BTwatch Report #219 January-February 2011 Executive Brief
16 March 2011
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Executive Brief from BTwatch, report #219. Click through for: an Extract from this month’s report; the Report Snapshot; or to contact us for more information about the full 54-page report, this industry standard monthly report service, and ongoing subscription access.
- MAIN STORIES: BT Group released results for Q3 FY10-11, which provided positively surprising profitability, but with revenue declining as anticipated. Improvements at Global Services enabled the company to again raise its guidance for this financial year and the next, as the recovering division is set to return to positive cash flow a year early. BT Retail had a quarter of improving trends, but with more to be done. BT Wholesale is meeting its goal of building a managed services business to replace vanishing legacy business. Openreach is improving profitability while juggling internal and external demands. [pp.4-14.]
- As the Group sheds retail fixed-line connections, the telco noted that copper lines in the wider market increased in Q3. BT Retail saw strong DSL broadband customer acquisitions, taking more than half of net adds for the period, and BT Vision sign ups also saw improvement. The robust retail performance hinted at the division finally working to get its competitive game together. BT was coy on progress made by its fibre rollout, which looks likely to have contributed to strong figures, and, unusually, may be a case of BT choosing to keep some good news to itself. [p.15-17.]
- Wi Fi has been identified by BT as a value added service that its customers are genuinely valuing. BT’s emphasis on developing its wireless network — now featuring more than 2.5 million hotspots — was given additional credibility as the wider market looks to follow BT’s lead on the technology, amidst moves by Telefónica O2 UK and BSkyB to increase competition in the wireless network market. BT is reportedly in talks with Olympic Games organisers regarding the prospect of building a Wi Fi network for the 2012 Games, in addition to its existing commitments to the event. [pp.9,31-32.]
- Ofcom looks set to introduce new charge controls imposing substantial price reductions on BT Wholesale in areas where there is deemed to be insufficient competition from unbundlers. However, a renewed ADSL2+ push would enable the division to sidestep the controls. The Ofcom proposal was positioned as supporting development of broadband in rural areas, a pitch that BT access service division Openreach is also making with its announcement that 41 market towns across the country are to be added to the next wave of fibre rollout. [pp.24,49.]
- Activity appears to be increasing around the vertical markets targeted by BT Global Services as part of its recovery programme. The financial services unit said it is targeting Brazil, with a focus on promoting its i trader platform, which combines data and voice services. BT is already said to have a strong market share on trading floors in Chile and Peru. BT is also working with Intel on telehealth trials with the NHS in Wakefield, examining prospect for adopting remote monitoring services in the near future. Omnitrol Networks is to provide RFID based retail inventory solutions, which could help the telco develop services for the packaged goods and logistics sectors. [pp.35-37.]
- BT Wholesale continues to build on the success of its managed services deal with KCOM, with a contract extension to provide IP voice solutions to be marketed to the Hull based telco’s corporate customer base. [p.43.]
- BT Innovate & Design is working with mobile broadband gateway developer Stoke on testing of LTE architecture that could enable BT to offer its mobile operator customers new IP core based converged services. [p.20.]
- The Information Commissioners Office dropped a case against BT, relating to leaked information about customers, which originated from a leaked, unencrypted email sent from the telco as part of controversial efforts by firm ACS:Law to extract compensation from file sharers. [p.23.]
- Senior ex BT figures Lucy Dimes and Sir Christopher Bland are to lead Alcatel Lucent’s UK and Ireland operations, hinting at renewed focus on winning BT business by the vendor. [pp.23-24.]
- Ofcom found in favour of BT in a dispute with Everything Everywhere on charges for 03 prefixed calls, but set out claims that BT had been involved in a margin squeeze in relation to CPS prices during 2008-09. [p.26.]
- BT RETAIL saw mixed results from a review of 2010 by comparison website broadbandgenie.co.uk: while it performed well on customer acquisitions, it failed to shine on customer satisfaction. PlusNet did well as a value brand, however, and there was promise for the future, with BT Infinity proving a popular innovation. The exchanges to be upgraded for fibre early, as a result of BT Retail’s Race to Infinity campaign, were named, with the number of winning exchanges being doubled due to the claimed popularity of the promotion. [pp.27-28.]
- After long-running rumours YouView, the new internet television platform in which BT is a partner, finally acknowledged that its commercial launch would be pushed back to 2012, due to “the scale and complexity of the project” . While there were suggestions that the delay could see the service miss a window of opportunity, BT appeared relatively unconcerned, showing recognition that its growth in the television sector is unlikely to be based on innovation. [p.28,30.]
- Jeff Prestel was named Chief Executive of BT Conferencing, following departure of Aaron McCormack. Prestel joined BT with the acquisition of video conferencing unit Wire One in 2008. Compunetix was awarded an extended contract to provide its conferencing solutions to the unit. [p.33.]
- BT GLOBAL SERVICES announced the addition of VDC Private to its portfolio of cloud based data centre services. The new offering enables customers to build dedicated private clouds based in their own data centre, or hosted by BT, using a hybrid model that offers flexibility and a gradual path towards managed services. [p.38.]
- Global Services is carrying through on its commitment to invest in Asia Pacific, with new appointments announced, and new customer centres opened in the region. [p.40.]
- BT announced a contract win with the Notaries Certification Agency in Spain, and also receipt of an Equality in Business award in the country. In the Middle East, BT is partnering Saudi Telecom to offer multinational customers new points of presence in the region. [p.41-42.]
- BT Wholesale launched its Content Connect content distribution network offering, which will enable content to be delivered to end users bypassing service providers’ backhaul. The launch sparked concerns about net neutrality, but BT was firm in its defence of the offering as a quality guarantee for content and service providers. [pp.44,46.]
- Openreach unveiled its proposals for duct and pole sharing products that would enable rival communications providers to embed their own fibre networks deeper into BT infrastructure. There was little enthusiasm for the offering from service providers, and BT remains cynical as to whether competitors are willing to make the level of investment needed to compete at this level. The telco took the opportunity to indirectly call for cable operator Virgin Media to open up its network assets on a similar basis. [pp.47-48.]
- Openreach issued an apology for delays in providing services to communications providers in recent months, which it attributed to adverse weather conditions and an unexpected spike in demand from unbundlers. BTwatch continues to consider a focus on fibre deployment is also affecting the division’s performance with its main external customer base. [p.51.]
About BTwatch
Report: #219
Covering: January-February 2011
Published: March 2011
Next report: April 2011
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