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BTwatch, snapshot of issue 2008.05

16 July 2008

MAIN STORY: BT announced a £1.5bn commitment to rolling out fibre in the UK. However, on closer examination, the promise is much less impressive than it initially appears. Only £1bn of new network investment is promised over five years, and only £200m over the first two, with the rollout covering less than half the UK’s households at best. The deployment is likely to focus on fibre-to-the-cabinet, rather than to-the-home, meaning actual speeds will be less than half the rates BT is highlighting. Much of the rollout also appears dependent on government bodies being prepared to fund it. BT is also demanding support and reassurances from the regulator, ahead of the Ofcom announcement of its next-generation network policies in September. There are questions to be answered regarding the proposals before they can be seen as more than just PR puff, but should this commitment to fibre be, as BT would have us believe, a step-change in the company’s broadband strategy, it is to be warmly welcomed. [pp.5-8.]

Issue: 2008.05
Covering: mid-June to mid-July 2008
Published: July 2008
Next issue: August 2008

Mapping the maze of the UK’s largest telco. A unique monthly report for the industry.

SUMMARY

MAIN STORY: BT announced a £1.5bn commitment to rolling out fibre in the UK. However, on closer examination, the promise is much less impressive than it initially appears. Only £1bn of new network investment is promised over five years, and only £200m over the first two, with the rollout covering less than half the UK’s households at best. The deployment is likely to focus on fibre-to-the-cabinet, rather than to-the-home, meaning actual speeds will be less than half the rates BT is highlighting. Much of the rollout also appears dependent on government bodies being prepared to fund it. BT is also demanding support and reassurances from the regulator, ahead of the Ofcom announcement of its next-generation network policies in September. There are questions to be answered regarding the proposals before they can be seen as more than just PR puff, but should this commitment to fibre be, as BT would have us believe, a step-change in the company’s broadband strategy, it is to be warmly welcomed. [pp.5-8.]

BT GROUP: As Ian Livingston settled into his new role as Group Chief Executive, a round of press interviews saw no indications of plans for significant or ground-breaking changes of strategy — such as a fibre rollout. Changes of focus appeared more subtle, with Livingston set to continue in the style in which he had run BT Retail, with a firm grip on operations and costs, and a pragmatic attitude. There were also signs that the new Chief Executive is more interested in running a successful retailer than an information technology company. [pp.2-3.]

BT paid the Ministry of Defence £1.75m to cover the government department’s costs accrued in relation to fraud at various BT call centres. [p.4.]

STRATEGY & OPERATIONS: Alcatel-Lucent announced an expanded role in the 21CN rollout, with a new contract that will see its service routers deployed more extensively in the new network to enable delivery of 21CN Ethernet services. Etelos, an applications provider, announced a partnership with BT to bring Web21C to its developers’ portal. BT sold nearly 500 patents to IPG Photonics. [pp.9-10.]

BT RETAIL: BT acquired Ufindus, an online classified advertising company, for £20m, as it works to boost its online directory business. The company, which will be merged into BT Directories, offers general classified advertising websites and niche sites targeting specific trade sectors. [p.14.]

BT Vision is to include a free subscription to premium Setanta Sports content to customers signing for its new £14- and £20-per-month portfolio of content package deals that offer a range of films, music, children’s programmes, and sports repeats, in a move said to undercut rivals’ pricing. A number of more ambitious plans for interactivity, high-definition broadcasting, retailing opportunities, and the integration of BBC’s iPlayer were highlighted, but with no specific launch plans. Turner Broadcasting is, however, to launch existing interactive games on BT Vision. [pp.15-18.]

A new promotion was launched for BT Broadband, with bigger cuts made to the level of its introductory-rate offers. Basic broadband customers are also being offered a free Home Hub if they also order BT Vision. [p.19.]

BT Openzone Wi-Fi hotspots were made available in additional courts in England and Wales. BT Openzone is partnering O2 to offer the mobile operator’s iPhone customers access to its hotspots. The unit drew attention to the future launch of MyPlace, a series of geographically focused portals for users of its wireless network that will provide information relating to BT Wireless Cities. [pp.20-21.]

Performance-management software provider Knoa was selected by BT to provide CRM solutions to BT Retail. [p.23.]

BT GLOBAL SERVICES: François Barrault, BT Global Services’ Chief Executive, raised his profile in a couple of press interviews, revealing an outspoken character said to be reminiscent of former high-profile BT executive, Pierre Danon. Barrault talked of a tough approach to his staff, his suppliers, and even potential customers, in pursuit of growth at the unit. [pp.24-25.]

Video-conferencing provider Wire One is to be merged into BT Conferencing, with the acquired American unit adding more than ten-times the number of staff that the existing unit employs. [p.26.]

BT signed a £414m, five-year contract to handle Procter and Gamble’s global IT and networking requirements — one of BT’s largest outsourcing deals to date. The telco will work with Hewlett-Packard on the account, although the deal is outside the companies’ existing strategic partnership agreement. [p.27.]

A seven-year networked IT services deal worth £160m was signed with the Nationwide Building Society, which will feature a network transformation programme by BT, consolidating existing voice and data networks onto 21CN infrastructure. [p.28.]

Mobile operator 3 Ireland agreed a £35m network build and management deal with BT, which will see BT’s Irish unit provide fibre-optic capability and backhaul infrastructure to support mobile broadband plans. BT and Eckoh won a contract to provide a hosted interactive SMS journey-planning service to National Rail Enquiries. [pp.28-29.]

BT is thought to be in talks to take over the NHS IT contract for the south of England, following the withdrawal of Fujitsu as prime contractor for the region. [p.30.]

In Asia Pacific, BT executives highlighted their commitment to the region, with plans for investment in India and Singapore to support expansion across the region. Elsewhere, BT said it expects to increase its workforce in China by up to 15% in the near future. [pp.12,31-32.]

Jan Geldmacher, BT Germany’s Chief Executive, is leaving the company for a senior role at Vodafone Germany. BT is building its presence in Germany with the acquisition of two small IT services companies, Stemmer and SND, from net AG. [p.33.]

BT Radianz is offering a new VoIP service that is said to be more secure and robust than existing offerings, in an attempt to target financial traders. Connectivity services contracts were agreed with trading platform Turquoise and information provider Telekurs. [pp.34-35.]

BT Frontline, BT’s new IT services unit in Asia Pacific, announced a contract win in Nepal, and intention to bid for work in the next Singapore ICT Operating Environment major project. [pp.35-36.]

Cisco heralded a deal with BT that will see the telco deploy the vendor’s ASR 1000 Series aggregation service routers within customer networks. BT iNet is to collaborate with Smith Micro Software for enterprise applications; and, in the US, BT is to work on joint-marketing efforts with SAP. [pp.37-38.]

BT WHOLESALE: BT Wholesale won a three-year contract with BSkyB to provide voice capacity for the Sky Talk service, which currently has more than one million customers. The deal, thought to be worth between £200m and £300m, saw BT usurp THUS as service provider. [p.39.]

Sally Davis, BT Wholesale’s Chief Executive, recognised in a speech that the unit must accept that demand for its services is ultimately driven by consumers, and needs to change its attitude and approach accordingly. [p.40.]

OPENREACH: While BT announced potentially significant fibre rollout plans, existing trials of fibre-to-the-premises in Ebbsfleet were criticised as too conservative. Openreach is conducting tests of electric vans in an effort to reduce the carbon footprint of its fleet. [pp.41-42.]

REGULATORY: There was a widespread response to Ofcom’s announcement of a review of Openreach wholesale charges, with an emerging view that the BT unit will be allowed to raise prices, but not by as much as it would like. BT called for regulators in other European nations to be given powers to force a degree of network separation that would reflect the current situation in the UK. [p.43.]

CITY REPORTS: Latest figures suggested BT’s pension scheme was funded to cover 97% of its liabilities, although outside observers have expressed concern over potential funding problems. The Communications Workers Union has threatened strike action if significant changes to the scheme were to be forced through. [p.45.]

EXTRACT

Livingston approach to top job begins to emerge

Ian Livingston, Chief Executive of BT Group, participated in a round of newspaper interviews upon taking up his new role.

The interviews saw Livingston outline his plans, which, predictably, did not point to a major change of strategy. What was notable to BTwatch was the commitment to run BT as a group in a similar way to the way he managed BT Retail, which could point to a firmer grip on operational costs. While he echoed Verwaayen’s (somewhat far-fetched and grandiose) view that BT is now closer to a software company than traditional telco, he also put a strong emphasis on the business performing as a retailer, with associated objectives and demands. The overall impression given, cutting away the platitudes, was that BT could embrace a new realism and discipline, which could serve the business well.

The Sunday Telegraph asked Livingston what he intends to do about BT’s apparently underperforming share price. He said that he does have a plan, but “chasing tomorrow’s share price” is not part of it. “That’s a pretty dumb thing for a CEO [Chief Executive Officer] to do. Our job is to focus on delivering profits and cash. The share price will take care of itself”, he said.

In the interview, Livingston outlined his three priorities for his tenure at BT: to focus on customer service; to improve BT’s global technological capabilities; and to make the company “more agile”.

Emphasis on customer service

Tackling customer service, he said that starting from this financial year, anyone in a management grade at BT has part of their bonus linked to “getting things right first time and avoiding failures”.

” Failures mean anything from not answering the phone, an engineer not turning up when they are meant to, or a customer phoning up because they don’t understand our broadband instructions or their bill. ”
– Livingston.

Building global presence

In terms of expanding BT’s global capabilities, Livingston said he plans to boost BT’s presence in Brazil, India, China, and Russia “so a customer such as Reuters or Unilever can get the same service in São Paulo or Mumbai as they do in Manchester”, and also boasted of the performance of BT Global Services.

” BT is a real global success story. We obviously wouldn’t appreciate that because we’re in the UK and we don’t like to talk about success, but it’s winning contracts against AT&T and IBM. ”
– Livingston.

He also vowed to retain Verwaayen’s 15% margin target for Global Services, which he hopes to achieve by the end of the next financial year.

A more agile BT

On his final priority — making BT more agile — he said he plans to remove layers of management, reduce the number of meetings, and make more people personally responsible for their decisions.

” We have come a long way since privatisation in 1984, but I want to start to move at software, or in fact retail speed rather than telecoms speed. I often quote my old Dixons chairman, Lord Kalms. He said that when he ran a small company, he tried to act like a big company, and when he ran a big company he tried to act like a small company — and that’s what we’ve got to do. It’s a change of attitude. Ben [Verwaayen] has taken us a long way but I think that, being a retailer by background and at heart, I want to take it further. ”
– Livingston.

He also underlined his intention that there will be no major sea-change in company strategy, and that he plans to be pragmatic in his leadership of the company

” I’ve been on the Board for six years, so funnily enough I don’t suddenly think, ‘I wish I’d spoken up earlier because I have a different strategy to pursue’…I make no apologies for the fact that I am going to be very operational and executional, as I was at BT Retail– and you will see from the figures that it’s quite a different business from the one it was three years ago. ” – Livingston

Although primarily focused on Livingston’s history and personal life, the interview with the Sunday Times provided some insights with regard to his appointment, BT strategy, and his opinions of the market.

On the timing of his appointment

” The timing made sense. It’s quite a good idea to say that one year has ended and with the new [financial] year comes the new guy. “ -- Livingston.

On BT Global Services

” Global Services is genuinely a world leader. There is a lot of opportunity to reinforce that advantage, and you will see us adding to our capability. “ – Livingston.

On the prospect of a “broadband crunch”

” There are a lot of scare stories. The internet is unquestionably busier in the evening, but you can download EastEnders quite easily. You just have to recognise that the money has to come from somewhere over time to pay for infrastructure. “ – Livingston.

[Sunday Times, 13 April 2008; Sunday Telegraph, 1 June 2008.]

TABLE OF CONTENTS

2 BT Group
2 Executives
4 Appointments;
Legal; Community
5 strategy and operations
5 Incubator companies
6 Network
9 21CN
10 Intellectual property
12 Operations
13 Suppliers
14 BT Retail
14 Acquisitions and disposals; Advertising and marketing
15 Vision
16 Appointments
19 Broadband
20 Wireless networks
21 Digital home
22 Business; Payphones
23 Scotland; Suppliers
24 BT Global Services
24 Appointments; Strategy
26 Acquisitions and disposals
27 Contracts
30 NHS contracts; Americas
31 Asia 33 Europe
34 Conferencing;
Global financial services; Legal
35 Frontline; Marketing
36 Media and broadcast
37 Partners
39 BT Wholesale
39 Appointments; Contracts
40 Executives
41 Openreach
41 Network 42 OTA
43 Regulatory
45 City Reports
45 Pensions; Brokers’ reports
46 INDEX

INDEX

A
Accenture, 30
Advertising Standards Authority, 14
Aite Group, 34
Alcatel-Lucent, 8
Amino, 16
Asia-America Gateway, 32
ATEME SA, 15
AT&T, 2, 33
Axos Capital, 33

B
Bain Capital, 33
Barclays, 4, 29
Barclays Stockbrokers, 29
Bigmouthmedia, 14
British Broadcasting Corporation, 17
British Petroleum, 37
BSkyB, 14, 19
BT Group, 2, 4, 5, 13
BT Global Services, 2, 3, 8, 24, 25, 30, 31, 32, 33, 34, 35, 36, 37
BT Americas, 27, 36, 38
BT Asia Pacific, 32
BT Frontline, 35, 36
BT Germany, 33
BT Global Financial Services, 34
BT iNet, 38
BT International, 30, 31, 32, 33
BT Latam, 30, 31
BT Media and Broadcast, 36
BT Radianz, 24, 34, 35
SND, 33
Stemmer, 33
Syntegra, 33
Wire One, 26
BT Retail, 2, 3, 8, 14, 16, 19, 23, 25
BT agilemedia, 16
BT Broadband, 15, 21
BT Business, 14, 22
BT Conferencing, 26, 34
BT Directories, 14
BT Entertainment, 16
BT Ireland, 24, 28
BT Openzone, 20, 21
BT Payphones, 22
BT Scotland, 23
BT Total Broadband, 19
BT Tradespace, 14
BT Vision, 15, 16, 17, 18, 19
Option 1, 19
Wireless Cities, 20
BT Wholesale, 8, 39
Directors
Rake, Sir Michael, 4
Ex-Directors
Bland, Sir Christopher, 6, 14
Executives
Apostolou, Evangelos, 34
Barrault, François, 3, 24, 31, 33
Benjamin, David, 14
Boustridge, Michael, 27, 36, 38
Bruce, Chris, 20
Church, Chris, 24
Dick, Brendan, 23
Geldmacher, Jan, 33
Grabherr, Dennis, 34
Hallsworth, Jeremy, 16
Lalani, Hanif, 3, 13
Livingston, Ian, 2, 5, 45
Ma, Allen, 32
Macias, João, 30
Marks, Dan, 16, 18
McCormack, Aaron, 26
Mohammedbhai, Taza, 21
Murphy, Bill, 22
Pardee, Maria, 11
Ramji, Al-Noor, 4
Reynolds, Paul, 39
Stanton, Ray, 13
Stark, David, 37
Stockman, Sinclair, 4
Ting, Steve, 36
Verderame, Kristen, 34
Watson, Marc, 17
Ex-executives
Bonfield, Sir Peter, 3
Burke, Andrew, 16
Danon, Pierre, 16, 25
Green, Andy, 24
Verwaayen, Ben, 2, 3, 8
Openreach, 6, 7, 8, 42
WLR3, 42
Strategy and Operations, 5
21CN, 6, 7, 8, 10
BT Design, 4, 11
CallFlow, 10
Business in the Community, 23
C
Cartoon Network, 18
Celeno Communications, 13
Cellex Networks, 13
Cisco Systems, Inc., 34, 37, 38
Communications Workers Union, 45
Comverse Technology, 13
Crossbeam Systems, 13
cVidya Networks, 13
D
Datamonitor, 4, 28, 31, 32, 33, 35, 38
Deutsche Telekom, 11
Disney ABC International, 15
Dyuna Blue, 13
E
Eckoh, 29
Eckoh Technologies, 29
Eircom, 16
Electrolux, 29
Etelos, 10
EZlegacy, 13
F
Fenavic, 13
Football Association
Premier League, 15
France Télécom
Orange, 31
Freeview, 16
Frontline Technologies, 35, 36
Fujitsu, 30

G
Google, 33, 35
H
Her Majesty’s Courts Service, 20
Hewlett-Packard, 25, 27
Hutchison Whampoa, 28
I
IBM, 2
Intec Telecom Systems, 24
InterCast Networks, 13
INX Media, 36
io global Limited, 5
Iomart, 14
Ufindus, 14
IPG Photonics, 10
iSoftStone Information Service, 4
ITT, 8
iTunes, 21
K
Kayote Networks, 13
Knoa, 23
M
Microsoft, 16, 33
N
National Health Service, 30
National Rail Enquiries, 29
Nationwide Building Society, 28
NetSuite, 22
NewACT, 13
New Delhi Television, 32, 36
New Venture Partners, 5
Nokia, 24

O
ObserveIT Systems, 13
Ofcom, 5, 6, 17, 22, 43
Carrier pre-selection, 42
Wholesale line rental, 42
Office of the Telecommunications Adjudicator, 6, 42
Olista, 13
Ovum, 26
P
Payzone, 24
Philippine Long Distance Telephone, 32
Pontis Networks, 13
Porta Systems, 13
Procter and Gamble, 27
Procter & Gamble, 27
Pudding Media, 13
R
Radianz, 34, 35
RatedPeople.com, 16
Retalix, 37
Royal KPN, 8
S
SAP, 28, 38
Sensomatix, 13
Setanta, 15
Setanta Sport, 15
Siebel Systems, Inc., 23
simplifydigital.co.uk, 43
Singularity, 4
Skipti, 33
Smith Micro Software, 38
Strategy Analytics, 19
SugarCRM, 22

T
TD Waterhouse, 29
Technologies
3G, 28, 32
ADSL, 8
ADSL2+, 6, 7, 17
Broadband, 2, 3, 5, 6, 7, 8, 10, 15, 17, 19, 21, 28, 31, 32, 38, 43
DSL, 13
FTTP, 7
ICT, 23, 30, 36
IP, 26, 27, 31, 33, 34, 37
IPTV, 6, 16, 17, 18
Java, 10
MPEG-4, 15
MPLS, 27
R&D, 35
SMS, 29
VDSL, 6
Video-on-demand, 15, 17
VoIP, 11, 31, 33, 34
VPN, 37, 38
Wi-Fi, 20, 21
Telefónica
O2 Europe, 21
Telekom Slovenije, 33
Telekurs Financial, 35
Tesco, 37
The Cloud, 21
Thomson Reuters, 33
Tjat Systems, 13
TRAI (India), 31
TruePosition, 24
Turner Broadcasting, 18
Turquoise, 35
Two Way Media, 18

U
Unilever, 2
Unisource, 8
V
Verint Systems, Inc., 37
Verizon, 31
Virgin Media, 5, 6, 19
Virtusa, 13
Vodafone, 33
Vringo, 13
VT iDirect, 31
W
World Economic Forum, 30
X
XConnect Global Networks, 39
X Prize Foundation, 35, 36
Y
Yell, 14

Written by AB · Filed Under KnowBT 

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