 9, 16
- LLU, 8
- Price controls, 8
- Wholesale line rental, 31
Office of Fair Trading, 17
Olympic Games, 11, 35
- London 2012, 23, 35
- Olympic Broadcasting Services London Ltd, 23
OnLive, 14
Ontology Systems, 6
OpenPeak, 15
Ovum, 33
P
Phorm, Inc. (121Media), 13
Picturebox, 20
Privacy International, 13
S
Scottish & Southern Energy (SSE), 31
Siemens, 9
SmartestEnergy, 7
Sony, 20
- Sony Pictures Television, 20
StarHub, 30
T
Tech Mahindra, 4, 5
- Tech Mahindra Mahindra Satyam, 4
Technology
- 3G, 15
- Bluetooth, 15
- Broadband, 8, 14, 16, 19, 31, 33, 35, 36
- – ADSL, 29
- – ADSL2+, 35
- Ethernet, 21
- Fibre, 8, 9, 33, 35, 36
- – FTTP, 35
- GSM, 32
- HD, 35
- IP, 25, 30, 32
- IPTV, 17, 31
- LLU, 8
- MPLS, 32
- Project Canvas (BBC, BT, ITV, FIVE), 17, 31
- Project Kangaroo (BBC, ITV), 17
- SMS, 23
- Unified communications (UC), 24, 25
- VoD, 17, 19, 20
- VoIP, 24, 25, 32
- VPN, 24
- VULA (virtual unbundled loop access), 8, 9
- Wi-Fi, 15, 19
- WiMAX, 29
Telefónica, 15
- Telefónica Europe (O2), 15
- – UK, 15
telent plc (Marconi), 5
TM Forum, 6
Top-Up TV, 16
Twitter, 13
tw telecom, 21
TynTec, 23
V
Virgin Media, 16, 17, 22, 33
W
Warner Bros, 14, 20
Z
ZTE, 9

About BTwatch

Issue: 2010.05
Covering: May-June 2010
Published: June 2010
Next issue: July 2010

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.

BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
BTwatch provides comprehensive analysis and insight into everything relating to BT, including its Divisions -- BT Retail, BT Wholesale, BT Global Services, and BT Openreach -- and its European and wider international operations. Also covered in-depth are strategy, financials, and associates and investments (such as Tech Mahindra).
Our ‘watch' report services are repeatedly described by clients and end-users as the single most valuable source of third-party sales intelligence, and are considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more, the reports represent both tactical tool and strategic reference, providing input and even a springboard for corporate planning, reporting, and meetings.
A ‘must-have' for sales teams focused on high-value sales, maintaining strategic relationships, and managing extended sales cycles. Just one nugget, insight, or validation can pay for the service many times over.
Pricing is typically USD $4.2k / EUR 2.8k / UKP £2.5k per year for a workgroup or small/midsize account, and can be tailored to meet your specific needs and situation. Copies of individual reports are also available, priced from UKP 500 (USD $825 / EUR 560). Multiple purchasing options available, including payment cards.
Delivered electronically 10-12-plus times a year, with back issues also available, providing unparallelled reference and insight into major events, strategic initiatives, financials and KPIs.
Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7183-0111.

EC backs Ofcom plan to require BT to share fibre access

AB — Wed, 23 Jun 2010 11:40:27 +0000

Extract from BTwatch, issue 2010.05. Click through for: the Executive Brief from this month’s report; the Issue Snapshot; or to contact us for more information about the full 40-page issue, this industry standard monthly report service, and ongoing subscription access.

EC backs Ofcom plan to require BT to share fibre access

The European Commission (EC) announced that it approved proposals from Ofcom to mandate virtual unbundling of BT’s fibre network (BTwatch, 2010.03), but has called on the regulator to move to full unbundling as soon as it is technically and economically possible. The European body looks to have overruled Ofcom on plans to allow BT to offer unbundled fibre services free of regulatory price controls, however.

Under Ofcom’s current proposals, BT will be obliged to provide “virtual” access to its optical fibre infrastructure to alternative operators though a virtual unbundled loop access (VULA) product. This is intended to offer rival telecoms firms a connection to the BT network, similar to that currently available through local loop unbundling (LLU). Ofcom said that the virtual solution allows LLU-like levels of product differentiation and innovation similar and maintains competition on UK broadband markets as the roll-out of next generation access networks gathers pace.

However, the EC also argues that full unbundling is likely to encourage communication providers to rollout fibre networks faster than BT. It was reported that the exception to allow virtual unbundling will last four years. However, Ofcom is already proposing that deeper access to the BT infrastructure, which would enable competitors to build their own fibre networks, must be made available by BT within months of a regulatory final determination on fibre access, with mid-2011 currently looking likely to be the deadline for its introduction.

Neelie Kroes, the European telecom commissioner, said that, given the “special circumstances” she supported the initial virtual structure, but emphasised that that virtual unbundling is only a temporary measure.

“In this specific instance, virtual unbundling seems the best option to safeguard competition and enable consumers to benefit from a wider range of services provided over next-generation fibre infrastructure…This interim solution is not a long-term alternative to physical fibre unbundling, which should be imposed as soon as possible.”
– Kroes.

BT, which has been moving towards virtual unbundling on its own, and committing to opening up its ducts and offering investment partnerships to rivals (BTwatch, 2010.02), said that it believes the current virtual unbundling model is suited to the requirement of the market.

“Our view is that the current Virtual Unbundled Local Access product meets the needs of the industry, but we will obviously work closely with Ofcom going forward.”
– BT statement.

EC requires cost-based pricing restrictions

When it had proposed the introduction of VULA, Ofcom had indicated it would not regulate the pricing of the product by Openreach, beyond requiring long-running equivalence of inputs measures are in place (which entails wholesale customers having access to exactly the same products, at the same prices and using the same systems and processes, that are available to BT). The EC has said it disagrees with this approach, however, and is calling for cost-oriented pricing, which would mean that Openreach prices will be regulated with set levels of reasonable return decided based on specific factors that contribute towards the costs of rolling out the service. The EC said that this would “drive both competition and investment in [next generation accesses]“.

[Further reference:
Commission accepts UK regulator proposal to mandate virtual unbundling of BT's fibre networks but requests full unbundling as soon as possible -- European Commission, 1 June 2010;
BT will have to share last mile fiber with competitors -- FierceTelecom, 3 June 2010;
EC calls on BT to open fibre networks to rivals -- v3.co.uk, 2 June 2010.]

About BTwatch

Issue: 2010.05
Covering: May-June 2010
Published: June 2010
Next issue: July 2010

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.

BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
BTwatch provides comprehensive analysis and insight into everything relating to BT, including its Divisions -- BT Retail, BT Wholesale, BT Global Services, and BT Openreach -- and its European and wider international operations. Also covered in-depth are strategy, financials, and associates and investments (such as Tech Mahindra).
Our ‘watch' report services are repeatedly described by clients and end-users as the single most valuable source of third-party sales intelligence, and are considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more, the reports represent both tactical tool and strategic reference, providing input and even a springboard for corporate planning, reporting, and meetings.
A ‘must-have' for sales teams focused on high-value sales, maintaining strategic relationships, and managing extended sales cycles. Just one nugget, insight, or validation can pay for the service many times over.
Pricing is typically USD $4.2k / EUR 2.8k / UKP £2.5k per year for a workgroup or small/midsize account, and can be tailored to meet your specific needs and situation. Copies of individual reports are also available, priced from UKP 500 (USD $825 / EUR 560). Multiple purchasing options available, including payment cards.
Delivered electronically 10-12-plus times a year, with back issues also available, providing unparallelled reference and insight into major events, strategic initiatives, financials and KPIs.
Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7183-0111.

BTwatch, issue 2009.08 snapshot

AB — Tue, 20 Oct 2009 04:00:36 +0000

Issue: 2009.08
Covering: mid-September to mid-October 2009
Published: October 2009
Next issue: November 2009

Mapping the activity and strategy of the UK’s largest telco. A unique monthly report for the industry.

Executive Brief
Extract
Table of Contents
About BTwatch
Index

EXECUTIVE BRIEF

MAIN STORIES: BT is rumoured to be discussing at board-level a bid to acquire broadcaster ITV. While it could be just a rumour sparked by BT Non Executive Director Tony Ball being linked to the Chief Executive role at ITV, BTwatch considers there could be logic in a tie-up, if BT is willing to spin-off its Retail consumer business into a new entity alongside the television assets, to create an unshackled media player, in the hope of replicating the striking success of BT’s last spin-off, O2. [p.3.]
BT announced it is increasing its target for the number of sites to be passed by its fibre-to-the-premises network by the end of 2012, from one million to 2.5 million. The increase, which does not affect the telco’s overall target of having ten million sites with access to some form of fibre network, appears to have been driven by a need to reconsider FTTP testing in the wake of the collapse of the construction industry and, BTwatch suspects, due to communication provider customers of both Openreach and BT Wholesale showing significantly more ambition than BT itself. [pp.30-34,36.]
Ofcom is lifting regulatory restrictions on BT’s pricing of narrowband telephony products, opening the door for BT to more aggressively price and market bundles of previously price controlled fixed-line services to consumer and business customers. While BT promised a “price war” BTwatch suspects the relaxation of regulation will principally benefit defensive plays. [pp.10-11.]
BT Wholesale announced a five-year managed services contract to provide the fixed-line element of a converged communications solution for SME customers, to be launched by Telefónica O2 UK. BT will also design, manage, and operate a dedicated order portal and service management centre for O2 sales teams. [p.27.]
BT GROUP: BT saw its credit rating upgraded by Credit Suisse on expectations of further cost-cutting and a mid term revenue growth. The broker suggested that BT may ultimately have to consider the fairly radical step of compulsory redundancies. [p.4.]
STRATEGY & OPERATIONS: BT signed an MoU for a strategic cooperation with the School of Economics and Management at Tsinghua University in Beijing. During a forum in Paris, BT networks senior executive George Nazi reiterated BT’s view that long-term commercial models where service providers pay for quality of service on network infrastructure are essential. [pp.6,7.]
A business intelligence suite from JasperSoft is being used to support BT’s Statistical Data Warehouse, which is managed by Unisys. [p.7.]
BT RETAIL: BT Television and Online services Chief Executive Marc Watson conceded — inevitably — that BT would not reach its target of more than two million BT Vision customers by the end of 2010, from its current base of fewer than 450,000. The admission was exploited as an opportunity to have another dig at BSkyB prices for its premium content, but there was also recognition that BT has failed to effectively demonstrate the value of the service to consumers. [pp.8-9.]
An on-demand shopping channel was launched on BT Vision , offering a range of products in different shopping categories, which can be accessed and ordered around the clock. [p.9.]
BT Retail continued to reject calls for alleged illegal file sharers to have their internet services withdrawn, in the face of accusations from the British Phonographic Industry that it is failing to act against lawbreakers to protect its own profits. BT described the action demanded as an abuse of legal rights, impractical, and disruptive to legitimate use of peer-to-peer services, as the telco attempts to rebuild its privacy credentials following the Phorm debacle. BT also teamed with the Trading Standards Institute to call for stronger action on “slamming“, shortly after Ofcom unveiled proposals for a tougher code of practice. [pp.13,16.]
BT Business continued to build its range of services in the search sphere, with the launch of BT SearchSmart, a search engine marketing service for SMEs operated in conjunction with search agent Latitude. BT’s support for the supposed “21st century business card” .tel domain was highlighted by Telnic. [pp.14,15.]
BT GLOBAL SERVICES: Ex-Getronics executive Rogier Bronsgeest was named as President of BT Global Services’ Customer Service Operations, and will also sit on the BT Operate Executive Board. [p.17.]
Analysts Ovum placed BT Global Services at the top of its Enterprise Strategy Scorecard , praising the division for its customer service and product innovation. However, rivals were close on BT’s heels. [pp.18-19.]
BT won a two-year contract to provide IT helpdesk and support services to the Manpower employment services business, in Australia and New Zealand. [p.19.]
Liverpool Direct Limited, the BT public private partnership with Liverpool Council, was criticised in a report that suggested the finances of the venture are still unclear, eight years after its launch. [p.20.]
BT is said to be in talks with Indian energy company PowerGrid, with a view to using its fibre-optic network as an alternative to traditional network suppliers, for its multinational corporation customers on the sub-continent. [p.21.]
Local operator EXATEL was named a BT Alliance member in Poland. BT highlighted its 20 years of operations in the Spanish market, which has seen the local BT unit grow to report annual revenue of EUR500m, tens of thousands of business customers, and a position as the main challenger in the country’s enterprise data transmission market. BT also indicated it is seeing continuing success in its biggest market outside the UK — Italy — with significant contracts with BNP Paribas and Fiat recently renewed. [pp.21,22.]
BT Benelux launched a Carbon Impact Assessment service that considers the contribution of networked IT services to carbon emissions, and offers practical solutions to reduce energy consumption. New business-continuity solutions were also launched over BT’s 21CN global platform. [pp.24,26.]
eIQnetworks was selected to provide security monitoring and reposting services for BT iNet’s LAN customers. Storage solutions provider NetApp trumpeted its role in the new BT Virtual Data Centre service, intended to act as a single hosted platform for corporate customers’ IT resources. [pp.24,25.]
BT WHOLESALE: BT Wholesale announced a new rollout target for its ADSL2+ network, which will see it extend its national footprint from an expected 55% in spring 2010, to 75%-coverage by spring 2011. The new goal will see BT reach in 18 months’ time where many of its competitors are now, in terms of rollout. BT Wholesale is also planning price cuts to encourage greater uptake of upgraded broadband services. [p.28.]
OPENREACH: Openreach is extending trials of its Broadband Enabling Technology , which is a fixed-line solution delivering stable 1Mbps broadband speeds at distances of up to 12km from an exchange, and is believed to be in talks with the Scottish government on upgrading rural exchanges. [pp.29-30.]
The ongoing dispute between Openreach and its engineers over working hours saw reports that the access services division is to call in contract workers after employees rejected proposals agreed upon by BT and the Communication Workers Union. [p.36.]

EXTRACT

BT linked to ITV bid

There were rumours that BT Group is considering a bid for broadcaster ITV. Reports stemmed from a Sunday Express newspaper article citing unnamed insiders as suggesting the possibility is being discussed at board level at BT.

While BT remains in a weak position financially, the prospect of the company raising funds has been raised, although getting its house in order is more likely the priority rather than an acquisition (see separate report). The presence of BSkyB as a shareholder could also make a BT bid unlikely to be successful.

The speculation regarding a BT bid for the broadcaster, which has a market capitalisation of around £2bn, could have been fuelled by the presence of Tony Ball as a BT Non-Executive Board member. Ball, a former BSkyB Chief Executive, has been linked with the vacant Chief Executive role at ITV.

Tony Ball had been thought to be close to signing a contract to become ITV Chief Executive, but negotiations apparently stalled on terms and conditions.

Could a deal be beneficial to BT as a group?

While BT, like many telcos, has a questionable record in managing content, the acquisition could put the company on a stronger footing to compete with BSkyB and Virgin Media in UK consumer markets through control of ITV content.

Rather than an acquisition that would see ITV become part of the BT Group, another possible scenario, in BTwatch’s view, could be the creation of a new entity merging the consumer element of BT Retail and ITV to form a new, retail- and content-focused UK converged communications player, with its own independent management and focus.

The spinout of O2 Group during BT’s last financial crisis demonstrated what a sluggish under-performing consumer business could do when liberated from the demands of being part of a regulated incumbent; and it could be that BT management are pondering whether the same trick can be repeated. This would leave the stripped back BT to focus on access services through Openreach, managed services through BT Wholesale, and developing a viable long-term IT services and international networks business through the troubled Global Services unit.

While regulators and the government might even welcome such a move, in propping up ITV and creating a more viable national champion, pension liabilities could prove a huge hurdle.

[Further reference: BT considering bid for broadcaster ITV - report -- DM Europe, 8 October 2009; BT rumoured to be reviewing the option of buying ITV -- SimplifyDigital.co.uk, 5 October 2009; BT targets ITV takeover -- Sunday Express, 4 October 2009; Talks stall over top job at ITV -- Financial Times, 10 September 2009.]

3 BT Group

3 Acquisitions and disposals
3 BT linked to ITV bid
3 Could a deal be beneficial to BT as a group?
4 City reports
4 Community
4 BT awards laptops to community projects
4 “…out of context…”
4 Rake on Ian Livingston and BT turnaround
4 Brokers’ reports
4 Credit Suisse upgrades BT
5 Regions
5 New South-West region head named
5 Tech Mahindra
5 Environment
5 BT holds exhibitions for “Wind of Change” project
6 Appointments
6 Executives
6 Fibre
6 Strategy and operations
6 Research
6 BT signs MoU with Tsinghua University
6 Ribbit
6 Ribbit to develop for Google Wave
7 Suppliers
7 BT suppliers feature in TechTrack 100
7 Strategy
7 BT opposes net neutrality
7 BT and Unisys select Jaspersoft

8 BT Retail

8 Advertising
8 Appointments
8 BT Television Services
8 Watson accepts BT Vision targets unreachable
8 BT accepts the inevitable
9 Broadband
9 BT Government
9 Echoes of BT Fusion marketing woes
9 BT Vision launches shopping channel
10 Pricing and tariffs
10 Ofcom narrowband ruling lifts ban on BT bundles
11 Community
11 Rivals unhappy with ruling, observers expect better value
11 BT promises “price war”, BTwatch yet to be convinced
11 Ofcom to conduct further work in unresolved areas
13 Competitors
13 Virgin Media considers VDSL2 rollout
13 Privacy
13 BT criticises file-sharing bans again, as BPI slams BT
13 BT pursuing the sensible PR approach this time
14 BT Business
14 BT Business launches SearchSmart
15 BT Business launches “Business Pulse” survey
15 Telnic highlights BT Business .tel support
15 BT Ireland
15 BT criticises Eircom court action
16 Regulatory
16 BT calls on Ofcom to tackle “slamming”

17 BT Global Services

17 Appointments
17 BTGS appoints Bronsgeest to customer service role
18 BT Global Financial Services
18 ELX links to Radianz infrastructure
18 BT closer to closing RadianzNet
18 Awards and accreditations
18 Ovum rates BTGS as “global leader of global leaders”
19 BT Health
19 Report not as rosy as it may first appear…
19 Contracts
19 BT wins two-year Manpower contract
20 Public sector contracts
20 LDL joint venture under fire
21 BT International: Europe
21 Virtual data centres planned for Italy
21 BT International: Asia
21 BT in talks with PowerGrid for broadband capacity
21 EXATEL named BT Alliance partner
22 BT highlights 20 years in Spanish market
22 BT renewing contracts in Italy
24 BT Benelux launches Carbon Impact Assessment service
24 BT iNet
24 BT iNet Selects eIQnetworks for security monitoring
25 Partners
25 NetApp trumpets virtual data centre role
26 Products and services
26 BT offers new business-continuity services

27 BT Wholesale

27 Managed services
27 Contracts
27 BT wins O2 contract for launch of SME fixed-line service
28 Products and services
28 BT to extend ADSL2+ footprint to 75% of country

29 Openreach

29 Customers
29 Union Street heralds 100th WLR3 order
29 Broadband
29 Openreach launches extended BET pilot
30 Fibre
30 TalkTalk joins fibre trials
30 murphx trumpets fibre trial role
30 BT in talks with Scottish authorities on exchange upgrades
30 BT accelerates fibre-to-the-premises plans
32 Suppliers
32 Carillion confirms BT contract
32 Lower costs enabling the rollout…
32 …but public funds still important
33 BT Wholesale customers driving demand?
33 Analyst reaction
34 Openreach announces FTTP trial sites
34 Communications provider private investment pondered
35 BT sets out FTTC timeline
36 Openreach provides FTTP pricing details
36 Employment
36 Hours dispute sees Openreach consider contract staff
37 OTA2
37 OTA2 updates for September 2009

38 Index

ABOUT BTWATCH

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.
BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
Our ‘watch’ titles are repeatedly described by clients and end-users as the single most valuable source of third-party intelligence. Considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more. Both tactical tool and strategic reference. An invaluable reference, input and even springboard for corporate planning, reporting, and meetings.
A ‘must-have’ for sales teams focused on high-value sales, maintaining strategic relationships, and managing extended sales cycles. Just one nugget, insight, or validation can pay for the service many times over.
Pricing typically USD $4k / EUR EUR3k / UKP £2.5k per year for a workgroup or small/midsize account, tailored to meet your needs and situation. Delivered electronically 10-12 times a year. Also available are back issues, which provide unparalleled reference and insight into major events, strategic initiatives, financials and KPIs.
Copies of individual reports are available, priced from UKP 200 plus any applicable sales taxes (or around USD $300 / EUR EUR230, governed by prevalent foreign exchange rates). Contact sales@marketmettle.com to place an order or find out more. Multiple purchasing options available, including payment cards.
Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7083-0055.
Below is a free taster from issue 2009.08 (September-October 2009), including an Executive Brief, Extract, Table of Contents and Index, giving a valuable snapshot of the full report.

INDEX

A
ACCA, 15
Advertising Standards Authority, 8
AT&T, 19
B
Baan Company, 17
Bharat Sanchar Nigam Ltd (BSNL), 21
Bharti Group
- Bharti Airtel, 21
BNP Paribas, 22
British Broadcasting Corporation (BBC), 8, 13
British Chambers of Commerce, 15
British Phonographic Industry, 13
BSkyB, 3, 8, 9, 10, 11
BT Group, 3, 4, 5, 6, 7, 8, 10, 19, 30
- Asia
- Tech Mahindra, 5
- BT Community Connections, 4
- BT Global Services, 3, 4, 6, 17, 18, 19, 20, 21, 22, 24, 25, 26
- BT Asia Pacific, 19
- BT Benelux, 24
- BT Frontline, 19
- BT Global Financial Services, 18
- BT Health, 19
- BT iNet, 24
- BT International, 21
- BT Italia, 21
- BT Radianz, 18
- BT Spain, 22
- Liverpool Direct Limited, 20
- Next Generation Contact Centre, 26
- RadianzNet, 18
- Spain, 22
- Virtual Data Centre, 25
- BT Innovation & Design
- Ribbit, 6
- BT Retail, 3, 8, 9, 10, 11, 13, 16, 35
- 1571, 7
- BT Business, 8, 14, 15, 35
- BT Fusion, 9
- BT Government, 9
- BT Ireland, 11, 15
- BT Local Business, 14
- BT SearchSmart, 14
- BT Tradespace, 15
- BT Vision, 8, 9
- Business Pulse, 15
- Terminate the Rate, 10
- BT Wholesale, 3, 5, 7, 27, 28, 29, 33, 35, 36, 37
- Wholesale Broadband Connect, 28
- Directors
- Ball, Tony, 3
- Rake, Sir Michael, 4
- Executives
- Alvarez, Luis, 22
- Bronsgeest, Rogier, 17
- Burger, Bas, 24
- Campbell, David, 34
- Cavestany Vallejo, Jacinto, 22
- Clark, Chris, 15
- Davis, Sally, 27
- Gayle, Andre, 7
- Karlowski, Pawel, 21
- Lalani, Hanif, 17, 18
- Livingston, Ian, 4
- Martin, Tom, 5
- Murphy, Bill, 14, 15, 35
- Nazi, George, 7
- Parker, Craig, 25
- Patterson, Gavin, 10
- Petter, John, 13, 16
- Ramji, Al-Noor, 6
- Rejali, Cameron, 28
- Reynolds, Jon, 5
- Robertson, Steve, 30, 32
- Sciolla, Corrado, 21
- Small, John, 29, 32
- Steed, Jacqueline, 6
- Sutcliffe, Graham, 24
- Sutton, Neil, 26
- Taylor, Kevin, 19
- Watson, Marc, 8
- Williamson, George, 32, 34
- Ex-executives
- Bross, Matt, 6
- Martinet, Mark, 8
- Scleparis, Stratis, 8
- Openreach, 3, 13, 29, 30, 32, 33, 34, 35, 36, 37
- Broadband Enabling Technology (BET), 29
- Ebbsfleet, 34
- ISDN2, 11, 29
- ISDN30, 11, 29
- WLR3, 29
- Strategy and Operations, 6
- 21CN, 6, 7, 26, 36
- BT Innovation & Design, 6, 7
- BT Operate, 17
Business Link, 15
C
Carillion, 32
Carphone Warehouse, 10, 11, 30
- TalkTalk, 11, 30
Cisco Systems, Inc., 9
Commission for Communications Regulation (ComReg, Ireland), 15
Communications Workers Union, 36
Core Communications, 7
Credit Suisse, 4
D
Datamonitor, 27
Design Council, 15
Deutsche Telekom
- T-Mobile, 7
Digital Britain, 29, 32
DTV Services
- Freeview, 8, 9
E
eIQnetworks, 24
Eircom, 15
ELX Futures, 18
Entanet, 7
Environment
- Wind turbines, 5
Epsilon, 7
Etisalat, 5
EXATEL, 21
F
Fiat SpA, 22
Football Association
- Premier League, 8
France Télécom
- Orange, 7, 19
- Orange Business Services, 19
G
Getronics NV, 17
Google, 6, 14
- AdWords, 14
Growing Business, 15
H
High Court, 15
Huawei Technologies, 6
Hutchison Whampoa, 10
I
IBM, 17
International Electrotechnical Commission (IEC)
- Broadband World Forum, 7, 32
ITV, 3, 8
J
Jaspersoft, 7
K
Kingston Communications (KCOM), 11, 27
L
Latitude, 14
Level 3 Communications, 8
Liverpool Council, 20
M
Manpower, 19
Microsoft, 25
Morgan Stanley, 33
murphx Innovative Solutions Ltd., 30
N
NatWest, 15
NetApp, Inc. (Network Appliance), 25
NGCC, 26
O
Ofcom, 4, 8, 10, 11, 16, 34
- Carrier pre-selection, 37
- LLU, 15
- Richards, Ed, 10
- Wholesale line rental, 29
Office of the Telecommunications Adjudicator, 37
- OTA2, 37
Olympic Games, 15
Ovum, 11, 18, 19
P
Phorm, Inc. (121Media), 8, 13
Phyworks, 7
PowerGrid, 21
R
Rational Software, 17
Reliance Communications, 21
Royal KPN, 17
Rural Coalition, 6
S
SamKnows, 35
Saudi Telecom, 5
Setanta, 8
- Setanta Sport, 8
South Tyneside Council, 9
T
Tech Mahindra, 5
Technology
- ADSL2+, 28, 33
- Broadband, 4, 5, 6, 7, 8, 9, 10, 11, 15, 16, 21, 27, 28, 29, 30, 32, 33, 34, 35, 36
- CRM, 26
- Fibre, 7, 13, 21, 30, 32, 33, 34, 35, 36
- FTTP, 30, 32, 33, 34, 36
- IP, 9, 30
- ISDN, 10
- MPLS, 21
- Project Canvas (BBC, BT, ITV, FIVE), 8
- SMS, 7
- SOA, 6
- VDSL2, 13
- VoD, 9
- VoIP, 30
TechTrack 100, 7
Telefónica, 7, 22, 27, 33
- Telefónica Europe (O2), 3, 7, 27, 33, 35
- Mobile Data
- Revolution, 6
- UK, 27, 33
telent plc (Marconi), 32
Telnic, 15
Tesco, 14
The Royal College of Nursing, 10
Trading Standards Institute, 16
Tsinghua University, 6
U
Union Street Technologies, 29
Unisys, 7, 17
Unite, 10
V
Verizon Communications, 19
Virgin Media, 8, 9, 13, 30
Vodafone, 6, 7, 27, 33
Vtesse Networks, 13
W
Worldwide Group, 7
Z
Zeus Technology, 7

BTwatch, issue 2009.07 snapshot

AB — Mon, 14 Sep 2009 04:30:56 +0000

MAIN STORIES: Tim Whitley, BT Corporate Strategy Director, discussed the prospects for Digital Britain and BT’s fibre plans. He indicated that BT is confident of winning the NGN battle with Virgin Media due to the potential of apparently superior upload speeds promised by BT’s customised VDSL technology. Whether government funds will be available to spread the reach of fibre is uncertain after reports that the government’s proposed levy could be postponed, or dropped altogether. [pp.8-10.]

Royston Hoggarth, Head of BT Global Services UK, is to leave the post after less than one year, to be replaced by Mark Quartermaine. It appears to BTwatch that Hoggarth and BT were merely marking time over the past year as the François Barrault-made appointment always appeared a mismatch. [p.28.]

BT Wholesale won a managed services contract with Vodafone UK that will enable the cellco to launch unified communications solutions for the SME sector. The deal, which builds on existing agreements between Vodafone and BT Wholesale, suggests continued success for the BT division’s managed services strategy, but could be bad news for the BT Business retail operation as competition in its sector intensifies. [p.33.]

BT Wholesale announced the introduction of Wholesale Broadband Managed Connect over IPstream Connect , a new offering that will enable its ISP customers to use a single backhaul link to deliver national broadband services based on a combination of legacy, ADSL2+, and fibre offerings from BT, which could accelerate adoption of BT’s next-generation services. [p.34.]

Carillion was awarded a £1bn networks installation and maintenance contract by Openreach. The construction and facilities management company will work on the contract with technology partner Telent, the company that emerged from the wreckage of Marconi. [pp.39-40.]

Issue: 2009.07
Covering: early-August to early-September 2009
Published: September 2009
Next issue: October 2009

Mapping the activity and strategy of the UK’s largest telco. A unique monthly report for the industry.

About BTwatch
Executive Brief
Extract
Table of Contents
Index

ABOUT BTWATCH

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.
BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
Our ‘watch’ titles are repeatedly described by clients and end-users as the single most valuable source of third-party intelligence. Considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more. Both tactical tool and strategic reference. An invaluable reference, input and even springboard for corporate planning, reporting, and meetings.
A ‘must-have’ for sales teams focused on high-value sales, maintaining strategic relationships, and managing extended sales cycles. Just one nugget, insight, or validation can pay for the service many times over.
Pricing typically USD $4k / EUR EUR3k / UKP £2.5k per year for a workgroup or small/midsize account, tailored to meet your needs and situation. Delivered electronically 10-12 times a year. Also available are back issues, which provide unparalleled reference and insight into major events, strategic initiatives, financials and KPIs.
Copies of individual reports are available, priced from UKP 200 plus any applicable sales taxes (or around USD $300 / EUR EUR230, governed by prevalent foreign exchange rates). Contact sales@marketmettle.com to place an order or find out more. Multiple purchasing options available, including payment cards.
Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7083-0055.
Below is a free taster from issue 2009.07 (August/September 2009), including an Executive Brief, Extract, Table of Contents and Index, giving a valuable snapshot of the full report.

EXECUTIVE BRIEF

BT GROUP: BT confirmed it is closing its graduate recruitment scheme from next year, with no clear indication of when it will return. It was noted that two of BT’s current board members are alumni of the programme. [p.3.]

BT is offering a new payment option to its pensioners that features higher upfront payments, but is not linked to inflation. The company defended its Pension Scheme as a valuable tool in keeping its skills base flexible. There were rumours that BT may sell off part of its pension fund in order to help cap its enormous liabilities in the area. [p.4.]

Regulator Ofcom is considering the future of next-generation networks in the UK, in light of BT scaling back and adapting its plans for 21CN in favour of a fibre rollout. BT’s new approach has meant new regulation may not be needed so urgently, but raises some uncertainty for communications providers and consumers. [p.5.]

STATEGY & OPERATIONS: BT announced that Kevin Marks, a former Google executive, is to join the company to develop web services and work with BT’s Ribbit business. [p.7.]

BT was critical of more draconian proposals from the new Digital Britain minister that would see customers who file-sharing illegally having their broadband service cut. [p.10.]

RR Donnelly was awarded a contract worth “hundreds of millions of dollars” to provide customer communications solutions for BT Group. [p.11.]

Computacenter announced that some of the work previously involved in its ongoing support contract with BT was to be returned in-house. BT suppliers TranSwitch and Virtusa said they were continuing to suffer, as BT restricts spending and 21CN work, but were confident investment would see improvements in 2010. [pp.11-12.]

BT RETAIL: BT Retail replaced Yahoo! with Google for search services for its BT Total Broadband offering, although it is to maintain its relationship with Yahoo! on email and content until 2011. There was some surprise that Microsoft’s Bing hadn’t picked up the deal. BT Business also developed its relationship with Google, becoming a reseller of Google AdWords to support its digital marketing portfolio for SMEs. [pp.13,23.]

As BT defended itself against a report from Ofcom-endorsed price-comparison website Simplify Digital, which questioned the value-for-money of BT’s broadband offering, the telco once again promoted its up-to-20Mbps broadband service, and the BT Accelerator interstitial plate. However, there were also claims that upgrading to the ADSL2+-based service could actually slow down access speeds for some customers. [pp.14-15.]

BT Vision launched a Bollywood content channel, and began a promotion offering a free Vision+ set-top box for customers taking content bundle subscriptions. Availability of ESPN Sports , which took over many of the sports rights held by insolvent Setanta, was confirmed on BT Vision. There were reports of BT discussing a subscription music download service with major record companies. [pp.16,18.]

The press reported that a row between BT and the Communications Workers Union was on the horizon over potentially revised working conditions in relation to jobs returning to the UK from India. BT called the press reports “incorrect and sensational” . [p.20.]

BT Openzone is partnering Wicoms, a network provider for the leisure industry, to provide Wi-Fi access at UK holiday sites. BT now claims more than half a million Wi-Fi hotpots across the UK and Ireland, and is seemingly making good progress towards a target of one million by the end of 2009. Whether the Wi-Fi network, probably largely comprising free BT FON users and BT Business Hubs with default public access channels, is actually making any money is unclear. [p.21.]

BT accused former mobile unit O2 UK of scaremongering over its claims of price rises that would accompany cuts in mobile termination rates, as part of the ongoing Terminate the Rate campaign. [p.22.]

BT subsidiary PlusNet announced a new range of voice and broadband services for SME customers. [p.27.]

BT GLOBAL SERVICES: Siemens Enterprise Communications awarded BT a contract to deliver and operate an international MPLS-based data network linking over 230 locations in 45 countries. BT highlighted the inclusion of its MobileXpress remote-working solution in the deal. BT Global Services also announced a two-year extension to its contract with Airbus in the UK to provide and manage a securely encrypted WAN. [p.29.]

Norfolk County Council awarded BT a £33m contract to provide data and voice services to 20,000 employees located at more than 1,000 sites, and again highlighted the MobileXpress component of the deal. BT is also to supply and manage an internet exchange covering the Council’s schools in a £7m deal, with Bluecoat Systems providing filtering solutions. [p.30.]

BT highlighted Cisco certification awards for several of its country units, with BT Australasia and BT Brazil securing Cisco Gold certification, BT Argentina and BT Mexico Silver, and several South American units achieving certification for unified communications, and routing and switching. [pp.31-32.]

BT announced that multilateral-trading platform operator Chi-X is to use BT Radianz Ultra Access to connect to investment firms in the City of London and clearing house LCH. Clearnet is also extending its Radianz deployment. [p.32.]

OPENREACH: David Campbell, Openreach’s MD for Next Generation Access, expressed confidence that demand for fibre was evident in the market, and said the division was gaining valuable insights into delivery of fibre-to-the-home through its Ebbsfleet pilot. [p.35.]

The FTTC pilot programme reached Glasgow ahead of schedule, in August, which BT attributed to efforts of Openreach, without mentioning the need to extend the pilot after setbacks in London tests. [p.36.]

The OTA2 announced that more than six million lines in the UK were now unbundled, with Wholesale Line Rental keeping pace. Progress is also being made on migration to WLR3 from WLR2, and on a product development roadmap from Openreach that gives communications providers a clearer view of the future market. [p.37.]

Adva Optical won a contract to provide its FSP 150 Ethernet product to support Openreach’s Ethernet Access Direct services. [p.41.]

EXTRACT

SUPPLIERS

BT awards RR Donnelley multi-million pound comms deal

Global integrated communications and print solutions provider RR Donnelley & Sons announced it had won a multi-year contract from BT Group to enhance the telco’s customer communication abilities, said to be worth “several hundred million dollars”.

The deal includes data processing, printing, fulfilment, and postal optimisation for all customer communications including bills, letters, and statements. The agreement also covers RR Donnelley’s colour “TransPromo” capabilities, multichannel delivery, and enhanced personalisation. The company will deal with the physical delivery of BT communications to Royal Mail regional distribution centres.

” Individualised communications are a vital component of our relationship with our customers. We look forward to leveraging RR. Donnelley’s process management expertise, their comprehensive experience, and the considerable investment they are making in new variable-colour printing capabilities, to improve the efficiency and effectiveness of our customer communications. ”
– Ian Duerden, Director of Billing, BT Retail.

” We are helping BT to significantly reduce costs, and also to leverage the power of TransPromo, particularly through the use of full-colour printing. This will be delivered through the unique technology platform that we have built precisely to provide these kinds of innovative solutions. We believe that this programme will place BT at the vanguard of TransPromotional communications in the UK. ”
– Mike Gordon, Managing Director of RR Donnelley’s Global Document Solutions.

The contract will be carried out by Donnelley’s Global Document Solutions arm in the UK.

In 2006, BT awarded RR Donnelley’s UK subsidiary Astron a £59m-extension to its existing document distribution contract with BT (BTwatch, 2006.06).

[Further reference: RR Donnelley awarded new multi-year contract by British Telecom -- RR Donnelly, 12 August 2009; RR Donnelley gets another big order -- Post Crescent, 15 August 2009; RR Donnelley awarded ‘multi-year' deal for BT -- Printweek, 21 August 2009.]

Computacenter announce cuts in BT contract

Following its recent announcement of an extension to its end-user support contract with BT Group (BTwatch, 2009.06), Computacenter updated on expected changes of details of the deal.

Two amendments of significance were flagged by the company, the first being the transfer of some of the work covered by the existing contract back to BT. Computacenter said that work equating to around 20% of the UK contract value would be returned to BT, as would corresponding staff. Secondly, no future UK capital purchases will be made using Computacenter Customer Specific Financing.

The non-UK element of the contract with BT — around 25% of the total value — was unaffected by the negotiations for the contract extension.

[Further reference: Computacenter half yearly report -2 -- Computacenter, 27 August 2009.]

TranSwitch expects BT revenue to flow

Speaking at the company’s Q209 results presentation, Ted Chung, Vice-President for Business Development at TranSwitch, a software solutions provider, indicated that his company could begin to see increased levels of revenue related to BT activity in 2010.

TranSwitch had a contract with Fujitsu, which is a 21st Century Network (21CN) supplier, and had apparently been expecting to see its equipment deployed as BT switched voice services to 21CN. TranSwitch had hoped to see units begin shipping before the end of 2007 (BTwatch, 2007.04).

” Unfortunately, it’s not a well-guarded secret that [BT] is — or really has been and continues to be — running behind their published deployment schedules. Our latest checks do indicate that the broadband rollout is continuing, and the voice migration from which we and our customers should really benefit, we believe should commence still in 2010. So while that’s not currently reflected in any of our numbers, nor our near-term projections, we are hopeful and optimistic that, starting in 2010, we can see some benefit from the UK. ”
– Ted Chung.

[Further reference: Q2 2009 TranSwitch earnings conference call -- final -- TranSwitch, 30 July 2009.]

Virtusa sees BT revenue decline

Virtusa, an IT outsourcing and consultancy company, announced continued declines in revenue generated from BT, for which it is a preferred supplier, but expressed confidence it would see the value of business with the telco rise in coming quarters, with growth evident in the second half of 2010.

According to the company, under the five-year contract it has in place with BT, there are minimum annual spend clauses, and BT is currently some way from being in line to achieve these minimums. Virtusa also noted that, with BT rationalising its portfolio of suppliers, it expected to benefit from contracts being concentrated among a smaller pool of vendors.

Virtusa’s BT revenue declined 24% sequentially in Q209 on a constant currency basis, but still represented 14% of the company’s total revenue.

[Further reference: Q1 2010 Virtusa Corporation earnings conference call -- final -- Virtusa, 30 July 2009.]

3 BT Group

3 Employment
3 BT graduate recruitment scheme closed
3 Executives
3 Livingston profiled
4 City reports
4 Pensions
4 Pensions
4 BT offers new pension options
4 BT highlights pension inclusiveness
5 Regulatory
5 BT requests BT Basic exemption for Ebbsfleet
5 Tech Mahindra/Mahindra Satyam
5 Regulatory
5 Ofcom considers NGN future post-21CN
6 Tech Mahindra/Mahindra Satyam
6 Suppliers
6 BT to cut event services agency roster
7 Fibre
7 Fibre to boost VoIP prediction
7 Market statistics
7 O2 surpasses BT in customer connection numbers
7 Strategy & operations
7 BT Innovation & Design
7 Marks joins BT and Ribbit
8 Research
8 Adastral Park hailed as sales tool
8 Geddes on media trends
8 Digital Britain
8 Whitley conciliatory on Digital Britain prospects
9 Nationwide 2Mbps minimum speeds a realistic possibility
9 BT pins fibre hopes upstream
10 Ethernet profile continuing to rise
10 On the FTTC trials, and longer term rollout plans
10 NGN levy to be suspended until post-election
10 BT criticises government file-sharing ban proposals
11 Suppliers
11 TranSwitch expects BT revenue to flow
11 Suppliers
11 BT awards RR Donnelley multi-million pound comms deal
11 Computacenter announce cuts in BT contract
12 Suppliers
12 Virtusa sees BT revenue decline
12 Systems
12 BT on subscriber data management systems

13 BT Retail

13 BT Expedite
13 Broadband
13 BT Total Broadband replaces Yahoo! with Google for search
14 Fibre trials
14 BT Operate engineer first to receive consumer fibre
14 BT ups 20Mbps broadband push
14 Promotion follows negative press, again
15 Marketing
15 ASA upholds complaint against TalkTalk
15 ADSL2+ could slow some connections claim reports
15 BT disputes Simplify Digital report
16 BT Television Services
16 Bollywood movies reach BT Vision
16 BT runs BT Vision promotion
18 Payphones
18 Phone box “adoption” scheme expanded
18 BT Vision signs up ESPN for football coverage
18 Rumours of music subscription service from BT Vision
19 Payphones
19 Phone box “adoption” scheme expanded cont’d
19 Patterson calls again for wholesale BSkyB access
20 Project Canvas under fire from BSkyB
20 Contact centres
20 Union row may jeopardise job repatriation
21 Wireless networks
21 BT ties with Wicoms for holiday park Wi-Fi
21 BT claims progress in million hotspot ambitions
22 Tariffs and pricing
22 Tariffs and pricing
22 BT: O2 is scaremongering over MTR cuts
23 BT Business
23 BT Business becomes AdWords reseller
23 BT trumpets cloud benefits for SMEs
25 BT Ireland
25 BT welcomes LLU price cut
25 BT trumpets school grant scheme
25 BT Ireland
25 BT customer-transfer approved
25 BT criticised by rivals in Northern Ireland
26 Chris Clark: BT Northern Ireland performing well
26 Current position and longer term plans
26 Competition
26 New projects
27 PlusNet
27 PlusNet launches SME offerings

28 BT Global Services

28 Appointments
28 Hoggarth leaves BT after just one year
28 Comment: A job over before it started
29 Contracts
29 Airbus awards BT WAN contract
29 BT wins Siemens network contract
30 NHS contracts
30 BT supports mental health “eCLinics”
30 Public sector contracts
30 BT awarded £40m Norfolk council contract
31 BT International: Asia-Pacific
31 BT wins Cisco Gold certification in Australia
32 BT Global Financial Services
32 LCH.Clearnet selects Radianz solution
32 BT International: Latin America
32 BT LatAm units gain Cisco endorsement
32 BT Global Financial Services
32 Radianz wins European access contract

33 BT Wholesale

33 Contracts
33 Vodafone to launch SME charge with BT Wholesale
34 Products and services
34 BT launches single link for 21CN and legacy products

35 Openreach

35 Executives
35 Campbell on next-generation access
35 Campbell on the BT Ebbsfleet FTTP pilot
35 Demand for fibre
36 Fibre
36 BT starts Glasgow fibre trials after London setback
37 OTA2
37 OTA announces six million LLU and WLR lines
39 Suppliers
39 Openreach awards Carillion £1bn contract
39 Return of Marconi
40 Carillion on Openreach deal
41 Openreach deploys Adva FSP 150 Ethernet solution

42 Index

INDEX

A
Adva Optical Networking, 41
ADVA Optical Networking, 41
Advertising Standards Authority, 15
Airbus, 29
Analysys Mason, 7, 12
Astron, 11
B
Babcock & Brown
- Eircom, 25
Barclays, 18
Bluecoat Systems, 30
British Broadcasting Corporation (BBC), 20
BSkyB, 15, 18, 19, 20, 37
BT Group, 3, 4, 7, 8, 11, 37
- Asia
- Tech Mahindra, 5, 6
- BT Global Services, 3, 28, 29, 30, 31, 32
- BT Argentina, 32
- BT Brazil, 32
- BT Global Financial Services, 32
- BT International, 31, 32
- BT Mexico, 32
- BT Radianz, 32
- MobileXpress, 30
- Spain, 29
- BT Group
- Strategy and Operations
- Adastral Park, 8
- BT Pension Fund
- Hermes Pension Management, 4
- BT Pension Scheme, 4
- BT Retail, 10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 25, 26, 33
- 1571, 22
- BT Basic, 5
- BT Broadband, 14, 16, 19, 21
- BT Broadband Accelerator, 14
- BT Business, 13, 14, 21, 23, 33
- BT Consumer, 10
- BT Expedite, 13
- BT FON, 21
- BT Ireland, 25, 26
- BT Mobile, 29
- BT Northern Ireland, 26
- BT Openworld, 13
- BT Openzone, 21
- BT Payphones, 18, 19
- BT Total Broadband, 13, 14
- BT Tradespace, 23
- BT Vision, 16, 18, 19
- BT Yahoo!, 13
- Option 1, 27
- Option 2, 27
- Option 3, 27
- PlusNet, 27
- Terminate the Rate, 22
- Together, 34
- V-Box, 16
- Wireless Cities, 21
- BT Wholesale, 14, 33, 34, 37
- i-Plate, 9
- WBMC over IPstream Connect, 34
- Wholesale Broadband Managed Connect, 34
- Executives
- Alvarez, Luis, 29
- Baldwin, Sian, 34
- Bowen, Laurie, 29
- Bruce, Chris, 21
- Campbell, David, 35
- Chanmugam, Tony, 3
- Clark, Chris, 25, 26
- Davis, Sally, 33
- de Souza, Valdir, 32
- Duerden, Ian, 11
- Geddes, Martin, 8
- Gupta, Asish, 12
- Lalani, Hanif, 3
- Lindsay, Chris, 23
- Livingston, Ian, 3
- Lumb, John, 19
- Marks, Kevin, 7
- Murphy, Bill, 23
- Nicholson, Andy, 32
- O’Boyle, Kevin, 4
- Patterson, Gavin, 19, 21
- Petter, John, 10, 14, 22
- Quartermaine, Mark, 28
- Rangaswami, JP, 7
- Stagg, Nigel, 20
- Watson, Marc, 18
- Whitley, Tim, 8
- Ex-executives
- Barrault, François, 28
- Green, Andy, 28
- Hoggarth, Royston, 28
- Verwaayen, Ben, 3
- Openreach, 9, 10, 25, 35, 36, 37, 39, 40, 41
- Ebbsfleet, 5, 35, 36
- Ethernet Backhaul Direct, 41
- WLR3, 37
- Ribbit, 7, 23
- Strategy and Operations
- 21CN, 5, 11, 12, 34, 39
- BT Innovation & Design, 7, 8, 12
- BT Operate, 14
C
Cable and Wireless, 28, 37
Camping and Caravanning Club, 21
Carillion, 39, 40
Carphone Warehouse, 15, 37
- TalkTalk, 15
Central Bureau of Investigation (India), 6
Channel 4, 20
Chi-X Europe, 32
Cisco Systems, Inc., 31, 32
Coastfields, 21
Commission for Communications Regulation (ComReg, Ireland), 25
Communications Workers Union, 20
Computacenter, 11

D
Datamonitor, 6
Digital Britain, 8, 10, 14
- Lord Carter, 10
- Timms, Stephen, 10
DMSL, 21
Doncaster, Rotherham, and South Humber Mental Health NHS Foundation Trust, 30
DTV Services
- Freeview, 20
E
EMI, 18
Ericsson, 39
ESPN, 18
Etisalat, 5
- Etisalat DB Telecom, 5
- Swan Telecom, 5
European Union
- European Commission, 5
Eventia, 6
F
FON, 21
Football Association
- Premier League, 18, 19
Fujitsu, 11, 39
G
Genius.com, 23
Google, 7, 13, 23
- AdWords, 13, 23
Graduate recruitment, 3

H
Hutchison Whampoa
- 3 Group
- 3 UK, 22
I
Infonetics, 12
ITV, 20
J
JPMorgan Chase, 4
L
Lattice
- 186k, 34
M
Mahindra Satyam, 6
Marconi, 39
Martec International, 13
McMenemy Hill, 6
McNicholas Construction and Enterprise, 39
Microsoft, 13
- Bing, 13
Mobile Termination Rates (MTR), 22
MoMedia, 16
N
National Health Service (NHS, UK), 30
Norfolk County Council, 30
North Lincolnshire Council Digital Inclusion, 30

O
Ofcom, 5, 7, 14, 15, 19, 20, 22, 25
- Carrier pre-selection, 37
- Light User Scheme
- BT Basic, 5
- LLU, 25, 37
- Strategic Review of the Telecoms Sector, 25
- USO, 18
- Wholesale line rental, 37
Office of the Telecommunications Adjudicator, 37
- OTA2, 37
R
Rainbow Telecom, 25
Royal Mail, 11
RR Donnelley, 11
S
Salesforce.com, 23
Setanta, 18
- Setanta Sport, 18
Shemaroo Entertainment, 16
Siemens, 29
Siemens Enterprise Communications, 29
Simplifydigital.co.uk, 15
Skanska AB, 39
Sony, 18

T
Tech Mahindra, 5, 6
- Mahindra Satyam, 5, 6
Technology
- ADSL, 15, 34
- ADSL2+, 14, 15, 33, 34
- Biometrics, 8
- Broadband, 4, 8, 9, 10, 11, 13, 14, 15, 16, 19, 21, 22, 23, 25, 26, 27, 33, 34, 35, 36
- Ethernet, 10, 37, 41
- Fibre, 5, 7, 9, 14, 26, 33, 34, 35, 36, 39
- FTTH, 5, 35, 36
- FTTP, 35
- IP, 5, 7, 27, 30, 33, 34
- ISDN, 7
- MPLS, 29
- Near Field Communications (NFC), 8
- Next-generation access (NGA), 5, 35
- Next-generation networks (NGN), 5, 6, 10
- Private circuits, 5
- Project Canvas (BBC, BT, ITV, FIVE), 20
- Project Kangaroo (BBC, ITV), 20
- RFID, 8
- SaaS, 23, 33
- Subscriber Data Management (SDM), 12
- Time-Division Multiplexing (TDM), 5
- VDSL, 9
- Video-on-demand, 20
- VoD, 16
- VoIP, 7, 27, 34
- Web Services, 7
- Wi-Fi, 21
Telefónica, 7, 21, 22
- Telefónica Europe (O2), 7, 21, 22
- UK, 7, 21, 22
telent plc (Marconi), 39
THA Group, 6
TranSwitch, 11
Twitter, 25

V
Virgin Media, 9, 10, 18, 19, 22, 37
Virtusa, 12
Vodafone, 25, 33
- UK, 33
W
Wicoms, 21
Y
Yahoo!, 13

BTwatch, issue 2009.06 snapshot

AB — Mon, 10 Aug 2009 12:40:44 +0000

MAIN STORIES: BT’s Q1 FY09-10 results were positively received, though largely on the basis that they could have been worse. Cost-cutting initiatives appear to be progressing ahead of schedule, but there are concerns about over-pruning the company’s future prospects. The path of the company in the Livingston era has so far followed predictions made by BTwatch on his ascent to the role, with signs emerging that this is set to continue. [pp.3-17.]

Issue: 2009.06
Covering: early-July to early-August 2009
Published: August 2009
Next issue: September 2009

Mapping the activity and strategy of the UK’s largest telco. A unique monthly report for the industry.

About BTwatch
Executive Brief
Extract
Table of Contents
Index

ABOUT BTWATCH

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.
BTwatch provides a thorough yet accessible grounding in the state of BT now, and where it is going. Following BTwatch enables our clients to get up to speed quickly, and stay ahead of their game.
Our ‘watch’ titles are repeatedly described by clients and end-users as the single most valuable source of third-party intelligence. Considered invaluable by many high-achieving commercial teams and account directors.
A unique source of valuable opportunities, knowledge, planning, strategy, and much more. Both tactical tool and strategic reference. An invaluable reference, input and even springboard for corporate planning, reporting, and meetings.
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Pricing typically USD $4k / EUR EUR3k / UKP £2.5k per year for a workgroup or small/midsize account, tailored to meet your needs and situation. Delivered electronically 10-12 times a year. Also available are back issues, which provide unparalleled reference and insight into major events, strategic initiatives, financials and KPIs.
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Contact us for further information, including samples and evaluation trial requests. info@marketmettle.com / +44-20-7083-0055.
Below is a free taster from issue 2009.06 (July-August 2009), including an Executive Brief, Extract, Table of Contents and Index, giving a valuable snapshot of the full report.

EXECUTIVE BRIEF

The expected departure of Matt Bross from his role as CTO was confirmed by BT, and may become a symbol of a fundamental shift in BT’s focus as influence consolidates with Al-Noor Ramji, BT’s CIO. [pp.24-26.]

It was reported that up to 2,000 contact centre jobs could be returned to the UK from India. The positions are expected to be filled by permanent staff in need of re-deployment due to ongoing restructuring. BT is also pushing for the use of workers in its Career Transition Centre, as an alternative to hiring short-term contractors. Call centre provider Sitel was said to be uncertain about BT contracts in the UK, but BT Global Services’ Commercial & Brands directorate in India was claimed to have saved the division £5m in the past year. [pp.23,24,31.]

BT Retail notified consumers of this year’s second set of price rises, via its BT Update magazine. The media jumped on the changes, bemoaning a 34% price rise in 2009, and BT failed to get its message across regarding supposed appeal of inclusive call packages for circumventing the price hike. [pp.32-33.]

BT Business is said to be preparing for a renewed assault on the mobile services front in the SME sector, through a string of new partnerships. The first deal to be tentatively announced will, possibly in 2009, see BT’s Unified Communications customers offered a fixed-mobile convergence solution working with the BlackBerry Mobile Voice Service . More propositions and offers are promised, and may be needed as mobile operators target the SME sector with offers such as O2 UK’s Fixed Number Anywhere service. [pp.40-41.]

BT Ireland is to migrate its consumer and small business customers to Vodafone Ireland, as part of a deal that will see BT provide increased levels of wholesale services to the Vodafone OpCo. The deal recognises BT’s failure to make significant inroads into the Irish retail market, while playing to its strengths as a local alternative network services provider. [pp.43-44.]

BT announced it was to be first telco to market with the Microsoft Dedicated Business Productivity Online Suite , which it plans to integrate with its Global Onevoice proposition. The deal saw BT herald, once again, a strengthening of its relationship with the computing giant. [pp.51-52.]

GROUP: There was alarm expressed at a substantial jump in the level of BT’s pension deficit, from £2.9bn at the end of March to £5.8bn at the end of the June. BT is to make a cash payment of £400 to non-management staff, in lieu of a pay rise. [pp.6,19.]

BT’s ex-Director of Equivalence, Peter McCarthy-Ward, is now advising the Australian government on functional separation of Telstra. During recent presentations before the Australian Senate, the BT veteran detailed the “extensive capacity for self-deception” harboured by BT prior to introduction of the Strategic Review Undertakings. [p.20.]

STRATEGY & OPERATIONS: Computacenter announced it had reached an agreement for an extension to its end-user customer support contract with BT, while CA claimed its provision of services to BT had saved the telco £18m in reduced IT administration over four years. [p.27.]

BT RETAIL performed somewhat below average in Ofcom’s recent study of broadband speeds in the UK. However, while the performance in the report, which found all copper-line providers underperformed significantly against speed claims, was not disastrous, the response of BT Retail saw the company appear overly defensive about its service. [pp.29-30.]

BT Vision inked a deal with Sony Pictures for video-on-demand movies, and new Head of Television Services Marc Watson expressed desire to make BT a “large-scale entertainment business” , while there were unsubstantiated press mutterings that his predecessor’s departure was due to a lack of backing for spending and unhappiness over the recent appointment of ex-BSkyB head Tony Ball as a non-executive director. Watson was bullish on the prospects of imminent affordable wholesale access to BSkyB content. [pp.33-36.]

The Project Canvas TV joint venture between BT, the BBC and ITV took on another partner with the arrival of broadcaster Five. The Canvas backers also took steps to placate the IPTV vendor community over concerns of stifling control over the technological aspects of compatible hardware. [p.37.]

Wi-Fi solutions provider Quiconnect extended its contract for roaming interconnection services for BT Openzone, while airline FlyBe awarded BT Openzone a contract to provide Wi-Fi in half of its airport lounges. [p.39.]

BT GLOBAL SERVICES announced it had won a £99m contract with the MoD, which forms part of an ongoing £1.5bn services contract with the defence ministry. A Siemens-led consortium featuring BT won an £85m, seven-year contract extension with EUROCONTROL. The company installed a wireless network with FMC capabilities for KPMG in Holland, and is providing managed-trading solutions to Commerzbank in a multi-million euro deal. [pp.46,49,50,53.]

BT Health said it had taken over Fujitsu’s South of England NHS Programme for IT contract “without a single hitch” , and is now developing services for an additional eight hospital trusts and allied centres in the region. BT also highlighted praise for its public-private partnership with Liverpool Council, ahead of the findings of an investigation into alleged waste at the joint-venture. [pp.48,49.]

BT Group signed a strategic partnership with IT Holdings, a Japanese IT services business, which will see the British telco provide global connectivity to Japanese companies. [p.50.]

BT said it had consolidated its position as the leading alternative provider in the business sector in Spain, and expressed optimism that Global Services’ switch to a more customer-centric focus, rather than a country-based one, would help boost profitability internationally. [pp.50,54.]

BT welcomed a planned acquisition of Nortel’s enterprise solutions business by Avaya, with BTGS head Hanif Lalani saying it strengthened BT plans to engage more closely with the purchaser. [p.55.]

BT WHOLESALE is providing IP VPN services to Virgin Media’s ntl:Telewest Business division, to enable the cableco to offer international services to its UK business customer base. BT agilemedia is partnering paysafecard and Dialogue for the delivery of a mobile payment voucher solution. [pp.56,57.]

ISPs are unhappy with BT Wholesale new charges on fault identification callouts, which they claim will cause extra expense and administration, as the BT unit attempts to reclaim engineering costs caused by problems that are not its fault. [p.58.]

OPENREACH: Services began from the first BT exchanges to be upgraded for FTTC trials, with service providers indicating that improved upload speeds are prompting business interest. However, as BTwatch was published, it was reported that trials in the Muswell Hill area of London had been halted by residents complaining about the over-sized cabinets used to house equipment. [p.59.]

Openreach welcomed proposals from Ofcom to introduce a core, regulated WLR product, which would enable it to build enhanced wholesale services for communications providers. [p.60.]

Openreach said all of its products are now firmly established on the Equivalence Management Platform , after BPM service provider Singularity trumpeted its provision of three “business as usual” WLR products to customer Universal Utilities. [p.60.]

Trimble, a mobile workforce solutions provider, expanded its contract with Openreach, to provide a complete resource-management suite in the currently contentious area of field-employee tracking. [p.61.]

EXTRACT

Regulatory

Ex-BT exec to advise on Australia network separation

Peter McCarthy-Ward, one of the key executives involved in BT Group’s regulatory settlement with Ofcom (BTwatch, passim), was named as a consultant for the Australian government on its plans for the separation of Telstra’s wholesale and retail businesses.

The appointment caused some controversy due to BT’s position as an international competitor to Telstra, and given former BT Director of Equivalence McCarthy-Ward’s apparently ongoing work as a BT contractor following his reported departure from the telco in late-2008.

” The department is using the expertise he gained in developing and implementing the functional separation of BT in preparing its advice to government. The department considers that his current role with BT does not create a conflict-of-interest which prevents him from advising on equivalence issues with Telstra; and it is his past experience that makes him a valuable source of advice. ”
– Spokesman for Australia Communications Minister, Stephen Conroy

McCarthy-Ward is said to be on a AU $60,000 (£30,000) six-month contract for the project.

McCarthy-Ward provides a candid view of settlement changes at BT

McCarthy-Ward earlier in 2009 gave evidence to the Australian Senate on the BT Group experience of functional separation of its network, and said it had helped improve the performance of BT Retail, and removed BT’s “extensive capacity for self-deception”.

” Often, it was a series of small but subtle, and very important, changes that we had to make to the wholesale services to render them fit for BT itself to use. This is quite a salutary piece of learning because we had believed that we were behaving ethically and properly to our wholesale customers, but when confronted with using the same product under the same conditions, we found that it was not fit-for-purpose for our use. The changes that we made to make it fit-for-purpose for ourselves flowed through as benefits in product improvements to our wholesale competitors. “

” It is worth saying that one of the reasons that [Retail] performance has improved was that the corollary of building a very robust and satisfactory wholesale regime was that our regulator felt able to deregulate retail prices, and from that flowed some advantages to our retail business in terms of the flexibility and freedom that they had in pricing. ”
– McCarthy-Ward.

Other changes made by BT in response to the functional separation included new formalised systems for fault repairs, which in the past had been built on informal contacts between BT staff.

[Further reference: Telco adviser works for BT -- The Age, 24 July 2009; DBCDE hires BT director to advise on functional separation -- CommsDay, 24 July 2009.]

BT slams Ofcom report on services for hearing-impaired

BT Group criticised the findings of a report from regulator Ofcom on potential telephony services for people with hearing impairments, claiming it “takes a narrow view” of options. The telco insisted that the Plum Report will not influence BT strategy in the area.

BT’s principle criticism is that the Ofcom-commissioned report does not consider the full range of possible services that could be developed, and used a small study sample to consider what users would want to have delivered.

BT highlighted a report it had previously commissioned, reportedly with a larger survey sample, that found demand was higher for text messaging and email services, rather than the (presumably significantly more expensive) video-based services that the Plum Report favoured.

The Ofcom-backed report also apparently indicated that BT and other telecoms providers would be expected to pay to provide video-based services. BT preferred a levy on British business to support new services for the hearing-impaired.

[Further reference: Deaf report under fire -- BT, 10 July 2009.]

3 BT Q1 FY09-10 results

3 BT Group
3 Overview — Global Services continues to strangle the rest of BT
3 BT Group financial highlights, Q1 FY09-10
4 BT Group, performance by division, Q1 FY09-10
4 BT Group, revenue by product type, Q1 FY09-10
5 Good progress on cost-reduction programmes
6 Global Services still bleeding cash, but Group outflow much reduced
6 Pension deficit remains a huge and worsening concern
7 Outlook — Livingston manages to paint a brighter future
7 Restatements lop £110m off FY08-09 EBITDA
7 Comment — cost cutting buys time, but what future?
9 The Livingston era — BTwatch odds, April 2008
10 Divisional performance
10 BT Global Services — continuing to leach cash from the rest of BT
11 BT Global Services, financial highlights, Q1 FY09-10
11 BT Global Services, revenue by product type, Q1 FY09-10
12 BT Retail — immense bottom-line performance boosted by exceptionals
13 BT Retail, financial highlights, Q1 FY09-10
13 BT Retail, revenue by product type, Q1 FY09-10
13 BT Wholesale — incremental improvements continue
15 BT Wholesale, financial highlights, Q1 FY09-10
15 BT Wholesale, revenue by product type, Q1 FY09-10
15 Openreach — steady as she goes
16 Openreach, financial highlights, Q1 FY09-10
16 Openreach, revenue by product type, Q1 FY09-10
17 Analyst reaction — Stockholm syndrome

18 BT Group

18 Associates and investments
18 BT advises on Mahindra Satyam recovery
18 Brokers’ reports
18 Bernstein ups BT rating on low expectations
19 Environment
19 Employment
19 Non-management staff to receive £400 cash payment
19 BT carbon accounting criticised
20 AGM
20 BT Customer Service team formed for AGM
20 Rake expresses confidence at AGM
20 Regulatory
20 Ex-BT exec to advise on Australia network separation
20 McCarthy-Ward provides a candid view of settlement changes at BT
22 Appointments
22 Ansell joins Eckoh board
22 Community
22 BT voted “most gay friendly”
22 BT slams Ofcom report on services for hearing-impaired

23 Strategy and operations

23 Billing
23 cVidya recognised for BT solutions
23 Operations
23 BT claims £5m savings from Indian directorate
24 Broadband
24 Rake unable to receive home broadband
24 Digital Britain
24 BT works to replace contractors with transitioning staff
24 Strategy
24 Bross BT departure confirmed
25 Fibre
25 Industry group claims business rate uncertainty stifling network investment
25 A potent symbol of the changing of the guard
26 Research
26 Rangaswami on the internet
26 Where is BT heading now?
27 Suppliers
27 BT supports HP-Sun migration campaign
27 Computacenter extends BT support deal
27 BT saves £18m through CA IT deployment
28 Training
28 BT encourages internal knowledge-sharing

29 BT Retail

29 Billing
29 BT and Royal Mail agree payment extension
29 Financial services
29 BT updates BT Credit Card terms
29 Broadband
29 Ofcom broadband study finds BT speeds below average
29 Broadband average download speeds, April 2009
30 Phorm
30 Phorm statement on BT withdrawal
30 Marketing
30 BT appoints digital ad agencies
30 BT defends performance in study
31 “…out of context…”
31 BT on SaaS for mid‑sized business
31 Regulatory
31 Contact centres
31 BT UK contact centre partner to cut jobs
31 BT repatriating contact centre jobs
32 Tariffs and pricing
32 BT Retail continues mobile termination cut campaign
32 Fixed-line
32 BT lambasted for 34% consumer call price hike
32 BT leaves itself open to criticism again
33 BT Television Services
33 BT signs Sony VoD deal
34 Watson relishes BT Vision challenge…
35 …but BT TV services criticised for lack of vision
36 BT calls for speedy Sky Sports access
36 BT partners Match.com for BT Vision dating
37 Canvas moves to placate set-top box vendors
37 BBC Trust gives Canvas the provisional go-ahead
37 Five joins Project Canvas
39 Wireless networks
39 BT Openzone signs deal for Flybe lounges
39 Quiconnect wins BT Wi-Fi deal
40 BT Business
40 BT to offer BlackBerry with UC solution…
41 Competitors
41 O2 to challenge BT with small business call-forwarding
41 …more new BT mobile moves rumoured
41 BT recognises there’s more to mobile than a simple MVNO offering
42 BT promotes Xero web application
42 BT cuts web-hosting prices for SMEs
43 BT Ireland
43 BT offloads Ireland consumer business to Vodafone
44 A welcome recognition of strengths and weaknesses from BT Ireland
44 BT Financial Services launched in Ireland
45 BT Conferencing
45 Recognition of BT video conferencing
45 Polycom names BT Service Provider of the Year
45 BT Ireland cleared to demand Irish wholesale Ethernet
45 BT Expedite
45 Integrated retail solution launched by Expedite

46 BT Global Services

46 BT iNet
46 BT iNet wins Cisco data centre accreditation
46 Acquisitions and disposals
46 BT disposes of German consultancy
46 Contracts
46 BT consortium wins EUROCONTROL contract extension
48 NHS contracts
48 BT claims successful Fujitsu contract handover
49 Public sector contracts
49 BT awarded £100m MoD communications contract
49 BT defends Liverpool partnership ahead of investigation
50 BT International: Asia
50 BT and IT Holdings sign strategic partnership
50 BT International: Europe
50 BT claims continued progress in Spanish market
50 BT installs wireless network for KPMG Netherlands
51 Products and services
51 HR assessment service launched by BT
51 BT offers hosted Microsoft Online Services for enterprise
52 BT promotes sustainability practice
52 Deal part of long-running BT efforts to build Microsoft relationship
53 BT Global Financial Services
53 BT wins Commerzbank managed trading systems deal
54 Strategy
54 BT GS shifting from geographic business model
55 Suppliers
55 Avaya builds BT business with proposed Nortel buy

56 BT Wholesale

56 Contracts
56 ntl:Telewest Business partners BT Wholesale for IP VPN
57 BT agilemedia
57 BT agilemedia to provide solution to paysafecard
58 Products and services
58 ISPs troubled by new BT Wholesale fault charging

59 Openreach

59 Network
59 BT dismisses swine flu network pressure concerns
59 Fibre
59 First pilot fibre connections live
60 Products and services
60 Openreach to be free of regulation on enhanced services
60 A dilution of the essence of the regulatory settlement?
60 Singularity claims EMP first
61 Suppliers
61 Openreach selects Trimble solution for mobile workforce

62 Index

INDEX

A
Alcatel-Lucent, 27
AOL, 29
Aruba Networks, 50
Avaya, Inc., 55
B
Babcock & Brown
- Eircom, 43, 44, 45
Bailey Teswaine, 49
British Broadcasting Corporation (BBC), 35, 37
BSkyB, 29, 34, 35, 36
BT Group, 3, 4, 5, 6, 11, 15, 16, 18, 19, 20, 22, 23, 24, 25, 27, 28, 43, 44, 50
- Asia
- Tech Mahindra, 18, 23, 31
- BT Global Services, 3, 4, 5, 6, 7, 8, 9, 10, 11, 17, 18, 22, 23, 24, 26, 44, 46, 48, 49, 50, 51, 52, 53, 54, 55
- BT Americas, 52
- BT Benelux, 50
- BT Global Financial Services, 53
- BT Health, 48
- BT Ignite, 52
- BT iNet, 46
- BT International, 39, 50
- BT Spain, 50
- Commercial & Brands, 23
- ITS.Netrix, 53
- ITS Recorder, 53
- Onevoice, 51
- Spain, 54
- Sustainable Workforce Assessment, 51
- Virtual Private Network, 51
- Wire One, 45
- BT Group
- Strategy and Operations
- Adastral Park, 24
- BT Pension Scheme, 6
- BT Retail, 3, 4, 6, 7, 8, 9, 12, 13, 17, 20, 27, 29, 30, 31, 32, 33, 36, 39, 41, 42, 44, 45, 52, 55
- BT Basic, 32
- BT Business, 31, 40, 41, 42
- BT Business Direct, 31
- BT Conferencing, 45
- BT Connected & Complete, 52
- BT Credit Card, 29
- BT Expedite, 45
- BT Fusion, 32, 40
- BT Ireland, 43, 44, 45
- BT One Plan, 40
- BT Openzone, 39
- BT Payment Card, 29
- BT Scotland, 32
- BT Update, 32, 33
- BT Vision, 12, 27, 33, 34, 35, 36
- BT WebWise, 30
- Communications Complete, 40
- Integrated Store, 45
- Live Meeting, 51
- Option 3, 32
- PlusNet, 29, 30
- Terminate the Rate, 32
- Together, 32
- Unlimited Anytime Plan, 32
- BT Wholesale, 4, 6, 9, 13, 15, 17, 20, 25, 39, 56, 57, 58
- BT Agilemedia, 57
- Directors
- Ball, Tony, 35
- Rake, Sir Michael, 19, 20, 24
- Executives
- Alvarez, Luis, 54
- Bowen, Laurie, 23
- Burger, Bas, 50
- Cavestany Vallejo, Jacinto, 50
- Clark, Chris, 43, 44
- Davidson, Maggie, 41
- Geddes, Martin, 25
- Gilthorpe, Emma, 24
- Lalani, Hanif, 24, 55
- Leonidas, Marjorie, 39
- Livingston, Ian, 3, 5, 7, 8, 10, 11, 12, 15, 26, 41
- McLeod, Dinah, 51, 52
- Murphy, Bill, 40
- Patten, Simon, 49
- Pemberton, Neil, 46
- Petter, John, 30
- Ramji, Al-Noor, 24, 25
- Rangaswami, JP, 25, 26
- Schrock, Randy, 52
- Smith, Peter, 48
- Steel, Mike, 57
- Sutton, Neil, 51
- Thompson, Jerry, 31, 42
- Watson, Marc, 33, 34, 36
- Ex-executives
- Ansell, Clive, 22
- Bross, Matt, 24, 26
- Marks, Dan, 34, 35
- McCarthy-Ward, Peter, 20
- Reynolds, Paul, 25
- Spitzer, Heiko, 46
- Verwaayen, Ben, 6
- Openreach, 4, 8, 9, 15, 16, 17, 20, 25, 58
- Strategy and Operations, 23
- 21CN, 9, 25, 30, 51
- BT Innovation and Design, 24, 26
- BT Operate, 26
- Career Transition Centre, 24
- iBuy, 28
C
Cable and Wireless, 15
CA Inc, 27
Carphone Warehouse, 29, 33
- TalkTalk, 29, 33
Cisco Systems, Inc., 40, 46, 55
Cluetrain Manifesto, 26
Commerzbank, 53
- Dresdner Bank, 53
Commission for Communications Regulation (ComReg, Ireland), 45
Communications Workers Union, 19, 31
Computacenter, 27
Cronos International, 46
cVidya Networks, 23
D
Datamonitor, 45
Defence Fixed Telecommunications Services, 49
Department of Health, 48
Deutsche Telekom
- T-Mobile, 41
Dialogue Communications, 57
Digital Britain, 10, 18, 24
DTV Services
- Freeview, 37
E
Eckoh Technologies, 22
Entanet, 58
Eurim, 25
EUROCONTROL, 46
F
Federation of Small Businesses, 32
Fiat SpA, 11
Financial Times, 18
FinnCap, 17
Flybe, 39
Football Association
- Premier League, 36
Forrester, 40
Fortis Private Banking, 17
France Télécom
- Orange, 29
Fujitsu, 48
G
Gartner Group, 17
Getronics NV, 46
GfK NOP, 29
Goldman Sachs, 17
Google, 26
H
HCL, 31
Hewlett-Packard, 27
HTC, 40
Hutchison Whampoa, 41
- 3 Group
- 3 UK, 41
I
IDNet, 58
Improvement and Development Agency for Local Government, 49
Infosys, 18, 31
ING Bank NV, 6, 19
Integrated Accommodation Services (IAS), 6
intellgenio, 46
IT Holdings, 50
ITV, 37
K
Kingston Communications (KCOM), 15
KPMG, 50
L
Liverpool City Council, 49
Lloyds Banking Group, 11
M
Mahindra Satyam, 18
Marks and Spencer, 19
Mastek, 48
Match.com, 36
Merrill Lynch, 17
Microsoft, 28, 51, 52
- Microsoft Dedicated Business Productivity Online Suite, 51
Ministry of Defence, 11, 49
Morrison, 17
N
National Health Service (NHS, UK), 48
- National Programme for IT, 48
- NHS National Programme for IT, 48
Nomura, 19
Nortel Networks, 55
O
Ofcom, 10, 20, 22, 29, 30, 31, 32, 35, 36
- Carrier pre-selection, 32
- Light User Scheme, 32
- BT Basic, 32
- LLU, 12, 13, 15
- Plum Report, 22
- Strategic Review of the Telecoms Sector, 22
- Wholesale line rental, 4, 11, 15, 16
Olympic Games
- London 2012, 22
Omnicom Group
- Abbott Mead Vickers BBDO, 30
- Agency.com, 30
Ovum, 17, 33
P
Paysafecard, 57
Phorm, Inc. (121Media), 30
Polycom, 45
Post Office, 29, 32
Procter and Gamble, 54
Q
Quiconnect, 39
R
Research In Motion
- BlackBerry, 40, 41
Royal Mail, 29
S
SamKnows, 29
Sanford Bernstein, 18
Shell Group, 34
Siemens, 46
Sitel, 31
Sony, 33
- Sony Pictures Television, 33
Sun Microsystems, 27
T
TANDBERG, 45
Tech Mahindra, 18, 23, 31
- Mahindra Satyam, 18
Technology
- ADSL, 30
- ADSL2+, 6, 30, 43
- Broadband, 4, 7, 11, 12, 13, 15, 16, 24, 25, 29, 30, 32, 37, 39, 43, 58
- DSL, 12
- Ethernet, 6, 15, 45
- Fibre, 8, 16, 18, 25, 30
- IP, 33, 37, 39, 56
- IPTV, 33, 36, 37
- Private circuits, 31
- Project Canvas (BBC, BT, ITV, FIVE), 33, 34, 35, 37
- R&D, 9
- SaaS, 31
- SIP, 51
- Unified Communications, 40
- Video-on-demand, 33
- VoD, 33
- VPN, 56
- Wi-Fi, 39, 40, 50
- WiMAX, 9
Telefónica, 29, 34, 50, 57
- Telefónica Europe (O2), 29, 34, 57
- UK, 29, 34, 57
- O2 UK, 9
Telstra, 20, 42
Tiscali SpA, 29, 33
U
Upaid Systems Ltd., 18
Uswitch, 33
V
Verint Systems, Inc., 53
Virgin Media, 29, 30, 35, 56
- ntl
Telewest Business, 56
Vodafone, 12, 19, 43, 44
Vtesse Networks, 25
W
Which?, 33
World Economic Forum, 24
WPP
- OgilvyOne, 30
X
Xero Ltd, 42

BTwatch, issue 2009.05 snapshot

AB — Thu, 16 Jul 2009 00:13:55 +0000

MAIN STORIES: The Digital Britain report on the future of UK media and communications was published, painting a picture of the development of next-generation networks in the UK that looks very favourable for BT, although BTwatch considers the lack of ambition and level of compromise means the initiative could ultimately prove to be a missed opportunity. However, there were plenty of positives for BT, which could see regulatory pressures ease further as Ofcom is charged with encouraging investment as well as promoting competition. A £6-per-year fixed-line levy looks set to be introduced to effectively subsidise BT’s fibre rollout; and public money is also to be made available for bringing universal 2Mbps broadband across the country. [pp.5-12.]

Dan Marks, head of BT Television Services, resigned from the company and is to be replaced by his deputy, Marc Watson. Marks left BT Retail claiming frustration that lack of regulation in the pay-TV market has meant that BT Vision has been unable to make a significant impression. Chief Technology Officer Matt Bross looks set to follow Marks out the door in BTwatch’s view, after the last vestiges of significant responsibility appear to have been stripped from him as his Chief Technology Office BT Innovate is merged into BT Design. [pp.18-19,29.]

Following rapidly on from criticism that it was throttling broadband speeds, BT Retail announced it was offering to upgrade its customers to ADSL2+ for the same price as they currently pay. The upgrade requires a new contract and was made available immediately to BT Business customers. BT is advertising the service as up-to-20Mbps, although the claim is optimistic, and Charles Dunstone of rival Carphone Warehouse noted that offering speeds far beyond those that can realistically be achieved by the average customer’s line is likely to lead to dissatisfaction. BT-owned PlusNet paused its ADSL2+ rollout due to unexpected technical problems. [pp.20,26-27.]

It was confirmed that BT Wholesale is to manage the network assets of Kingston Communications, as part of a deal that could be worth up to £750m over the coming ten years. [p.49.]

Issue: 2009.05
Covering: June to early-July 2009
Published: July 2009
Next issue: August 2009

Mapping the activity and strategy of the UK’s largest telco. A unique monthly report for the industry.

About BTwatch
Executive Brief
Extract
Table of Contents
Index

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Below is a free taster from issue 2009.05 (June-July 2009), including an Executive Brief, Extract, Table of Contents and Index, giving a valuable snapshot of the full report.

EXECUTIVE BRIEF

It was confirmed that BT Wholesale is to manage the network assets of Kingston Communications, as part of a deal that could be worth up to £750m over the coming ten years. [p.49.]

BT GROUP: Tony Ball, former BSkyB Chief Executive, was appointed as non-executive director for BT Group. Current board member Patricia Hewitt is to take on senior independent director duties, following the departure of Maarten van den Bergh. [pp.3-4.]

BT is looking at creative cost-cutting solutions that avoid redundancies, including offering to “loan out” staff to other companies, and enabling employees to take additional time off or take career breaks while taking a 75%-salary cut. Despite BT efforts to demonstrate it is not rewarding failure, executive pay at the company continued to be scrutinised, with particular anger expressed towards the £3m pay-off for Global Services scapegoat François Barrault. [pp.13,15.]

Tech Mahindra appointed new executives and re-branded Satyam as Mahindra Satyam, as it started to get to grips with rejuvenating the scandal-hit services provider. [pp.16-17.]

STRATEGY & OPERATIONS: BT channel partners were said to be concerned about a lack of clarity from BT regarding 21CN plans, with the project appearing to take a back seat to the roll out of fibre, in terms of coverage. BT Chairman Sir Michael Rake hinted at BT plans for FTTH following quickly on from FTTC, suggesting that 2014 could see a roll out of fibre to premises. [pp.22,23.]

Tata Communications said it has won a deal worth an estimated $1bn to become the primary supplier of international direct dial minutes to BT, under a five-year contract. BT could also become the main distribution channel for IDD traffic for Tata in Europe, as the relationship develops. BT renewed its trading agreement with in-administration vendor Nortel, covering convergence products; and network solutions provider Harris Stratex talked-up a multi-year IP solutions deal with BT. [pp.24-25.]

BT RETAIL: BT let it be known that it would not proceed with plans to introduce the BT WebWise targeted-advertising solution based on controversial technology from Phorm. The decision may have come too late to reverse the damage done to BT’s reputation by its drawn-out handling of the sensitive topic of online privacy. [p.28.]

Setanta Sports , one of the principal premium content services on BT Vision, was withdrawn from the platform just ahead of Setanta going into liquidation. ESPN, which bought the channel’s Premier League football rights, is to replace Setanta on the TV platform. There was a delay in the process of starting up IPTV initiative Project Canvas , as the matter remained under discussion at partner BBC. BT attacked BSkyB for attempting to block the project, but may have irked the BBC by calling for content providers to pay towards the cost of delivering their services via the internet. [pp.30-32.]

O2 UK is to offer all its mobile broadband customers access to Wi-Fi via BT Openzone hotspots, extending a deal between the two companies that had previously seen only iPhone users benefit. BT Openzone also won a contract to provide Wi-Fi to branches of Starbucks in Portugal and Spain. A deal with ATM company Cashbox will see cash dispensers fitted with Wi-Fi kit. [p.33.]

There were reports that BT and AT&T were to agree an interconnection deal for Cisco TelePresence services, despite squabbling; and Nestlé announced it is to introduce Cisco TelePresence conferencing supported by BT. [p.34.]

Irish music publishers are to take BT Ireland to court, for refusing to agree to the industry’s demands for a strict policy on illegal file-sharing. [p.35.]

BT GLOBAL SERVICES: BT won a £22m contract extension with Spanish bank Caixa Galicia to provide an iVPN service, as well as a seven-year WAN services deal with Swiss firm Syngenta. Hertz Europe also extended its NITS contract with BT, and the Metropolitan Police in London is to deploy BT identity management systems. [pp.37-39.]

The value of BT’s contracts with the NHS were said to have been boosted by £546m, following its agreement to take over Fujitsu contracts in the South of England. The additional money was said to be indicative of both BT’s underbidding for its original IT contracts with the NHS, and its stronger bargaining position when renegotiating the floundering South of England deals. [p.40.]

BT signed an MoU with Indian government computer security organisation CERT-In, as Chairman Sir Michael Rake emphasised the importance of the region to BT. BT Italia looked to bring in a new business plan that will cut staff and costs to help it compete more effectively. BT expanded its global media network to Holland, and agreed a deal for more satellite capacity in Latin America. [pp.42-44.]

Hosting facilities were expanded, with a data centre added to serve the financial community in New York. A new virtual data centre solution was showcased ahead of its launch at a conference in Germany. [pp.45,48.]

BT WHOLESALE: Charles Dunstone of Carphone Warehouse pondered the possibilities for competing with BT Wholesale, as his company absorbed its recent acquisition Tiscali, and emphasised its right to a say in the development of future networks. [p.50.]

ISPs Spitfire and Entanet indicated they were to participate in BT Wholesale trials of VDSL, which are to be conducted as part of BT’s pilots of FTTC. [p.50.]

OPENREACH: Openreach was reportedly in ongoing talks with the Communications Workers Union over working practices, as the union attempts to resolve staff concerns over satellite tracking, and the access services’ business looks for concessions that might provide a cost-efficient alternative to outsourcing work. [p.52.]

The number of unbundled lines inched towards six million, as Openreach committed resources to a product development roadmap ahead of anticipated Ofcom approval. [p.52.]

EXTRACT

DIGITAL BRITAIN: Opportunities for BT as Digital Britain report published

The Digital Britain report was published by the UK government’s Department for Business, Enterprise and Regulatory Reform (BERR), with recommendations and proposals for engendering the development of a UK society that fully embraces digital technology. The scope of the report covered the future of television and radio, creation and control of digital content, the role of government in the digital world, and, most significantly for BT, the creation and maintenance of the appropriate infrastructure to make the transformation possible.

Fixed lines to attract £6 annual levy to build next-generation public fund

The headline-grabbing plan from the document was the introduction of a £6 surcharge to be levied on all fixed lines in order to subsidise the rollout of next-generation high-speed broadband to areas where it would not be economically viable otherwise.

A Next Generation Fund is to be raised through a £0.50 supplement-per-month on nearly all fixed lines, which was described as the “fairest and most efficient means of ensuring that the overwhelming majority of the country has access to next-generation broadband”. It is interesting to note that, at this stage, the report refers to providing next-generation coverage to the majority, and not all of the country.

The supplement is to be applied to “all copper fixed lines” (residential and business equivalent) from 2010. Mobile lines are not to be included as they are considered to contribute through licence coverage requirements for mobile telephony and broadband. Confusingly, while the report says the levy will be applied to copper lines, it actually includes Virgin Media cable connections in this definition. Customers on social-telephony schemes will not be required to pay the charge.

The levy was justified in terms of the overall falling prices of services in the UK. Rather disingenuously, the report highlighted the existence of “free” broadband, and suggested that 10Mbps DSL could be found for £5.99-per-month, but it seems likely that this would be as part of a bundle with other services.

It was predicted that £150m- to £175m-per-year would be raised by the levy. It is considered that this level of annual subsidy would make connecting the “Final Third” as commercially viable as connecting the rest of the country by 2017. Estimates from Business Monitor International suggested there would be 32 million fixed lines in the UK by the end of 2009, which could be the starting point for the levy collection, and could see nearer £192m collected in 2010, although this figure would be reduced by the trend for declining fixed-line connections. The estimated total includes cable lines, which appear to attract the levy.

90%-fibre coverage by 2017

A Final Third project is proposed that would deliver 90%-coverage of next-generation broadband for homes and businesses by 2017, which is also hoped to accelerate the rollout of coverage from the 50% range to two-thirds. The report authors considered targeted subsidies as more effective than tax incentives to deliver this target, which is why a supplement on fixed lines is to be imposed.

As areas in need of investment are identified and classified, a reverse auction would be conducted to select the company that wins each next-generation upgrade project to be developed under the initiative. A coherent framework for network design, operating systems, common processes, and regulatory requirements is to be agreed upon to ensure consistent quality and choice.

Although possible, it is unlikely that any company other than BT is going to be in a position to make viable tenders for the projects, considering that they would still carry risks, require experience and personnel, and may have no significant upside. Virgin Media is perhaps one exception, although its experience remains in provision of services in densely populated urban areas.

The cost of a national fibre rollout

Analysis conducted for the report suggested coverage can be brought to between 60% and 70% of the country before incremental rollout costs begin to rise notably. The Digital Britain report showed initial costs-per-connection in higher density areas hover around £400 for fibre-to-the-cabinet (FTTC), and around £2,000 for fibre-to-the-home FTTH (Gigabit Passive Optical Network/GPON slightly higher than point-to-point/PTP).

Analysys Mason figures, released by the Broadband Stakeholder Group, were used by Digital Britain to make its assumptions on costs. According to the source material, a nationwide deployment of FTTC with scope for competition at cabinet infrastructure-level would cost £5.6bn, compared to £5.1bn for a network with some competition in more dense areas, and £4.6bn if infrastructure-sharing was not a requirement (although the report suggested that, in practice, competition would only be practical for just under 70% of the population).

BT doubts levy-level

Subsequent to BT’s initial positive response to the report (see below), there were indications that the company does not consider that the levy alone will be sufficient to bring broadband to the 90%-level envisaged by the report.

” There’s £1bn on offer here, but the devil’s in the detail about which areas will get funded. If [the charge] is for the ‘Final Third’, we would be very surprised if that could cover it. All our modelling shows differently. If you’re going from 55% to 85% [coverage], then I can see that that could be delivered. I can see a way to get to 85% with that kind of money. But we will struggle to get to 100% — in fact, it would be impossible to get to 100%. “
– Liv Garfield, BT Group Strategy and Portfolio Director.

The comments from the BT executive do not actually appear to stray too far from the logic of the Digital Britain report, although they do appear to be based on different assumptions of what the levy funds can be used for. BTwatch’s reading of the Digital Britain report considers that the fund would be available only for the areas where the economic case for fibre is the weakest — the final 30% of the country where the report’s research indicated the cost of deploying fibre begins a steep rise. The report left a somewhat grey area as to plans for how coverage will be boosted from levels of around 50% to approaching 70%, but suggested that by supporting the rollout in the most remote areas, competitive pressures (and presumably public demand) would see an operator (presumably BT) speed up plans to deploy in those areas. Garfield appears to suggest that the funds would be available in a much larger area of the country than Digital Britain is proposing.

It was interesting to note that, according to Garfield, the levy could bring in funding of £1bn. Assuming the executive was considering the 2010-2017 period, from when the levy is introduced until the 90% target is hoped to be achieved, this would mean BT is predicting a fairly steep continued decline in fixed lines. Digital Britain had predicted annual levy revenue of between £150m and £175m, which would give a range of £1.2bn to £1.4bn over the same period. As noted elsewhere, a research estimate put the potential sum that could be collected in the first year as high as £192m.

Comment: does BT forecast a halving of wireline connections by 2017?

BTwatch (issue 2009.04) recently calculated that the UK had 30.4 million fixed-access connections at 30 March 2009 (excluding broadband, but including cable), and, in very crude terms, this base has been declining at an annualised rate of around 2.6%.

If crudely extrapolated, this suggests a reduction to around 24.5 million connections by 2017 (down 19% over the period), and an income from the proposed levy of around £1.3bn in the eight years to that date (seemingly bang in line with the Digital Britain estimates).

However, if BT’s internal estimates reduce this income to £1bn (rather than just conveniently rounding it down), it could be projecting far sharper annualised decline in region of 8.5%, which, conceivably, could involve the fixed-line base being cut in half over the same period. At present, the major line-base losers are BT Retail and BT Wholesale, with rivals until very recently still growing their bases, so such a scenario could get even worse from a competitive standpoint. Should BT hold a far more pessimistic view, as outlined above, it could fear that fewer than half of UK homes will be connected to fixed networks in 2017 (compared to over 90% at present).

Even the more moderate decline suggested by BTwatch’s back-of-an-envelope calculations raises further questions related to Digital Britain, or at least BT’s role as a wireline participant and presumed prime beneficiary. The current norm is for fixed-broadband to share a voice connection, but a decline to 24.5 million fixed-connections would considerably undershoot the number of households and business premises in the country, with perhaps as many as 25% of homes without a fixed connection, leading to the conclusion that wireless access could prove a critical component of the Digital Britain vision. However, BT might successfully argue that ‘availability’ is the key criteria, as opposed to ‘provision’.

Universal Service commitment for broadband by 2012

Prompted by research showing that more than 10% of households cannot achieve 2Mbps, Digital Britain introduced a Universal Service Broadband Commitment that will see 2Mbps delivered to all areas of the UK by 2012.

This is expected to be completed using copper and wireless networks, possibly including satellite if necessary. It may be that mobile networks are the most cost-effective and quick way to complete this exercise, and it is not clear to whom the obligation of coverage provision would be handed. The view of many observers, including Openreach Chief Executive Steve Robertson, is that the fixed-line network is the most effective way to complete the project (see separate report), although more creative solutions may be needed for a tiny proportion of remote areas.

£200m of direct public funding is to be made available to fulfil the broadband commitment, with additional funds and support including: putting contracts out to tender; contributions in kind from private partners; public sector organisation contributions in areas that will benefit from contributions; consumers themselves paying for in-home upgrading; and wider coverage obligations on the mobile operators.

A Network Design Procurement Group is being established to deliver on the commitment, with a Chief Executive to be appointed in the autumn of 2009.

The BBC Trust will also have a view on the rollout, presumably linked to proposals for widespread IPTV/internet television plans as part of Project Canvas (see separate report).

Ofcom role to encompass investment as well as competition

Ofcom is to have its role “modernised”. This would see it given an “explicit general duty” to encourage investment in networks to further interests of consumers, alongside its duty to promote competition. It will also be required to alert the government of any significant deficiencies in coverage, capability, or resilience of the UK communications infrastructure, and report every two years on the overall state of the infrastructure.

The need for modernisation was the result of an “accelerating picture of investment in multiple types of next-generation networks”. This seems to reflect a long-standing BT argument that it should no longer be considered dominant due to the availability of alternatives such as mobile coverage (some evidence of which can be found in BT’s performance extrapolated from BT Key Performance Indicators by BTwatch — BTwatch, 2009.04).

BTwatch considers it is difficult to see a way in which the report does not provide BT with considerable licence to build-out networks as it sees fit, and could mark a longer term return to the levels of monopoly and imperiousness to regulatory decisions made by Oftel that BT enjoyed at the turn of the century.

Further report highlights

In his introduction to the report, Lord Carter noted that it is vital for the private sector to invest and build next-generation infrastructure, but also that the money and value in the market is shifting to service and application development rather than infrastructure. Interestingly, this move towards applications was predicted by BT when it introduced the 21CN project in 2003, and the rapid delivery of applications over the new network was considered to be one of the keystones of the project (BTwatch, 2003.05). However, because of the barriers and hurdles that the project encountered on the way, and a failure to address immediate competitive threats while focusing on future markets, BT is now in a position where it is still catching up on rivals with an ADSL2+ rollout, and has failed to introduce the layers of 21CN that would have seen it already well placed for this movement in the market.
The Digital Britain report suggested that the UK is on the verge of a digital “big bang” , with the volume of digital content expected to increase by a factor of between ten and one hundred times in the next three-to-five years.
Virgin Media is not to be required to open its network to rivals, but forcing it to do so in the future was not ruled out.
The report also emphasised the importance to government of a shift of public sector services to digital “as part of the financial solution for the public services” . This could be a possible further indicator that BT may be in a strong position to push for public investment and minimal regulation on its new infrastructure. Some commentators observed that the majority of the public that are most dependent on public services are those least likely to be online, which could also mean a push to bring basic broadband services into homes that have so far resisted the technology, perhaps suggesting there will be scope for a broadband equivalent to BT’s low-user/low-income voice line rental products.
A factor to be taken into account in considering the Digital Britain report is the prospect that the government behind it could be replaced within the next twelve months, and a Conservative Party spokesman on the topic of Digital Britain was critical of the levy and on BT’s own levels of commitment to super-fast broadband networks.
It was noted that wholesale prices for copper line services had fallen £8-per-year since 2005 in real terms. The combined retail cost of voice and broadband has fallen by £7.50 over the same period in real terms.
Consensus has not yet been reached between the government and the mobile operators on the future of mobile spectrum, which is an obstacle on the roadmap for future developments of next-generation mobile services. Should agreement between the parties be reached, auctions of 4G-suitable spectrum could quickly follow in 2010 (for more on the impact of Digital Britain on mobile operators, see Telefonicawatch and Vodafonewatch).
In discussing the importance of establishing the standards of online privacy, it was noted that the Information Commissioner is developing a new code of practice for personal information online. Also, Sir Tim Berners-Lee has been appointed by the Prime Minister to form a panel to determine the best way to manage public data. Berners-Lee has in the past spoken out against targeted advertising services such as Phorm, which BT until recently was expected to launch on its network (see separate report), due to privacy concerns. It is unclear whether Berners-Lee will directly touch upon the use of data for advertising purposes, but it is significant that a high-profile figure in a prestigious role that is considering the management of online data is concerned about the rise of such services.
Francesco Caio in his earlier report on next-generation network deployment set out a number of recommendations that Digital Britain said could still be carried through as part of, or in addition to, its main plans. These include: guidelines for homebuilders to mandate embedded next-generation broadband; relaxation of regulations on overhead lines; and ensuring there is no discrimination on non-domestic rates.
Digital Britain considered Long Term Evolution (LTE) 4G mobile networks as capable of bringing mobile broadband speeds of 50Mbps in a competitive market, but with challenges to a rollout in the Final Third of the country. The report foresees mobile data connection speed increases for the Final Third that would not be based on truly next-generation mobile broadband technology.
The report described fixed-to-mobile substitution as “modest” .

Comment: will the levy actually hurry fixed-lines’ demise?

In its current state, the fixed-line telecoms market is moribund, with lines being shed at increasing rates and alternatives increasingly viable. Passing on a £0.50-per-month line rental increase to customers already seeing increased line costs, and finding that advantages of fixed-line access are dwindling, must be questioned.

Beyond the core network that will remain essential, the wisdom of burdening the dwindling customer base of fixed-line services in order to make it a more viable offering in the long term runs the risk of building a network for which many find they have little use.

The decision to set aside funds for bringing 2Mbps to the homes across the UK that are at present unable to receive such speeds also highlights the compromised ambitions of the project. A grand infrastructure project could surely have begun by grasping the opportunity to leapfrog currently (barely) acceptable 2Mbps for the introduction of fibre as a showcase for a new network’s capabilities. Instead, the remote areas of the country look set to remain technological backwaters saddled with a service that has already been identified as insufficient for future needs.

Reaction — BT the winner

Expressing a view that no doubt had been shared with Lord Carter prior to the announcement of the levy, BT Group Chief Executive Ian Livingston indicated that BT could now seriously consider running FTTC past 90% of UK homes by 2017, while at the same time downplaying the potentially positive impact of the report on BT. Virgin Media, meanwhile, appeared satisfied that its network was not to be subject to increased regulation.

” BT agrees with the government that next-generation broadband will be important to the country’s economic future, and we will continue to play a leading role in strengthening the UK’s leadership in communications. It is important that the government finds ways to encourage investment in super-fast broadband, particularly in the parts of the country where the economics currently do not work. The report recognises this, and Lord Carter should be praised for offering a creative solution. “

” BT is alone in having an open network that hundreds of other companies can, and do, access, so we are well placed to be at the heart of the government’s plans. Funding should only be available to companies that are prepared to open their networks to others to ensure that [the] UK retains the most competitive telecoms sector in the world. “

” What this might well do, and has a good chance of doing, is providing enough support to make the risk and rewards of doing this programme acceptable. “

” I don’t think BT looks radically different today [after the publication of the report] from how it did yesterday. The most important thing for BT is operational excellence. “
– Livingston.

” As both Ofcom and the government have acknowledged, there is no immediate case for mandating access to Virgin Media’s network. “
– Virgin statement.

The view among the analyst community largely shared BTwatch’s opinion that the report is favourable for BT (with little apparent consideration for the longer term effects that strongly favouring BT could have on market development).

BT is expected to be the primary gainer from government subsidies, and the changes at Ofcom are expected to give the incumbent more of a free hand.

” BT has now had a considerable hand up from the government. It means that the company can now start to tell a credible longer term story. “
– Robin Bienenstock, analyst at Bernstein Research.

Analysts at UBS considered that, on the apparent assumption that BT’s current plan to spend £1.5bn on fibre rollout would cover 40% of the country (and it should be noted that, at all stages, BT has said that some spending will be dependent on public sector contributions), taking FTTC to 90% of the population will cost an additional £3bn. UBS also said the levy could contribute between £1.1bn and £1.4bn to this total.

” [Digital Britain tilts] the playing field rather more in favour of BT [by] offering solace in the form of a changed Ofcom mandate and a ‘‘Next Generation Fund’ that will generate roughly £150m to £175m a year in subsidy for the provision of fast broadband to the ‘Final Third’ of the country. “

” Rather than having to choose between milking decaying assets into oblivion on one hand, and indebting itself to undertake massive investment on the other, BT now has the possibility of capturing cost savings and reinvesting them to sustain a longer term future as the country’s chief network access player. “

” The only point of caution that we can see for BT is that it is still unclear how the bidding process for any subsidy will actually work. “
– Sanford Bernstein Research.

” Whilst much discussed in recent months, a duty [upon Ofcom] to promote investment is generally seen as a positive for BT, given the previous 20+ year focus on competition within the UK market. ” – Cazenove.

In the media, while the report was considered worthy if a tad unambitious, The Economist was notable for its contrarian view on the value of spending now on super-fast networks.

” Spending public money on whizzy new networks appeals to technophiles, but the benefits are not clear for others. Video-on-demand is the usual justification, but Sky, a satellite-TV firm, already offers such a service, and the BBC’s popular iPlayer service runs well enough over the existing network. Boosters claim the benefits of fast internet access cannot be predicted, and that history shows that extra bandwidth generates its own supply of data. Yet evidence from Hong Kong, which already offers speedy connections, suggests that super-high speeds appeal only to a few. And if demand for speed grows, the falling cost of hardware means it will be cheaper to provide in future than it is today. ” – The Economist.

[Further reference: Taxpayers face bill to meet costs -- Financial Times, 16 June 2009; Digital Britain brings BT some cheer -- Financial Times, 17 June 2009; Vodafone and BT buck FTSE fall as miners slump again -- The Guardian, 17 June 2009; Digital Britain: what it means for shares -- Citywire, 17 June 2009; Logica advances as broker turns positive; Market report -- The Independent, 18 June 2009; And access for all; The future of broadband -- The Economist, 20 June 2009; BT has reservations over broadband tax plans -- ZDNet, 2 July 2009; Phone tax not enough for full broadband rollout -- v3.co.uk, 2 July 2009; Tax on fixed line to subsidise broadband -- Business Monitor International, 1 August 2009.]

3 BT Group

3 Appointments
3 BT appoints Tony Ball to the Board
4 BT Board
4 Brokers’ reports
4 Ball brings valuable expertise to BT Board
5 City reports
5 Community
5 Digital Britain
5 Opportunities for BT as Digital Britain report published
5 Fixed lines to attract £6 annual levy to build next-generation public fund
6 Community
6 Pensions
6 90%-fibre coverage by 2017
6 The cost of a national fibre rollout
6 BT doubts levy-level
7 BT Pension Scheme plans equities withdrawal
7 Marketing
7 Agencies pitching for £9m digital ad account
7 Comment: does BT forecast a halving of wireline connections by 2017?
8 Public relations
8 CSR agency dropped as part of PR shake-up
8 Universal Service commitment for broadband by 2012
8 Ofcom role to encompass investment as well as competition
9 Regulatory
9 Further report highlights
10 Annual General Meeting
10 BT bullish in face of AGM dissatisfaction, pension worries
10 Comment: will the levy actually hurry fixed-lines’ demise?
11 Reaction — BT the winner
13 Employment
13 BT to loan out staff
13 BT offers employees year off on 25%-pay
15 Executive pay
15 L&G leads complains about BT bonuses
16 Tech Mahindra/Mahindra Satyam
16 New name and new executives for Satyam
16 New name first phase on road to merger
17 Tech Mahindra raises funds to boost Satyam stake

18 Strategy and operations

18 BT Innovation & Design
18 BT holds international “code jam”
18 BT Design to merge with BT Innovate
19 End of the road for Bross?
20 21CN
20 PlusNet hits snags in ADSL2+ trials…
22 …begins tests of IPStream Connect
22 Partners and resellers bemoan 21CN uncertainty
23 Fibre
23 Rake hints at FTTH rollout by 2014
24 Suppliers
24 Tellabs beat Huawei to BT 21CN deal
24 Tata trumpets $1bn BT deal
25 BT renews trading agreement with Nortel
25 Harris Stratex heralds BT contract

26 BT Retail

26 Broadband
26 BT to boost broadband speeds to 20Mbps
26 Broadband Accelerator to boost speeds on customer premises
27 Mobile
27 Up-to-20Mbps still an optimistic claim
27 Dunstone doubts BT’s ADSL2+ play
27 BT finally catching up with rivals?
28 Tariffs and pricing
28 Rivals, consumer groups criticise rolling contracts
28 Phorm dropped by BT in face of negative publicity
29 BT Television Services
29 Watson replaces Marks at BT Vision
29 BT Business
30 BT Vision removes Setanta Sports
30 BT highlights Setanta collapse as sign of pay-TV market weakness
31 Reseller predicts widespread SMB uptake of 20Mbps offer
31 BT calls for VoD contribution to broadband network costs
31 BBC Trust delays decision on Project Canvas
32 BT Payphones
32 Community
32 BT warns Sky over Project Canvas objections
33 Wireless networks
33 O2 UK extends Openzone deal
33 BT wins international Starbucks Wi-Fi deal
33 BT ties with Cashbox for ATM Wi-Fi
34 BT Conferencing
34 BT, AT&T close to TelePresence deal despite “politics”
34 Nestlé chooses Cisco TelePresence from BT
34 BT DirectorIes
35 BT Ireland
35 Clark pushes “sustainable cost‑transformation” message
35 BT wins deal with CryptoLogic
35 Record labels to sue BT Ireland
36 Clark pushes “sustainable cost-transformation” message cont’d
36 Marketing
36 BT uses Twitter to contact unhappy customers
36 A double-edged sword?

37 BT Global Services

37 Appointments
37 Contracts
37 BT wins five-year Caixa Galicia contract
37 BT wins Syngenta deal
39 Awards and accreditations
39 Hertz extends BT’s NITS contract
39 BT wins identity management contract with Met Police
40 NHS contracts
40 Value of BT NHS contracts up £546m
41 BT International: Americas
41 Foster: Breaking into the US security market
42 BT signs MoU with CERT-In
42 BT International: Asia
43 Rake underlines focus on Asia
43 BT International: Europe
43 BT Italia negotiates with unions over restructuring
44 BT expands media network to Netherlands
44 BT International: Latin America
44 BT signs satellite deal for remote coverage
45 Financial Services
45 BT expands hosting capacity
45 BT optimistic on financial services business
46 Partners
46 BT partners Secerno
48 Products and services
48 BTGS announces Virtual Data Centre service

49 BT Wholesale

49 Contracts
49 KCOM outsources network management to BT
50 Competitors
50 Carphone Warehouse ponders rivalling BT Wholesale
50 Fibre
50 Spitfire joins ISPs in Wholesale VDSL trial
51 Openreach
51 Disgruntled BT engineer “damages exchange”
51 Robertson on broadband for Digital Britain
52 Openreach in talks with unions over outsourcing
52 OTA2
52 OTA2 updates on network progress
53 BT fibre acceleration plans receive coverage boost
54 BT proposed fibre exchanges, second phase

55 Index

INDEX

A
Accenture, 40
Alcatel-Lucent, 19, 39, 46
Analysys Mason, 6
Apple, 33, 36
AT&T, 34, 42
B
BAA, 33
Babcock & Brown
- Eircom, 35
Bank of America-Merrill Lynch, 5
Barclays, 5
Berners-Lee, Sir Tim, 10
Bernstein Research, 11
Breckland Council, 32
British Broadcasting Corporation (BBC), 8, 12, 13, 26, 29, 31, 32, 33
British Chamber of Commerce, 43
BSkyB, 3, 4, 30, 32
BT Group, 3, 4, 5, 6, 7, 11, 18, 23, 24, 25, 43, 49, 50
- Asia
- Tech Mahindra, 16, 17
- BT Community Connections, 5
- BT Global Services, 4, 15, 18, 19, 34, 37, 39, 45, 46, 48
- BT Americas, 41
- BT Benelux, 39, 44
- BT Global Video Exchange, 34
- BT India, 42
- BT International, 41, 42, 43, 44
- BT Italia, 43
- BT Spain, 37
- One Source for Cisco TelePresence, 34
- Quick Start, 46
- Radianz Proximity, 45
- Virtual Data Centre, 48
- Work Anywhere, 46
- BT Group
- Strategy and Operations, 18
- BT Pension Scheme, 7, 13
- BT Retail, 22, 26, 29, 30, 33, 34
- BT Broadband, 26
- BT Broadband Accelerator, 26
- BT Business, 19, 29, 30, 31, 36
- BT Care (Twitter), 36
- bt.com, 7
- BT Conferencing, 34
- BT Ireland, 35, 36
- BT Mobile, 39
- BT MyPlace, 33
- BT Openzone, 33
- BT Payphones, 32
- BT Tradespace, 30
- BT Vision, 29, 30, 32
- BT WebWise, 28
- PlusNet, 20, 22
- Together, 25
- BT Wholesale, 22, 24, 26, 49, 50, 52
- DataStream, 46
- i-Plate, 26
- IPStream, 22
- IPStream Connect, 22
- Directors
- Ball, Tony, 3, 4
- Hewitt, Patricia, 4
- Rake, Sir Michael, 3, 4, 23, 43
- Executives
- Blackburn, Mike, 39
- Bross, Matt, 18, 19
- Bruce, Chris, 33
- Burger, Bas, 44
- Campenon, Olivier, 34
- Cavestany Vallejo, Jacinto, 37
- Clark, Chris, 35
- Croxford, Ivan, 30
- Dalton, Careson, 13
- Davis, Sally, 49
- Faux, Martin, 36
- Fitzpatrick, Brian, 24
- Foster, Jean, 41
- Garfield, Liv, 7
- Geddes, Martin, 42
- Halbert, Bill, 49
- Lalani, Hanif, 18, 37, 48
- Livingston, Ian, 11, 15, 18
- Morgan, Peter, 8
- Moss, Kevin, 41
- Murphy, Bill, 29
- Narang, Sudhir, 42
- Nicholson, Andy, 45
- O’Neill, Colm, 35
- Patterson, Gavin, 26
- Prestel, Jeff, 34
- Ramji, Al-Noor, 18
- Rangaswami, JP, 18, 36
- Robertson, Steve, 8, 51
- Rodrigues, Mario, 44
- Schneier, Bruce, 41
- Sciolla, Corrado, 43
- Smith, Karl, 46
- Watson, Marc, 29
- Williams, Sean, 30
- Ex-executives
- Barrault, François, 15
- Cowen, Tim, 37
- Green, Andy, 19
- Marks, Dan, 29, 32
- Verwaayen, Ben, 19
- Goonhilly Earth Station, 6
- Openreach, 8, 51, 52
- WLR3, 52
- Strategy and Operations, 18, 19
- 21CN, 9, 19, 20, 22, 24, 50
- BT Innovation and Design, 18, 19, 36, 42
- BT Operate, 19
Business in the Community, 5
C
Caffe Nero, 33
Caixa Galicia, 37
Carphone Warehouse, 27, 28, 50
- TalkTalk, 27, 28, 50
Cashbox, 33
Ciena, 4
Cisco Systems, Inc., 34, 37, 39
Citigroup, 4
Communications Management Association, 27
Communications Workers Union, 13, 52
CryptoLogic, 35
D
Datamonitor, 4, 17
Deloitte, 30
Department for Business Enterprise and Regulatory Reform (BERR, UK), 5
Deutsche Bank, 49
Deutsche Telekom, 4
Diabetes UK, 13
Digital Britain, 5, 6, 7, 8, 9, 10, 12, 26, 31, 51
- Caio, Francesco, 10
- Lord Carter, 9, 11, 26
DMSL, 31
DTV Services
- Freeview, 29, 30, 32
E
Entanet, 50
ESPN, 30
European Union, 28
F
Federation of Communication Services, 22
Fishburn Hedges, 8
Football Association
- Premier League, 30
Fujitsu, 40
G
Gamma Telecom Ltd, 22
Gartner Group, 31
General Electric Co. (GE)
- NBC Universal
- Universal Pictures, 29
Globant, 18
Goldman Sachs, 4
Grupo VIPS, 33
H
Harris Stratex Networks, 25
Hertz, 39
- Hertz Europe, 39
High Court, 35
Hilton Group, 33
Huawei Technologies, 24, 43
Hutchison Whampoa
- 3 Group
- 3 UK, 27
I
iMMovator, 44
Indian Computer Emergency Response Team
- CERT-In, 42
Industrial Technology Research Institute, 29
iome, 33
ITV, 3, 4, 29, 31, 32
J
JPMorgan Chase
- JPMorgan Cazenove, 12, 49
K
Kabel Deutschland, 3
Kazoo, 8
Kingston Communications (KCOM), 49
L
Law Debenture, 6
LBI International AB, 7
Legal & General, 15
LinkedIn, 41
Logica, 12, 19
M
Mahindra and Mahindra, 16
Mahindra Satyam, 16, 17
Marketing Society, 31
Metropolitan Police Service, 39
Morgan Stanley, 4
N
National Health Service (NHS, UK), 40
- NHS Connecting for Health, 40
Nestlé, 34
Netgem, 29
New Skies Satellite, 44
Nortel Networks, 25
O
Ofcom, 8, 9, 11, 12, 29, 30, 52
- Carrier pre-selection, 52
- LLU, 52
- Strategic Review of the Telecoms Sector, 52
- Wholesale line rental, 22, 52
Office of Fair Trading, 32
Office of the Telecommunications Adjudicator, 52
- OTA2, 52
Omnicom Group
- Abbott Mead Vickers BBDO, 7
- Agency.com, 7
Open IPTV Forum, 29
Ovum, 40
P
PCCW, 43
Phorm, Inc. (121Media), 10, 26, 27, 28
Pirelli, 29
R
Ramada Jarvis, 33
RapidShare, 26
Redwood, 36
S
Samsung, 30
Sanford Bernstein, 12
Secerno, 46
Setanta, 29, 30
- Setanta Sport, 29, 30
SkyTeam, 33
Sony, 35
Spitfire, 50
Starbucks, 33
Syngenta, 37
T
Tata Communications, 24
- Global Voice Solutions, 24
Tech Mahindra, 16, 17
- Mahindra Satyam, 16, 17
Technology
- ADSL, 22, 51
- ADSL2+, 9, 20, 22, 26, 27
- ATM, 33
- Broadband, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 22, 23, 26, 27, 28, 29, 30, 31, 32, 33, 36, 50, 51
- DSL, 5
- Ethernet, 19
- Fibre, 6, 7, 10, 12, 19, 22, 23, 26, 49, 50
- FTTH, 6, 23
- HD, 34
- ICT, 35
- IP, 22, 25, 29, 31, 37, 44, 50
- IPTV, 8, 29, 31, 32
- LTE, 10
- MPLS, 34
- NITS, 39
- Private circuits, 9
- Project Canvas (BBC, BT, ITV), 8, 28, 29, 31, 32
- SIP, 50
- Unified Communications, 39
- VDSL, 50
- Video-on-demand, 12, 31
- VoD, 31
- VoIP, 37, 50
- Wi-Fi, 33
Telefónica, 33, 36
- Telefónica Europe (O2), 33, 36
- UK, 33, 36
Teleglobe, 24
Tellabs, Inc., 24
Thus, 32
Timico, 27
Tiscali SpA, 50
Trimedia, 8
Twitter, 36, 41
U
Ubiquisys, 4
UKSIF, 6
UPC Communications, 35
Uswitch, 28
V
Verizon Communications, 42
Virgin Media, 5, 6, 9, 11, 30, 50
Vivendi, 35
Vodafone, 12
W
Wales Council for Deaf People, 32
Which?, 34
Wieden & Kennedy, 7
Wind Telecomunicazioni SpA, 6
WPP
- OgilvyOne, 7

37 Appointments

BTwatch, issue 2009.04 snapshot

AB — Tue, 16 Jun 2009 15:30:38 +0000

RESULTS: BT Group reported its results for the full year to 31 March 2009, with the worse-than-expected £1.3bn Q4 write-down dominating most of the headlines, and the potential £7bn-£11bn pension deficit and accompanying £525m annual top-up payment capturing the rest. BT’s new mantra of ‘three-out-of-four ain’t bad’ was reiterated with the company insisting that all divisions aside from BT Global Services are performing well. However, BTwatch noted sales weakness behind the painful Global Services’ housekeeping exercise and pressure on cash flow. Performance was below expectations, and the reduction in the BT dividend was greater-than-expected. [pp.3-25.]

Issue: 2009.04
Covering: April to May 2009
Published: May 2009
Next issue: June 2009

Mapping the activity and strategy of the UK’s largest telco. A unique monthly report for the industry.

About BTwatch
Executive Brief
Extract
Table of Contents
Index

ABOUT BTWATCH

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.
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Below is a free taster from issue 2009.04 (April-May 2009), including an Executive Brief, Extract, Table of Contents and Index, giving a valuable snapshot of the full report.

EXECUTIVE BRIEF

BTwatch’s analysis of BT’s Q4 KPIs highlighted the operational pain of the economic downturn, and BT Retail’s continued competitive weakness. [pp.25-31.]

BT Global Services is being restructured and reorganised with new contract review and due diligence procedures hoped to reduce the risk of mega-deals becoming out of control and unprofitable. BT Retail benefited from smaller BT Global Services’ customers being transferred to the division, but BTwatch believes the UK retail business is yet to face up to underlying problems with its business model. BT Wholesale, which is growing a commendable managed services business, and Openreach performed solidly. [pp.18-19,20,21,22,23.]

BT indicated at its results announcement that it is to accelerate its initial fibre rollout as part of its commitment to next-generation services. However, the fibre commitment appears to mark the end of 21CN as a grand infrastructure project as originally envisaged. [p.3.]

BT GROUP: There were rumours that BT is considering a bid for T-Mobile UK or 3 UK, two mobile operators thought to be up for sale. While the intricacies of a major takeover could prove disastrously distracting for the already over-taxed telco, there is undeniable logic in BT becoming a more integrated communications player in its home market. [p.32.]

After the terrible BT results, came the post mortems as to who was to blame for the current situation and, following the release of the BT Annual Report, predictable press outrage regarding the level of executive bonuses. BT attempted to draw the sting from criticism with a commitment to introducing a claw-back clause into senior contracts that would mean sustained good performance was rewarded. The company also noted that bonus payments linked to financial performance were not paid last year, and BT Global Services’ Chief Executive Hanif Lalani declined any bonus due to him. [pp.33-35,39-40.]

Meanwhile, 15,000 more BT staff, outsourced workers, and contractors are expected to lose their jobs in the current year as a result of continued cutbacks. BT emphasised that the bulk of the losses would not affect permanent staff, and Finance Director Tony Chanmugam expressed a desire to bring more work in-house. [pp.5,13,35.]

Progress was made in the Tech Mahindra acquisition of a controlling stake in IT services provider Satyam, which will lead to BT holding an indirect stake in the scandal-hit business. However, questions were raised regarding the wisdom and value of the deal. [pp.36-37,39.]

STRATEGY & OPERATIONS: Business ISP Timico completed trials of 21CN-based services and is to roll out ADSL2+, while a deal was signed with wholesale services provider murphx that will lead to the delivery of 21CN services to its customers. [pp.41-42.]

BT Operate halved the number of Citrix servers used to support BT’s infrastructure at a saving of £7.5m so far. BT Innovate trumpeted two awards won by prototype video products at the ITEX 2009 exhibition. [pp.42,43.]

BT RETAIL: While BT Retail’s Consumer head John Petter stressed BT’s commitment to customer retention through value-for-money services, the unit was criticised once again for its practice of locking customers into rolling twelve-month contracts. BT also positioned itself as a consumer champion, launching a campaign with operator 3 UK calling for mobile termination rates to be lowered. [pp.48,50.]

A combined fixed and mobile broadband package was highlighted by BT, which the company said was hundreds of pounds cheaper than similar offerings from rivals Orange and Virgin. BT was criticised by IPTV partner BBC for throttling the speed of access to the broadcaster’s broadband iPlayer, and allegedly making the service unusable during peak evening hours for customers on the telco’s basic broadband package. [pp.50-51.]

BT’s largest rival in the consumer broadband sector is now Carphone Warehouse after its TalkTalk business acquired Tiscali UK. The retailer now claims to have the second-largest network in the UK through the unbundling programme led by its Opal Telecom unit, and is now aggressively pursuing BT business customers. [p.52.]

After previously appearing to rise above privacy concerns surrounding the Phorm targeted advertising solution it is trialling, there were rumours that BT is considering abandoning the service in favour of a less controversial alternative following the news that high-profile web organisations including Amazon plan to block it. [p.52.]

BT Business launched Ethernet-based broadband services for the SME sector, which it claimed could cut costs by up-to-65% compared to past offerings. The business unit continued to defend itself from the threat of broadband providers offering faster services with the promise of ‘free’ ADSL2+ upgrades when they become available for its SME customers. [pp.53-54.]

BT Business continued its software-as-a-service push signing an agreement to re-sell online accounting software from New Zealand-based xero. New web tools were also launched by the unit. [p.55.]

BT Conferencing, an increasingly talked-up BT Enterprise unit, announced availability of high-definition video-bridging and mobile management solutions from Ring2. [pp.56-57.]

While BT Vision continues to struggle to build a viable customer base, BT Retail’s Dan Marks talked-up the prospects for Project Canvas, which could be viewed as an upgraded IPTV service, and is under development with the BBC and ITV. Existing pay-TV market leader BSkyB expressed disquiet on the competition aspects of the initiative. [pp.57-58.]

BT Ireland won a EUR55m five-year contract to provide contact centre services for the republic’s emergency services. [p.59.]

BT GLOBAL SERVICES: BT announced contracts around the globe as it emphasises its pursuit of growth in developing markets: a network-outsourcing deal was won with Brazilian catering company GRSA; UAE-based Emirates Airline awarded the telco a contact centre services contract, and in Europe French rail company SNCF handed BT a contract to integrate and support video-surveillance and ticketing solutions from 3Com into its network infrastructure. [pp.61-63.]

Cerner, a software partner on BT’s massively written-down NHS contracts, indicated that under revised implementation procedures progress is being made on the system rollout, although problems persist. BT’s partnership with Liverpool Council is under review due to apparent lack of transparency in the billing of the £78m-per-year contract, but BT reported success for another major public sector project with the Department for Work and Pensions. [pp.64-65.]

BT launched its increasingly popular Quick Start portfolio of unified communications and business-efficiency services in the Middle East and North Africa. New managed security products were unveiled by BT at the InfoSecurity event held in April, and the business also emphasised the importance of the risk-management services it provides. The Onevoice converged communications platform was upgraded with integrated conferencing services, mobile international calls, and SIP. [pp.67-68,72.]

Hitachi Communications Technologies is to act as an original equipment manufacturer for BT’s trading system portfolio. BT agreed a new four-year global trading agreement to offer Nortel’s voice application equipment, and solutions and convergence portfolio to customers. Datapulse is to provide unified communications applications across BT’s UK and international businesses. [pp.68-70.]

BT Media & Broadcast partnered CET Teleport to expand the reach of its media network, and is to broadcast content from India’s UTV in the USA. [p.71.]

BT WHOLESALE: BT was linked to a deal to take over aspects of regional incumbent Kingston Communications. BT expressed enthusiasm for the introduction of smart-metering for the UK’s energy networks, which would entail a rollout of new communications services for suppliers. [p.73.]

OPENREACH: Ofcom increased the price that Openreach can charge rivals for provision of wholesale fixed-line services by 6% — a figure markedly less than BT had hoped, resulting in the usual sabre-rattling from the telco about the implications that the decision could have on its ability to invest in the widely supported fibre rollout. Analysts were a little more positive on the impact of the decision on Openreach, however. [p.74.]

REGULATORY: The Universal Service Obligation is under review by Ofcom, after considerable lobbying from BT. Among the proposals for a new USO are a requirement for mobile operators to contribute to maintaining a payphone network. A report on the impact of the Telecoms Strategic Review was issued by Ofcom. [p.75.]

EXTRACT

IPTV: Dan Marks comments on Project Canvas

In an interview with the Birmingham Post, Dan Marks, Deputy Managing Director of BT Consumer, and Chief Executive of BT Vision, outlined the company’s vision for Project Canvas, the company’s new joint venture with the BBC and ITV (BTwatch, 2009.01). The service is designed to offer an internet-like interface for televisions, and offer free access to digital services such as the BBC’s iPlayer, on-demand television services, and video from other sources.

Marks said Project Canvas is about “bringing the PC to the TV”; combining the flexibility of the internet with the mass-market reach of television.

” Canvas is a successor to Freeview. It looks a lot like BT Vision, but on a lot bigger scale. We are going to develop the next version of it with some 42 channels and radio channels, but we are also going to have HD TV [high-definition television] channels. ”
– Marks.

Marks said the service will support a much wider variety of content providers, enabling organisations such as local newspapers or public sector bodies to broadcast their own content.

” What you are going to have as a customer is a set-top box, which is connected to broadband, and offering not only channels-on-demand but also interactive services. This is a way for anyone who has something to say to people to relate to them, have a one-to-one, and make more personal relationships with them. That can mean local content and local news services. It can mean narrow, niche-content programming for people who live in Digbeth, for example, or for people who are interested in model railways. For example, you can search for Tom Cruise and it will search the channels and everything on-demand. It will come up with a list of programmes with Tom Cruise in them. TV is getting personalised, and Canvas is going to make Freeview more personalised than before. ”
– Marks.

The project, however, still has regulatory hurdles to overcome. The BBC Trust is currently conducting consultations on the project to assess its public value and market impact, and is due to report back on 8 June 2009. The consultation has already received objections from the advertising lobby and BSkyB, which allege that the service could “significantly distort competition” in the on-demand market.

BSkyB has also called on telecom regulator Ofcom to assess Project Canvas’s market impact before the BBC is allowed to go ahead with the service. In its submission to the BBC Trust’s consultation, the News Corp-owned firm said the BBC’s role is not to “develop, promote, and operate its own means of delivery”, but to “work with industry and in partnership with other organisations to facilitate understanding and adoption of emerging technologies”.

However, Marks said the venture is trying to give customers “what they want”.

” Forty years ago they wanted a telephone line; five years ago they wanted broadband. Today, customers want TV, broadband, and also entertainment — we are simply moving with our customers. The entertainment business is a bit like the retail world. Up until now, getting your entertainment was a bit like going down the high street and going to the BBC shop or the ITV shop. We are making that high-street shopping more like supermarket shopping. ”
– Marks.

[Further reference: ‘Insufficient justification' for Canvas joint venture, says Sky -- Telegraph, 11 May 2009; BSkyB raises objections to Project Canvas -- hollywoodreporter.com, 12 May 2009; How Project Canvas will make the PC a star of TV -- Birmingham Post, 21 May 2009.]

3 Q4 FY09 results

3 Write-down hell; sales weakness masked
4 “…out of context…”
4 Tony Chanmugam on his professional background
4 BT Group financial highlights, Q4 and 12m FY08-09, periods ending 31 March 2009
4 BT Group, performance by division, 12m FY08-09
5 BT Group, performance by division, Q4 FY08-09
6 Revenue — only managed services impressing
7 BT Group, revenue by product type, Q4 FY08-09
7 BT Group, revenue by customer group, Q4 FY08-09
8 Charges and reviews — further write-downs in FY09-11
9 BT Group: specific items and charges, Q4 and 12m FY08-09
10 Pensions — deficit of £7bn-£11bn+ estimated
10 Cash flow and liquidity — Q4 weakness decimates cash generation
11 Outlook — bullish in the face of adversity; cost squeeze ahead…
12 Comment: blame game
13 Layoffs
15 Divisions
15 BT Global Services
16 BT Global Services, financial highlights, Q4 FY08-09
16 Order book, contract wins
17 Restructuring progress
18 Going forward
18 BT Global Services: new structure
19 BT Retail
20 BT Retail, financial highlights, Q4 FY08-09
20 BT Ireland
22 BT Wholesale
22 BT Wholesale, financial highlights, Q4 FY08-09
23 Openreach
23 Openreach, financial highlights, Q4 FY08-09
24 Market reaction
25 KPIs
25 Q4/12m FY08-09 KPIs and operational analysis — shaky
25 KPIs
27 BT Group: Q4 FY08-09 Key Performance Indicators, three months to 31 March 2009
29 Revenue and cost analysis
30 BT Group: Q4 and 12m FY08-09 revenue and cost analysis, periods to 31 March 2009

32 BT Group

32 People
32 Awards and accreditations
32 M&A
32 Unlikely rumours circulate of BT T-Mobile UK bid
33 Environment
33 Employment
33 BT to introduce bonus-payback clause
33 Claw-back plans a subtle attempt to shift blame?
34 Marketing
34 Livingston bonus attracts condemnation
34 BT moves to deflect criticism
35 Regional worries as BT announces more job cuts
35 Compulsory redundancies not ruled out at BT
35 Should the higher job-cut numbers be considered surprising?
36 Associates and investments
36 Tech Mahindra “cautiously optimistic” on diversification
36 BT claims success of home-working scheme
36 Buyout of initial Satyam-stake completed
37 Questions raised over value and potential of deal
39 Tech Mahindra wins Swan Telecom contract — report
39 Annual Report highlights

41 Strategy and operations

41 21CN
41 Timico completes 21CN pilot, launches ADSL2+
42 BT agrees 21CN deal with murphx
42 BT Innovate
42 BT wins awards for video products
43 Digital Britain
43 Prime Minister indicates hope for government network investment
43 BT Operate
43 BT Operate rationalises Citrix server deployment
43 BT’s dilemma made clear at Digital Britain
44 CLA claims countryside left behind in broadband rollout
45 Operations
45 BT praises leasing to boost capital efficiency and cash flow

46 BT Retail

46 Advertising
46 ASA rules against BT in Telecom Plus case
46 BT appoints eType to resume third-party advertising
48 Customer satisfaction
48 BT placed bottom in phone-user poll
48 Customer service
48 BT adds live chat to inclusion website
48 Operations
48 Petter highlights customer-retention efforts…
49 Legal
49 Marketing
49 …but BT contract lock-ins criticised
49 BT to promote development in North-West
50 Tariffs and pricing
50 BT ties with 3 to campaign for lower termination rates
50 Broadband
50 BBC criticises BT for throttling iPlayer access
51 UK slips to eleventh in global broadband league table
51 BT cuts the price of combined broadband
52 BT distancing itself from Phorm?
52 Carphone moves into second spot with Tiscali buy…
52 …and targets BT’s business broadband share
53 Business
53 BT launches Ethernet broadband services
54 BT to offer ‘free’ ADSL2+ upgrades
54 BT feeling the pressure to compete on speed
55 BT introduces SME web tools
55 BT to resell Xero’s online accounting software
56 Conferencing
56 BT signs US patent licensing deal
56 BT Conferencing wins access to MiCTA members
56 BT launches high-definition video bridging
57 Conferencing offers mobile management via Ring2 tie-up
57 IPTV
57 Dan Marks comments on Project Canvas
59 Ireland
59 BT Ireland to avoid brunt of job cuts — spokesperson
59 BT Ireland wins emergency services contract
60 Redcare
60 Redcare launches new products, touts cost benefits
60 Wireless
60 CanvasM selected for TuVista trial

61 BT Global Services

61 Contracts
61 People
61 BT awarded Brazilian network outsourcing deal
62 Marketing
62 BT appointed official partner for BMW International Open
62 BT lands Emirates contact centre outsourcing work
63 BT International: Americas
63 BT North America completes solar-energy project
63 BT secures LAN implementation deal with SNCF
63 BT wins FT deal
64 BT North America completes solar-energy project cont’d
64 NHS contracts
64 Cerner claims progress in NHS contracts
64 …but report highlights more problems
65 Public sector contracts
65 BT trumpets DWP success
65 LDL investigation to report in October
66 Products and services
66 BT Diamond adds IP address management service
67 BT launches managed security services…
67 …and promotes risk management services
68 BT upgrades Onevoice platform
68 Suppliers
68 BT signs global agreement with Nortel
69 BT signs new framework agreement with Datapulse
70 BT Global Financial Services
70 Radianz targets London with Ultra Access solution
70 BT Global Financial Services
70 BT wins Radianz contract with Instinet
70 BT signs Hitachi to sell trading systems
71 BT Media & Broadcast
71 BT lands deal with UTV Movies
71 BT extends GMN reach via VSAT provider
72 BT International: Middle East
72 BT launches Quick Start in Middle East and North Africa

73 BT Wholesale

73 M&A
73 BT linked to Kingston assets
73 Contracts
73 BT enthusiastic on smart-metering

74 Openreach

74 Ofcom sets Openreach wholesale prices

76 Regulatory

76 Ofcom reports on impact of Strategic Review
76 Ofcom to review payphone funding

77 City reports

77 Brokers’ reports
77 Property
77 Lease-back-related debt downgraded

78 Index

INDEX

SYMBOLS
3Com Corp., 63
A
Advertising Standards Authority, 46
Agilent, 37
B
Babcock & Brown
- Eircom, 59
BATS Europe, 70
BMW, 62
(BBC, 50, 51, 57, 58
BSkyB, 25, 27, 28, 29, 54, 58
BT Group
- BT Diamond IP, 66
- BT Financing Solutions, 45
- BT Global Services, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 20, 24, 25, 29, 30, 31, 32, 33, 34, 35, 36, 39, 45, 61, 63, 67, 68, 69, 70
- BT Americas, 63
- BT Asia Pacific, 71
- BT Germany, 62
- BT Global Financial Services, 70
- BT Int., 63, 64, 65, 72
- BT Japan, 70
- BT Media & Broadcast, 71
- BT North America, 63, 64
- BT Onevoice, 68
- Featurenet, 31
- Global Carrier, 30
- Liverpool Direct Limited, 65
- Mng’d Fraud Reduction, 67
- Mng’d Secure Docs., 67
- Managed Secure Email, 67
- MeetMe, 57, 68
- Onevoice, 68
- Quick Start, 72
- Radianz Proximity, 70
- Tech Mahindra, 36, 37, 39, 60
- Unified comms. and collab. (UCC), 68, 72
- BT Pension Scheme, 11
- BT Retail, 3, 4, 5, 12, 13, 19, 20, 25, 26, 27, 28, 29, 30, 31, 39, 40, 45, 46, 48, 49, 50, 54, 59
- Adam and Jane, 49
- BT Basic, 26, 28, 48
- BT Business, 19, 20, 41, 42, 53, 54, 55
- bt.com, 50
- BT Conferencing, 19, 56, 57
- BT Consumer, 57
- BT Ireland, 20, 59
- BT Mobile, 28, 63
- BT Openzone, 60
- BT Payphones, 29, 31
- BT Redcare, 60
- BT Redcare Agile, 60
- BT Total Broadband, 50
- BT Tradespace, 55
- BT Vision, 19, 26, 46, 48, 50, 57
- Friends and Family Mobile, 49
- Online Starter Kit, 55
- Option 1, 50
- Option 3, 55
- Together, 28, 56, 68
- BT Wholesale, 3, 4, 5, 6, 7, 22, 23, 25, 27, 29, 30, 31, 32, 39, 73, 74, 75
- Directors
- Rake, Sir Michael, 11, 32, 33, 39
- Ex-Directors
- Alahuhta, Matti, 32, 39
- Bland, Sir Christopher, 12
- Van den Burgh, Maarten, 33
- Executives
- Boustridge, Michael, 63
- Buckley, Warren, 48
- Campenon, Olivier, 62
- Champan, Theo, 34
- Chanmugam, Tony, 4, 6, 8, 10, 11, 12, 13, 17, 35
- Chin Hu, Lin, 65
- Clark, Chris, 59
- El Kabbany, Wael, 72
- Formosa, Harry, 71
- Glenn, Philip, 60
- Halbert, Bill, 73
- Hobby, Ben, 56
- Hodkinson, Tim, 63
- Huart, Olivier, 63
- Lalani, Hanif, 17, 34
- Levy, Dan, 45
- Livingston, Ian, 3, 6, 8, 12, 13, 15, 17, 18, 20, 22, 29, 33, 34, 35, 39, 43, 51
- Lyell, Lewis, 68
- Marks, Dan, 57
- Marsh, Jon, 36
- McCormack, Aaron, 57
- McInness, Danny, 60
- Morris, Peter, 59
- Murphy, Bill, 53
- Nicholson, Andy, 70
- Pearson, Lee, 34
- Petter, John, 48, 50
- Rooney, Tim, 66
- Sanches, Luiz, 61
- Seidel, Bob, 56
- Stanton, Ray, 67
- Stephens, Nathan, 34
- Strutt, John, 54
- Taylor, Kevin, 61, 65, 71
- Thompson, Jerry, 55
- Ex-executives
- Barrault, François, 12, 13, 17, 33, 34, 61
- Green, Andy, 12, 33
- McClelland, Maggy, 61
- Verwaayen, Ben, 12, 33
- Openreach, 3, 4, 5, 9, 23, 27, 29, 31, 39, 74, 75
- Ribbit, 68
- Strategy and Operations, 41
- 21CN, 3, 5, 9, 18, 41, 42, 53, 54
- BT Innovate, 42
- Video Circle, 42
- Zeta, 42
- BT Operate, 43
Business in the Community, 32
C
Cable and Wireless, 73
Carphone Warehouse, 26, 28, 52, 54
- TalkTalk, 52
Cerner Corp, 64
Channel 4, 46
Chi-X Europe, 70
Cisco Systems, Inc., 62
Citrix, 43
COLT Telecom, 61, 73
Commerzbank, 16
Commission for Communications Regulation (ComReg, Ireland), 59
Communications Workers Union, 34
Conduit, 59
Country Land and Business Association, 44
Credit Suisse, 77
D
Datamonitor, 56
Department for Work and Pensions (DWP, UK), 65
Department of Health, 64
Deutsche Bank, 77
Deutsche Telekom, 32, 34
- T-Mobile, 32
- UK, 32
DTV Services
- Freeview, 51, 57, 58
Dynamix Balwas Infrastructure Pvt. Ltd.
- Swan Telecom, 39
E
Echoworx, 67
Emirates Airline, 62
Ericsson, 39
Etisalat, 39
Euronet Worldwide, Inc., 37
European Broadcasting Union (EBU / Union Européenne de Radio-Télévision / UER)
- Eurovision Song Contest, 49
European Union
- European Commission, 50, 52
F
Financial Times, 63
Ford, 44
France Télécom, 32, 34
- Orange, 26, 28, 32, 51
Frontline Technologies, 65
Fujitsu, 64
G
Grupo de Solucoes em Alimentacao, 61
H
Hitachi Communication Technologies, 70
HSBC, 77
Hutchison Whampoa
- 3 Group
- 3 UK, 32, 50
I
Integrated Accommodation Servs. (IAS), 10
International Paralympic Committee (IPC)
- Paralympic World Cup, 60
Investec, 74
ITV, 51, 57, 58
J
JPMorgan Chase, 77
K
Kingston Communications, 73
L
LBI International AB, 50
Liberty Media
- DIRECTV Group, Inc., The, 71
LifeSize Communications, 56
Liverpool City Council, 65
Logica, 12
M
Metropolitan Police Service, 16
MiCTA, 56
Morgan Stanley, 77
Motorola, 60
murphx Innovative Solutions Ltd., 42
N
National Health Service (NHS, UK), 3, 64
Nestlé, 37
New Delhi Television, 61
News Corp., 58
Nissan Motor Company, 37
Nokia, 32
Norfolk County Council, 16
Nortel Networks, 68, 69
Northwest Regional Development Agency, 49
O
OECD, 51
Ofcom, 49, 50, 58, 74, 75, 76
- Carrier pre-selection, 25
- FRIACO, 28, 31
- Light User Scheme
- BT Basic, 26, 28, 48
- LLU, 5, 19, 22, 23, 26, 27, 29, 30, 31, 74
- Richards, Ed, 74
- Strategic Review of the Telecoms Sector, 76
- USO, 43, 44, 76
- Wholesale line rental, 6, 7, 23, 25, 26, 27, 29, 31, 74
Olympic Games
- London 2012, 34
Omnicom Group
- Abbott Mead Vickers BBDO, 49
Oracle, 65, 67
P
Phorm, Inc. (121Media), 52
Post Office, 25
R
Research In Motion
- BlackBerry, 57
Ronald A Katz Technology Licensing, 56
S
Satyam Computer Services Ltd, 36, 37
SNCF, 63
Solar Power Partners, 64
Sun Microsystems, 65
Suntech Energy Solutions, 64
Syngenta, 16
T
Tech Mahindra, 36, 37, 39, 60
- CanvasM, 60
Technology
- Broadband, 6, 7, 11, 19, 22, 23, 26, 27, 28, 29, 30, 31, 39, 40, 41, 42, 43, 44, 49, 50, 51, 52, 53, 54, 55, 58, 74, 75
- ADSL2+, 39, 41, 42, 54
- Convergence, 30, 68
- Ethernet, 16, 23, 39, 53
- Fibre, 3, 6, 23, 43, 44, 49, 51, 54, 75
- HD, 56, 57
- IP, 16, 19, 44, 50, 53, 60, 65, 66, 69, 71
- IPTV, 19, 26, 27, 44, 50, 57
- ISDN, 28, 30
- IVR, 69
- LAN, 63
- MPLS, 18, 30
- Private circuits, 53
- Project Canvas (BBC, BT, ITV), 51, 57, 58
- SIP, 68
- VoIP, 66
- VPN, 53, 60
- Wi-Fi, 60
Telecom New Zealand, 55
Telecom Plus plc, 46
Telefónica, 34, 54
- Telefónica Europe (O2), 54
Telemark, 15
Telereal, 77
Telstra, 55
Thomson Reuters, 3
Timico, 41
Tiscali SpA, 26, 28, 29, 52
- Tiscali UK, 26, 28
Top-Up TV, 29
Turquoise, 70
U
Upaid Systems Ltd., 37
Uswitch, 48, 51
UTV Global Broadcasting (India), 71
V
Virgin Media, 26, 27, 28, 29, 44, 51, 52, 54
Vodafone, 74
W
WebEx Communications, Inc., 53
Wipro Ltd, 39
Work Wise UK, 53
X
Xero Ltd, 55
Z
Zone, 50

BTwatch, issue 2009.03 snapshot

AB — Wed, 29 Apr 2009 23:13:32 +0000

MAIN STORIES: Tech Mahindra, the Indian IT outsourcing business in which BT holds a 31%-stake, acquired a majority stake in scandal-hit services business Satyam, giving BT a 16%-indirect share in Satyam. The deal has split opinion as to whether it was a good move by Tech Mahindra, or whether potential costly legal actions and financial restatements could bring the buyer down. There were suggestions that the move could hasten BT’s exit from the Indian company, although BTwatch considers taking a long-term view could be wiser. [pp.3-6.]

Issue: 2009.03
Covering: mid-March to mid-April 2009
Published: April 2009
Next issue: May 2009

Mapping the activity and strategy of the UK’s largest telco. A unique monthly report for the industry.

About BT|watch
Executive Brief
Extract
Table of Contents
Index

ABOUT BT|WATCH

For comprehensive coverage of BT Group worldwide, nothing comes close to BTwatch. Independent and unbiased, BTwatch offers unparalleled scope, valuable analysis and a considered view of BT’s corporate, domestic and international activities.
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Below is a free taster from issue 2009.03 (March-April 2009), including an Executive Brief, Extract, Table of Contents and Index, giving a valuable snapshot of the full report.

EXECUTIVE BRIEF

There were reports that the write-down on BT Global Services accounts — expected ahead of BT Group’s full-year results — could total more than £1bn. The consensus initially suggested a lower, but still enormous, figure, and there are continued concerns over the performance of BT’s mega-contracts with the NHS and Reuters. There were even suggestions BT has considered walking away from the NHS contract. [pp.29-30,50-51.]

Rumours circulated of a further 10,000 job cuts at Global Services as restructuring continues. Contractors are being required to accept up-to-30% reductions in their rates, which BT says reflects market conditions. Attempts are also being made to renegotiate large outsourced contracts in India. [pp.27-28.]

BT’s potential pension liabilities also continue to worry investors, with suggestions that the company could see any possibility for maintaining dividends eliminated by required annual top-ups of £500m or more. However, more positive rumours emerged that BT has plans for a bond issue, and is in negotiations with the pensions regulator regarding its obligations. [pp.10,50-51.]

BT confirmed the exchanges that will feature in the first phase of its fibre-to-the-cabinet pilot. Most are in urban areas, but two rural locations are to be used to better understand the demands of serving less-populated areas. At the Digital Britain forum, there were indications that the government could provide funding for more network investment, with network operators speaking at the event leaving the impression that the political will to expand next-generation access will trump any regulatory concerns. [pp.45-46,48-49.]

BT GROUP: Press reports suggested that Ian Livingston’s recent acquisition of £100,000 of BT shares was linked to contractual requirements to hold a stake equivalent in value to double his basic salary. [p.8.]

STRATEGY & OPERATIONS: After years of delays, BT said its 21CN programme had met targets for rollout for the end of 2008, and trumpeted connectivity to the network across a series of Scottish towns. There were press reports claiming that UK intelligence services consider its selection of China’s Huawei as a preferred supplier for the next-generation project poses a potentially devastating security risk to the country. [pp.11-12.]

BT Operate and BT Global Services are to deploy a business process guidance solution intended to reduce manual errors from software provider Panviva. The Group is also expecting to see productivity gains through deployment of standardised testing systems from Fanfare. [pp.15-16.]

BT RETAIL: BT was reported to have been the second-largest online advertiser in the UK during 2008, behind former mobile unit Telefónica O2. [p.17.]

BT welcomed the findings of a survey for Reader’s Digest that found BT to be the UK’s most trusted ISP. It was dismissive, however, of a uSwitch-backed poll that found it offered poorest value-for-money, and one of the bottom three providers for overall customer satisfaction. [pp.18-19.]

BT launched promotions offering consumers cash discounts and free three-month broadband subscriptions in return for taking services with the company. SME customers are also to be offered voice and broadband bundles priced from £30-per-month plus line rental. [p.19,23.]

BT Retail was considering the sale of the i-Plate, a self-install device from BT Wholesale designed to improve broadband connection speeds. [p.19.]

BT Openzone won a contract to provide Wi-Fi access in Starbucks coffee shops for use by customers and to support store operations. BT noted that nearly five million BT Broadband customers will be able to use the hotspots, although headlines are likely to focus on the access it affords O2 iPhone customers. [p.20.]

BT Business made Ribbit for Salesforce available in the UK, which will enable SME users to integrate mobile voice communications with their CRM system, and also includes voice-to-text functionality. [p.22.]

IT services units BT Lynx and BT Basilica are to be merged to form BT Engage IT, and the business unit of dabs.com is to be re-branded BT Business Direct. [p.24.]

The European Union is to examine online privacy in the UK, following the government decision to clear BT’s early trials of Phorm, which were conducted without participants’ permission. [p.25.]

A ‘human rights’ complaint was made to the Welsh Assembly regarding BT’s failure to offer online billing in Welsh. [p.26.]

BT GLOBAL SERVICES: BT won a five-year, $120m contract to provide network and data centre services to international brewer SABMiller. The deal was won by BT Retail’s BT Business division, with support from Global Services. [p.28.]

It was confirmed BT is to take over responsibility for some of the NHS Programme for IT contracts abandoned by Fujitsu. [p.29.]

BT Conferencing was named as video-conferencing company TANDBERG’s first telco partner. [p.30.]

Nordic trading platform Burgundy is to utilise BT’s Radianz solutions for managing market data. BT Spain won a contract extension worth up to EUR44.5m with the Ministry of Public Administration, and BT also signed TNT Post Parcel Services as a new customer in the Netherlands. A EUR2.5m contract to install subsea cables across the Gulf region was announced. [pp.31,35-36,38.]

A new BT Security Operations Centre for the Asia-Pacific region was opened in India. The facility will also serve global customers as part of BT’s “follow the sun” support programme. [p.33.]

BT Ireland announced that all broadband customers on unbundled exchanges across the Republic would be automatically upgraded to up-to-24Mbps broadband services. [p.36.]

BT attended the Latin American World Economic Forum in Brazil, as it works to build its business in the region. It also highlighted BT Conferencing’s services in Brazil. [p.37.]

Czech operator GTS Novera was named as BT’s first Gold Alliance partner in the Czech Republic. [p.38.]

BT looks set to develop new unified communications offerings using its BT Corporate Fusion service and software from OnRelay. Observers considered that the use of 3G networks to replace deskbound IP phones would prove attractive to corporate customers. BT also added SIP internet telephony connectivity to its Virtual Private Network solution, and highlighted a new electronic message delivery solution as it increasingly looks to deliver unified communications. [pp.39-41,42.]

BT WHOLESALE: BT Wholesale announced it was to be a sub-contractor to Nokia Siemens Networks for the provision of network-managed services to Orange UK. Up to 240 Orange staff are expected to join BT under the deal. [p.43.]

BT Wholesale announced a “pioneering” SIP-interconnect deal with Telecom Italia. [p.44.]

REGULATORY: BT looks set to be able to offer more competitive bundled products, following a draft proposal from Ofcom that could see regulation in the areas of network charge controls and fixed-narrowband services eased. [p.47.]

CITY REPORTS: Standard & Poor’s reduced BT’s credit rating, but also removed the company from a watch list and predicted improved performance in 2009-10. [p.52.]

EXTRACT

ASSOCIATES AND INVESTMENTS: Tech Mahindra to buy Satyam

After earlier reports that it was interested in bidding for the company, Tech Mahindra was said to be set to complete an acquisition of a controlling stake in troubled IT services vendor Satyam. Tech Mahindra is expected to pay INR 29bn (£0.4bn) for a 51%-stake in the company. BT holds a 31%-stake in Tech Mahindra, and is its largest client.

Satyam recently admitted to overstating its results for a number of years, which led to a collapse in its value, a loss of contracts, and expectations of a takeover. A bid from Tech Mahindra, reportedly backed by BT, was said to be the best offer received, and the company is now arranging financing for the deal.

The funding is likely to consist of a mix of bank debt, bonds, debentures, and cash. Tech Mahindra reportedly has INR 7bn in cash, and is set to raise INR 9.5bn in non-convertible debentures, INR 2.5bn in bank loans, and INR 6bn in bonds. The remainder of the acquisition price is expected to come from Group companies. Venturbay Consultants, a wholly owned Tech Mahindra subsidiary, is the vehicle through which the takeover deal is to be completed. Tech Mahindra initially agreed to acquire a 31%-stake in Satyam, and is now fulfilling an obligation to offer to buy an additional 20%-stake in the open market at the same price it paid for its existing stake.

Rapid progress on the deal is considered important to bolster customer confidence in the beleaguered company, which includes international giants such as Cisco and Nestlé among its customer base. Satyam was effectively taken over by the Indian government following the admission of fraud, and the authorities were keen to arrange a rapid sale to rescue the business, and to minimise the impact on the Indian outsourcing industry as a whole. The takeover was announced within around four months of the initial reports of fraud at Satyam.

While the price bid for the Satyam shares was significantly higher than other offers from competitors — Tech Mahindra is to pay INR 58-per-share compared to offers of INR 45.50-per-share by Larsen & Toubro, and INR 20-per-share by Wilbur Ross — Tech Mahindra was widely considered to have struck a good deal for the business. However, it is important to note that Satyam and its new owners remain liable for any payments and damages in relation to any claims or lawsuits that result from the deception. In addition, Satyam has not yet completed the re-statement of its accounts, so there is still no clear visibility as to the position of the company.

” Satyam has already lost about 17% of its revenue base since January 2009, and management reckons that another 13%-loss cannot be ruled out…While the proposed acquisition enhances Tech Mahindra’s service offerings and reduces client concentration, it brings a new set of unquantifiable risks. ”
– note from IIFL, a Mumbai-based brokerage.

Tech Mahindra’s involvement in the bidding for Satyam saw ratings agency Fitch withdraw its “AAA” debt rating for the company, citing uncertainties.

The Securities and Exchange Board of India (SEBI) is to investigate a sharp increase in Tech Mahindra’s share price immediately prior to the announcement of its deal to buy Satyam. The share price had risen by more than 20% over an eight-minute period in the 30 minutes before the announcement.

Tech Mahindra names new Satyam board members

The government-appointed directors on Satyam’s board are to remain in place for the time being, but four Tech Mahindra appointees are to be added.

The Tech Mahindra executives expected to be appointed to the Satyam board are: Vineet Nayyar, Chief Executive; CP Gurnani, President, International Operations; Sanjay Kalra, President, Strategic Initiatives; and Ulhas Yargop, Director, Tech Mahindra and President of the IT Sector, Mahindra Group. Sanjay Kalra is responsible for Tech Mahindra’s relationship with BT, as well as research and development, for telecom equipment manufacturers and transformation/business process reengineering services.

While approving the acquisition by the Tech Mahindra subsidiary, the Company Law Board of India (CLB) said the new directors appointed by Tech Mahindra would have immunity from prosecution in relation to the fraud conducted at Satyam. The CLB also granted Satyam additional time to file returns and documents relating to its finances until the end of 2009, in recognition of the scale of the task of re-stating results.

Tech Mahindra closes gap on software services giants

Satyam was the fourth-largest software services business in India, behind Tata Consultancy Services, Wipro, and Infosys. Tech Mahindra is expected to report FY09 revenue of INR 75bn.

It was noted that Tech Mahindra completed the deal at a price that values Satyam at around 7% of the market capitalisation of larger competitor Infosys. The deal cost Tech Mahindra around two-thirds of the level of its own market capitalisation, to buy a company that, in terms of employees, is twice its size.

There were suggestions that the combined Satyam and Tech Mahindra business would surpass the software services export business of Wipro, to become India’s third-placed software services company.

Risks for Tech Mahindra — and BT’s investment value

There are concerns that Tech Mahindra may not have the skills to manage the new company, which works in significantly more areas than Tech Mahindra has experience of. While Tech Mahindra has focused on the telecoms vertical, and is heavily reliant on work from BT, Satyam is active in the financial services, healthcare, and manufacturing sectors.

The actual levels of Satyam profit and revenue are unclear, but it is thought that the Tech Mahindra bid will amount to a price ten-times the annual profit, which analysts consider fair.

The existing and possible legal suits against Satyam include a potential $1bn (£0.69bn) claim by British mobile payments company Upaid, up to $100m class actions relating to the fraud generated in the USA, and a claim from members of the family of disgraced Chief Executive Ramalinga Raju, that they lent the company INR 13.5bn.

” The series of unknowns could just blow up the company. ”
– unnamed analysts on the deal.

Will the deal hasten — or further delay — BT’s exit?

There was speculation that the Tech Mahindra deal could hasten BT’s departure as a shareholder in the company.

” The acquisition of Satyam will open the door to an exit by BT. This in turn will open the door to Tech Mahindra becoming a viable business partner for other telcos that refused to do business with Tech Mahindra because of the BT ownership. ”
– Peter Schumacher, Chief Executive of management consultants Value Leadership Group.

It was reported over the past year, that BT was considering selling its interest in the Indian business, but was deterred by the fall in the market value for its stake (BTwatch, passim). The prospect of the sale was also thought to be of concern to Tech Mahindra, as it is so reliant on BT for its revenue (nearly 60% BT-related).

However, with the company newly expanded, Tech Mahindra would not be as troubled by BT disposing of its interest, and may find that it is better-placed to win contracts with other major telcos thought to have been wary of working with the company due to BT’s close involvement. With the Tech Mahindra business now significantly expanded, BT may also be in a position to attract a much better price for its stake, although it could take some time for the markets to fully gauge the value of the expanded group.

Alternatively, BT could reconsider the investment for its long-term benefits. It now holds a 16%-stake in India’s fourth-largest software services provider, which could prove to be an attractive longer term investment that is worth holding on to, despite the current financial and operational pressures BT is under.

BT thought to be wary of Tech Mahindra expansion

Richard Wright, Director, Corporate Communications, BT Asia Pacific, has said that BT is “supportive” of the Tech Mahindra decision, and Vineet Nayyar, Chief Executive of Tech Mahindra, insisted that BT fully endorsed the deal.

However, BT was said to have been initially wary of the deal, taking into account Satyam’s exposure to law suits surrounding financial irregularities. BT has also allegedly opposed Tech Mahindra plans to expand into other markets in the past.

” In the last three to four years, Tech Mahindra had opportunities to diversify its suite of offerings by acquiring companies in verticals such as banking and capital markets. However, every time the proposal came to the board, it was shot down by BT as it wanted Tech Mahindra to maintain its telecom focus. ”
– Unnamed source.

Brokers split on merits of the deal

Brokers in India were said to be fairly evenly divided by Tech Mahindra’s decision to acquire Satyam.

Three of seven brokers that issued reports in the wake of the deal’s news downgraded Tech Mahindra, while three recommended or reiterated a “buy” rating.

” Lots of unknowns, client confidence issues, execution challenges and liabilities [Upaid and class action suits] increase the risk profile of Tech Mahindra. We rate it high risk. ”
– Citibank, which downgraded Tech Mahindra.

” Is Tech Mahindra financially strong to digest this giant? With $575m of cash needed for the deal, and only $110m in hand, we think the answer is no. ”
– Brokers CLSA upon downgrading Tech Mahindra to “sell”.

” [The deal is] a positive for Tech Mahindra since there is very little overlap (service lines, vertical and geographical) with Satyam…We await details about its funding plans to decide whether we would revise our view on the stock. ”
– Nomura Securities analysts.

Centrum Broking downgraded Tech Mahindra’s rating, and ICICI Securities suspended its rating. Bank Of America-Merrill Lynch maintained its “overweight” rating.

Angel Broking said the Satyam acquisition would prove positive for Tech Mahindra in the long term, but may not create medium-term value.

” If Satyam’s margins are indeed 3% [as declared by disgraced Chief Executive Ramja], the deal will be significantly EPS [earnings-per-share]-dilutive for Tech Mahindra. This is not even considering the potential liabilities arising on account of the law suits filed against Satyam. As for Satyam’s clients, the stability that ensures from the deal would be important for the continuance and stability of their businesses and relation with Satyam. ”
– Angel Broking.

” Clients would be happy to see a closure to the Satyam scandal, but they would still want to know about the continuity of services provided to them. Tech Mahindra will have to communicate to Satyam clients to provide them comfort. It has BT’s backing and a strong presence in the US, but Tech Mahindra is not that well-known in markets such as Australia, where it will have to market itself. ”
– Jens Butler, Principal Analyst-IT services, Software and Sourcing, Asia-Pacific, Ovum.

” The next 60-90 days will be crucial to demonstrate a plan for existing Satyam customers. Satyam provides niche work in areas such as auto and engineering services, so clients will be concerned about the long-term plan in that space. ”
– Sudin Apte, a Senior Analyst with Forrester Research.

” There may be a conflict of interest among Satyam’s auto clients, considering that the company will now be owned by an auto major, M&M [Tech Mahindra's parent company]. The same will apply to telecom clients, as BT has a stake in Tech Mahindra, and is one of its biggest clients. So, clients will do their own cross-questioning and due diligence on the deal. ”
– Diptarup Chakraborti, Gartner India’s Principal Research Analyst.

“…out of context…”

” In my personal view, arrived after interactions with customers, it is palpable that Satyam is a viable and strong entity. ”
– Anand Mahindra, Chairman of Tech Mahindra.

” We have been impressed by the extraordinary skill and dedication of the Satyam leadership, and, indeed, of their entire workforce. We have complete confidence in Satyam’s executive leadership to restore the company and take it to new levels of success. We would like to reassure stakeholders that priority focus is being given to retaining critical customer-facing resources, so that the customer experience continues undisturbed. This is also a new beginning for Satyam — and for Tech Mahindra. Both companies will now have access to enhanced talent and scale to compete in the global market. ”
– Vineet Nayyar, Vice-Chairman and Chief Executive of Tech Mahindra.

” Satyam, for the foreseeable future, will continue to be an independent entity…We reassure stakeholders that priority would be to retain current customers and win back business lost due to the crisis ”
– Vineet Nayyar.

” Tech Mahindra is a good company. The Group has great standing and a strong reputation. To me, it is a good thing that it is a company that does not have an overlap with Satyam. There are complementarities, and very little overlap. “

” Since their customers are by and large different, it means tremendous possibilities in terms of cross-leveraging and cross-selling of IT services. In that sense, I foresee a lot of value being created. “

” And finally, there are synergies at the Group-level. One of Satyam’s major areas of expertise is engineering. The possibility for the Mahindra Group to leverage this is phenomenal. So again there is a straight fit. “

” Customers are happy on two or three counts. They are happy that the process has gone through smoothly and quickly. Also, look at the standing of the Mahindra Group…Some clients of Satyam may have interacted with the Group or heard of them; they are happy now that a Group like the Mahindras have come in with their great track record. So customers have comfort in the financial strength and governance of the Group, and they are now looking forward to working with them. Just one or two customers have said they are happy, but still need to go back to their own boards because they are automobile companies. ”
– Kiran Karnik, Chairman, Satyam board.

[Further reference: The game changer -- India Today, 27 April 2009; Info-Tech ‘No plans to shift Satyam headquarters' -- The Hindu; TechM 20% offer today -- The Statesman; Satyam to remain in Hyderabad, govt directors to continue -- Times of India, 21 April 2009; Indian co Tech Mahindra raises $353us mln for Satyam stake -- Asia Pulse; Tech Mahindra and Satyam discuss transition -- Associated Press; Satyam not a sinking ship, says Mahindra -- Hindustan Times; Tech Mahindra has enough capital to meet Satyam's expenses -- The Press Trust of India, 20 April 2009; ‘It is a tribute to team Satyam and their capability' -- The Hindu; Sebi to probe Tech Mahindra price spike -- India Business Insight, 18 April 2009; Tech Mahindra nominees brace for Satyam challenge -- The Hindu; Satyam buy may hasten BT's exit from Tech Mahindra -- The Hindu; New Satyam directors get immunity shield -- Times of India, 17 April 2009; Satyam: Broking firms divided on Tech Mahindra's wisdom -- The Hindu; Satyam takeover positive for Tech Mahindra in long-term: Report -- The Press Trust of India, 16 April 2009; Tech Mahindra moves to seal Satyam takeover -- Financial Times; BT backs Tech Mahindra -- The Hindu; India: Satyam clients cross fingers, keep eyes open -- TendersInfo, 15 April 2009; It's a steal -- Hinduja CFO -- The Hindu; Corporate perspective on deal value -- The Hindu, Tech Mahindra sups with giants -- Hindustan Times; Satyam-Tech Mahindra: Divided opinion for new owner -- Times of India, 14 April 2009; At least two firms join race for disgraced Satyam -- Agence France Presse, 20 March 2009.]

3 BT Group

3 Associates and investments
3 Tech Mahindra to buy Satyam
4 Tech Mahindra deal
4 Brokers split on merits of the deal
4 Tech Mahindra names new Satyam board members
4 Tech Mahindra closes gap on software services giants
5 Tech Mahindra deal
5 Brokers split on merits of the deal cont’d
5 Risks for Tech Mahindra — and BT’s investment value
5 Will the deal hasten — or further delay — BT’s exit?
6 “…out of context…”
6 BT thought to be wary of Tech Mahindra expansion
7 Community
7 BT employees appointed to Red Cross emergency team
7 BT launches BTCC in South West
8 Appointments
8 Executives
8 Livingston share acquisition linked to contract terms
8 Legal
8 Executive abandons unfair dismissal claim
9 Community
9 Marketing
9 BT seeks to stem PR spending
10 Employment
10 Training recognition emphasised by BT
10 Pensions
10 Rumours of BT pension plan deal boost shares
10 BT may inject property assets to boost pension fund
11 Ribbit

11 Strategy and operations

11 21CN
11 21CN on target, claims BT
11 Scottish towns connected to 21CN
12 Security
12 BT on security outsourcing
12 Chinese “cyberwar” security fears for BT network
12 BT Operate
12 BT Operate claims success for 24-hour work-sharing
13 IT systems
13 BT trumpets new application platform
13 Research
13 New “innovation hub” to open at Adastral Park
15 Suppliers
15 BT selects Panviva solution to cut provisioning errors
16 BT seeks to standardise testing systems; cut costs

17 BT Retail

17 Appointments
17 BT Vision
17 Advertising
17 BT is UK’s second-highest spending online advertiser
17 ASA rules complaints against BT
18 BT Payphones
18 Prisoners get cheaper calls
18 Broadband
18 BT named ‘most trusted’ ISP brand…
18 …but worst for value and satisfaction
19 BT and uSwitch continue long-running argument
19 BT pushes broadband promotions
19 BT Retail ponders i-Plate sales
20 Wireless networks
20 BT signs Starbucks Wi-Fi deal
22 BT Business
22 BT Local Business
22 BT Local Business opens in Chester and North Wales
22 BT launches Ribbit for Salesforce
23 BT introduces £30 broadband bundle
24 BT merges and rebrands SME units
24 Dabs SME business also renamed
24 BT SME ICT push continues to gather pace
25 Legal
25 EU begins legal action over UK Phorm trials
25 Mishandling of controversial technology continues to haunt BT
26 Regions
26 Tariffs and billing
26 BT line rental increase comes into effect
26 BT referred to rights committee over Welsh billing

27 BT Global Services

27 Appointments
27 Operations
27 More BT job cuts rumoured and contractor rates slashed
28 Awards and accreditations
28 Forrester names BT GS a “strong performer”
28 BT looking for price cuts on outsourced contracts
28 Contracts
28 BT wins $120m deal with SABMiller
28 Deal brought in by BT Business
29 Awards and accreditations
29 Telemark ranks BT GS top for customer satisfaction
29 Munich Re renews BT contract
29 NHS contracts
29 Write-downs expected on NHS contracts
29 BT picks up Fujitsu NHS work, signs new MoU
30 Billing
30 BT GS identifies £3m in unbilled revenue
30 New funding keeps BT on board
30 BT Conferencing
30 BT Conferencing becomes TANDBERG certified partner
31 BT Global Telecoms Markets
31 BT inmo to use Qnective mobile VoIP
31 BT Global Financial Services
31 Burgundy chooses Radianz Shared Market Infrastructure
31 BT MSM passes 10 billion milestone
33 BT iNet
33 BT iNet to partner Red Box Recorders
33 BT International: Asia
33 New security centre opened for APAC
34 BT International: Europe
34 (Old) accounts show revenue drop at BT Ireland
34 BT Work Anywhere launched in Benelux
35 BT Spain wins MPA contract extension
35 Media and broadcast
36 Tech Mahindra
36 BT Benelux wins Dutch TNT mobile messaging contract
36 BT Ireland to offer 24Mbps broadband
37 BT International: Latin America
37 BT attends WEF in Latin America
37 BT attempts to build relationships vital to success in region
37 BT Conferencing launched in Brazil
38 BT International: Middle East
38 BT wins EUR2.5m undersea cable contract
38 Partners
38 GTS Novera achieves BT Alliance Gold status
39 BT praises Cisco innovation
39 Products and services
39 OnRelay signs BT Global Services FMC agreement
40 OnRelay move welcomed
40 BT adds UC to VPN offering
42 BT unveils Finder application

43 BT Wholesale

43 BT Wholesale web presence overhauled
43 Contracts
43 BT heralds Orange deal
43 BT to play role in managed services for all MNOs
44 Networks
44 BT links with Telecom Italia for SIP interconnect

45 Openreach

45 Fibre
45 BT details FTTC deployments
46 OTA2
46 OTA2 updates for March

47 Regulatory

47 Fixed-line market reviews commenced by Ofcom
47 Competitive bundles become a possibility
48 Digital Britain
48 Livingston speaks at Digital Britain event
48 BT committed to investment, but still defensive on existing coverage
49 Hints that government money may be forthcoming for changes

50 City reports

50 Brokers’ reports
50 Analysts estimate GS write-down of up to £1.5bn
51 Goldman Sachs predicts BT zero dividend
51 Citigroup guardedly positive on BT
52 Credit reports
52 S&P downgrades BT, but expects recovery

53 Index

INDEX

A
Advertising Standards Authority, 17
AkzoNobel, 8
Angel Broking Ltd, 5
AOL, 18, 19
AT&T, 38
Avaya, Inc., 39
B
Barclays, 8
Bharat Sanchar Nigam Ltd (BSNL), 36
Brasscom, 37
British Broadcasting Corporation (BBC), 25, 35, 48
British Red Cross, 7
BSkyB, 35, 47
BT Group, 3, 8, 10, 15, 16, 29, 45, 48, 50, 51, 52
- Asia
- Tech Mahindra, 3, 4, 5, 6, 7, 28, 36
- BT Community Connections, 7
- BT Global Services, 7, 9, 10, 11, 15, 24, 27, 28, 29, 30, 31, 33, 34, 36, 38, 39, 40, 50, 51, 52
- BT Asia Pacific, 6, 33
- BT Benelux, 34, 36
- BT Conferencing, 30, 34, 37
- BT Corporate Fusion, 39
- BT Counterpane, 12
- BT EMEA, 29
- BT Finder, 42
- BT Global Financial Services, 31
- BT Global Telecoms Markets, 31
- BT Global Video Exchange, 30
- BT India, 33
- BT iNet, 33
- BT inmo, 31
- BT International, 33, 34, 37, 38
- BT Media and Broadcast, 35
- BT Mosaic, 35
- BT Spain, 35
- BT Workstyle, 34
- Etherflow, 11
- Managed Secure Messaging, 31
- One Source for Cisco TelePresence, 30, 39
- Onevoice, 40
- Quick Start, 34
- Spain, 29, 37
- Wire One, 30
- Work Anywhere, 34
- BT Group
- Strategy and Operations
- Adastral Park, 12, 13
- BT Pension Scheme, 10
- BT Retail, 9, 17, 18, 19, 22, 24, 25, 26, 28, 47
- 1571, 26
- BT Broadband, 20
- BT Business, 22, 23, 24, 28
- BT Business Direct, 24
- BT Engage IT, 24
- BT Fusion, 39
- BT Home Hub, 17
- BT Ireland, 34, 36
- BT Local Business, 22
- BT Lynx, 24
- BT Mobile, 34
- BT One Plan, 23
- BT Openzone, 20
- BT Payphones, 18
- BT Scotland, 11
- BT SME, 24
- BT Total Broadband, 17
- BT Tradespace, 22
- BT Vision, 17
- BT WebWise, 25
- dabs.com, 24
- Direct Debit, 25
- Option 1, 17, 23
- BT Tower, 10
- BT Wholesale, 11, 19, 43, 44, 46, 47
- i-Plate, 19
- Wholesale Broadband Connect, 11
- Directors
- Rake, Sir Michael, 8
- Executives
- Alvarez, Luis, 29, 37
- Bruce, Chris, 20
- Burger, Bas, 34
- Burke, Micheál, 36
- Cavestany Vallejo, Jacinto, 35
- Cumberland, Hugh, 31
- Derriennic, Marc, 7
- Dick, Brendan, 11
- Farr, Simon, 40
- Frischauf, Michael, 27
- Gassner, Wilhelm, 27
- Gorringe, Nick, 24
- Hurley, Steve, 38
- Karlowski, Pawel, 38
- Lalani, Hanif, 27, 29
- Lindsay, Chris, 22
- Livingston, Ian, 8, 48, 50
- Macias, João, 37
- Masters, Steve, 39
- Morgan, Peter, 9
- Murphy, Bill, 23, 28
- Narang, Sudhir, 33
- Palmer, Andy, 10
- Pareja, Raul, 7
- Petter, John, 18, 47
- Pilcher, Malcolm, 39
- Prestel, Jeff, 30
- Read, Phil, 33
- Robertson, Steve, 45
- Schneier, Bruce, 12
- Schrock, Randy, 42
- Smith, Graeme, 7
- Stanton, Ray, 28
- Szebesta, Daryl, 15
- Taylor, Kevin, 33
- Thomas, Steve, 16
- Zwerus, Wilco, 36
- Ex-executives
- Collazo, Jose, 27
- Tubb, Gary, 17
- Verwaayen, Ben, 10
- Wheeler, Julian, 35
- Openreach, 11, 45, 46, 47
- EMP, 46
- Ethernet Backhaul Direct, 11
- Ribbit, 11, 22
- Strategy and Operations, 11
- 21CN, 11, 12
- BT Design, 30
- BT Operate, 12
Business Superbrands, 18
C
Cable and Wireless, 48
Carphone Warehouse, 18, 47
- TalkTalk, 26
Cisco Systems, Inc., 3, 24, 30, 33, 39
Citibank, 4, 51
Citigroup, 51
Coca-Cola, 28
Comic Relief, 9
Communications Workers Union, 26
Company Law Board of India (CLB), 4
Computer Sciences Corp, 30
Confederation of British Industry (CBI), 10
D
David Ross Group, 38
Deutsche Telekom, 10
E
East of England Development Agency, 13
easyJet, 8
Ericsson, 43
Euroclear, 31
European Union, 25
- European Commission, 25
F
Fanfare, 16
Fishburn Hedges, 9
Football Foundation, 9
Forrester, 5, 28
France Télécom, 43
- Orange, 18, 43
Fujitsu, 27, 29, 50
G
Gartner Group, 5
Goldman Sachs, 51
Government Communications Headquarters (GCHQ, UK), 12
GTS Novera, 38
Gulf Bridge International (GBI), 38
H
Harmonic, 35
HCL, 36
Hewlett-Packard, 24
Home Office (UK), 18
Huawei
- Zhengfei, Ren, 12
Huawei Technologies, 12
I
IBM, 24
INEM, 35
Infosys, 4, 28, 36
K
Kazoo, 9
L
Larsen & Toubro, 3
M
Mandelson, Peter, 49
Marconi, 12
Merrill Lynch, 4
Microsoft, 24, 39, 42
Morgan Stanley, 8, 51
MTV, 35
Munich Re, 29
N
National Health Service (NHS, UK), 29, 30, 50
- N3, 29
- National Programme for IT, 29, 30, 50
- Royal Free Hampstead NHS Trust, 29
- Royal Free Hospital, 29
Nestlé, 3
Nokia, 43
Nokia Siemens Networks, 43
Nomura, 4
Nortel Networks, 39
O
Octane PR, 9
Ofcom, 18, 19, 45, 46, 47, 48
- Carrier pre-selection, 46
- LLU, 46, 47
- Strategic Review of the Telecoms Sector, 46
- USO, 49
- Wholesale line rental, 46, 47
Office of the Telecommunications Adjudicator, 46
- OTA2, 46
OnRelay, 39, 40
Ovum, 5, 46
P
Panviva, 15
Phorm, Inc. (121Media), 25
Prison Reform Trust, 18
Prodigy, 43
R
Red Box Recorders, 33
Red.es, 35
Royal Dutch Shell Group of Companies, 8
S
SABMiller, 28
Salesforce.com, 22
Satyam Computer Services Ltd, 3, 4, 5, 6, 7, 36
Securities and Exchange Board of India (SEBI), 3
Setanta, 17
- Setanta Sport, 17
Siemens, 39
simplifydigital.co.uk, 19
SimulScribe, 22
Spanco Telesystems, 36
Standard and Poor’s, 52
Starbucks, 20
Suffolk County Council, 13
Swisscom, 10
T
TANDBERG, 30
Tata Group
- Tata Consultancy Services Ltd (TCS), 4, 36
Tech Mahindra, 3, 4, 5, 6, 7, 28, 36
Technology
- 3G, 40
- ADSL2+, 36
- Broadband, 7, 11, 12, 17, 18, 19, 20, 23, 25, 36, 43, 45, 46, 47, 49
- CRM, 22
- DSL, 29
- Ethernet, 11, 43
- Fibre, 45
- ICT, 13, 24
- IP, 17, 27, 30, 31, 35, 39, 44, 47
- IPTV, 47
- ISDN, 45
- LAN, 33
- MPLS, 29
- Private circuits, 45
- SaaS, 24
- SIP, 40, 44
- SMS, 22
- Unified Communications, 30, 39, 40, 42
- VoD, 11, 36
- VoIP, 17, 27, 31
- VPN, 29, 40
- Wi-Fi, 17, 20
- WLAN, 34
Telecom Italia, 44
Telefónica, 17, 37
- Telefónica Europe (O2), 17, 18, 20, 48
- UK, 17, 18, 20, 48
Telemark, 29
Telnic, 22
TNT, 36
Trimedia, 9
U
UK Government
- Joint Intelligence Committee, 12
- Lord Mandelson, 49
Unilever, 7
Uswitch, 18, 19
V
Virgin Media, 17, 18, 26, 48
Vodafone, 43, 48
- UK, 48
W
Webware.com, 11
Welsh Assembly, 26
Wilbur Ross, 3
Wipro Ltd, 4, 36
World Economic Forum, 37
Y
YouGov, 18

Market Mettle » KnowBT

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