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BTwatch issue 2007.10

24 December 2007

GROUP: After several months’ consideration, the European Commission decided to launch a formal investigation into BT’s “Crown Guarantee”, which underwrites part of BT’s pension scheme. Should the Commission decide the guarantee amounts to state aid, BT could be required to make additional payments of up to £12m into the UK government’s Pension Protection Fund. Rod Kent was named as the new Chairman of the BT Pension Scheme. [p.2.]

BTwatch

Issue: 2007.10
Covering: 15 November to 20 December 2007
Published: December 2007
Next issue: January/February 2008

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

SUMMARY

GROUP: After several months’ consideration, the European Commission decided to launch a formal investigation into BT’s “Crown Guarantee”, which underwrites part of BT’s pension scheme. Should the Commission decide the guarantee amounts to state aid, BT could be required to make additional payments of up to £12m into the UK government’s Pension Protection Fund. Rod Kent was named as the new Chairman of the BT Pension Scheme. [p.2.]

STRATEGY & OPERATIONS: BT was the UK’s fourth largest spender on R&D in 2006, according to a government report. BT invested more than £1bn in its drive to reinvent itself as an IT services company, and was placed second only to Japan’s NTT in spending among global telcos. [p.3.]

BT named the head of a new research centre in Shanghai, and trumpeted its leading role in a consortium of academic and industrial partners working on collaborative research between India and the UK. [pp.3-4.]

Ciena announced that BT had selected its CN 3000 Ethernet access series as one of the network termination equipment platforms for 21CN. Ciena, a 21CN transmission supplier, developed its Ethernet solution with ANDA Networks. [p.4.]

There was continuing frustration among ISPs regarding a lack of information about broadband upgrades within the 21CN programme. BTwatch wonders whether BT is unable to provide much information simply because it does not yet have it. [p.5.]

Matt Beal, Director of Strategy for BT Design, gave an insight into BT’s relationship with Chinese vendor Huawei. While he made it clear that the two companies are learning how best to work together, he also noted that the Chinese company’s different approach compared to Western vendors had an upside. [p.6.]

BT RETAIL: BT Retail performed poorly in the annual JD Power survey on broadband customer satisfaction; with Tiscali, Virgin Media, and BSkyB named in the top three. BT also experienced negative media coverage after a disgruntled customer aired his grievances on video-sharing site YouTube. BT’s call centres were also placed last in a survey. In contrast, BT Global Services won a WCA award for its customer service. [pp.7,9,13.]

BT Vision is trialling “unskippable” advertisements accompanying free movie downloads available on its BT Vision Store service. Advertising is to be tailored to users based on demographic information, and the films can be forwarded between broadband users. Should the trial be successful, BT could introduce some form of compulsory advertising for free or reduced price content on its BT Vision IPTV service. BT tied itself in semantic knots as reports continued to claim that the company had failed to meet its initial targets for BT Vision subscriptions. [pp.8-9.]

BT Business is trialling a new BT Tradespace Communities element within its business networking offering. BT said it now has more than 30,000 businesses using its Tradespace service. [p.10.]

BT Redcare is offering UK police forces a new “body worn” video solution, which features a video camera attached to a headband, to record evidence at the scene of incidents. [p.11.]

BT GLOBAL SERVICES: BT is to acquire Frontline Technologies, an IT solutions provider based in Asia-Pacific, for £68.5m. The acquisition has been described as another step towards BT developing stronger capabilities in the IT area of networked IT services, but also raised questions about its ongoing partnership with HP. Previously announced acquisitions of Net2S and I.Net moved closer to completion. [pp.12-13.]

BT won a £30m contract with Aibel Group, an oil services company, through its partnership with HP. BT is to be the lead contractor supporting the oil company’s international expansion plans. BT and HP look like they will be less successful in bidding for a contract with the UK’s Home Office to provide IT services for the eBorders security contract — a consortium led by American defence firm Raytheon is expected to win the work. BT announced it is to modernise communications for car manufacturer BMW in Bavaria as part of the companies’ ongoing relationship. [pp.14-15.]

BT’s contract with the NHS in London was said to have been “reset”, as the NHS Programme for IT shifts from a more centrally controlled model, to a situation where responsibility for strategic systems is handled locally. It was stressed by the NHS that the new agreement is part of normal commercial activity, and the value of the deal is unaffected. [p.15.]

BT promoted a pilot of its VoIP service over the N3 broadband backbone among health authorities in London. The pilot is to be used to demonstrate the VoIP services’ effectiveness to NHS trusts across the country. [p.16.]

BT’s partnership with Swisscom was said to have been “re-defined” just a few months after its initial announcement. BT is to acquire all the assets of joint-venture Infonet Switzerland, and Swisscom is to buy a 10% stake. The new arrangement is expected to make more BT products and services available to Switzerland-based companies. [p.17.]

BT Conferencing is to deploy an IP platform from Sonus Networks, which is intended to make its “reservationless” conferencing services more resilient, simple to use, and more flexible. [p.18.]

BT was reported to be planning Wi-Fi services in India within the next year. Comments from a BT executive also appeared to indicate an interest in providing local MVNO, with another partnership with Vodafone a possibility. [pp.18-19.]

BT raised its profile in the Middle East. The company was in Qatar to promote its experience in providing IT services to the healthcare industry, which it is hoping to export to local markets. It is also to manage the infrastructure of Nuetel Communications, a leading telecoms provider in Bahrain. BT Radianz services are to be made available in the Middle East, following a partnership with United Arab Emirates service provider Etisalat. [pp.14,20,21.]

BT WHOLESALE: BT Wholesale won a £98m contract to manage and maintain Virgin Media’s fixed-line voice switching network. BT will also manage network support contracts with Virgin’s hardware and software suppliers. 184 Virgin staff are to join BT as part of the deal. [p.22.]

BT Wholesale finalised a distribution agreement with Sharedband, an internet solutions provider, which will see it offer the Sharedband aggregation software suite to ISPs. The software reportedly “bonds” several broadband links to create an aggregated connection that can act as a single feed. It is intended to fill the gap between basic single-line broadband offerings and leased lines. Sharedband, which is run by a number of former BT researchers, hopes that BT Retail will be among the customers for its offering, although no ISPs have signed up yet. [pp.23.]

OPENREACH: Azul Systems highlighted its role in the development of Openreach IT systems, which support the provision of service level guarantees by the BT access services division. Service level guarantees were in the spotlight for Openreach, as regulator Ofcom proposed a new compensation structure for service providers that do not receive the required level of service from Openreach. The Ofcom proposals come as the regulator indicated that it was pleased with the performance of BT in relation to its Strategic Review Undertakings, but the OTA expressed some dissatisfaction about Openreach’s delivery of important elements of WLR3. [pp.24-26.]

REGULATORY: The regulator is looking at changes to broadband regulation, with regions of the UK where there is adequate competition seeing the level of regulation drop. BT has offered price guarantees in an attempt to allay competitors’ concerns about the limited removal of its significant market power rating. BT is reportedly struggling to make a workable margin on its network access business, and is thought to have asked the regulator to re-consider rates. [pp.27-28.]

EXTRACT

BT VISION: “Unskippable” ads trialled at BT Vision Store BT was reported to be trialling advertising that cannot be fast-forwarded through on a number of films made available on its BT Vision Store online film download service.BT is offering films that are free to download, which can be viewed for 30 days after being accessed, and feature 30-second commercials within the movie. The films can also be forwarded by email to other broadband customers.Advertisements from the AA, Norwich Union, Renault, Tourism Australia, and Coors Beer are to feature in the trial, and participants will be expected to provide some demographic information to enable adverts to be personalised.

The three films available at the beginning of the trial are Mischief Night, Played, and The Punk Rock Movie, provided under an agreement with FremantleMedia. Intel and Hiro Media are said to be working on the trial, with Isobar, an Aegis-owned digital advertising agency, is also working on the project.

” This will be a fascinating trial: the concept of targeted TV advertisements is now a reality through the combined technology behind BT Vision Download Store and Hiro’s software solution. We believe that sympathetically placed targeted advertising, combined with a viral film-sharing capability, will be attractive to customers in conjunction with free or reduced prices. “
– Antony Carbonari, Interactive and Commercial Media Director, BT Vision.

” This important agreement will give us a real insight into the downloading habits of consumers and, in particular, how they interact virally and respond to targeted advertising. “
– Pete Kalhan, FremantleMedia Enterprises Senior Vice-President, Home Entertainment & Archive Sales.

Should the three-month trial prove a success, BT could consider rolling it out onto the BT Vision IPTV (Internet Protocol television) service, although this would take an estimated 12-to-18 months to set up.Carbonari, the BT executive responsible for the trial, joined BT in 2006. Previously, he worked at Disney in a number of different executive roles relating to broadband services, sales and distribution, and business development (BTwatch, 2006.02).

Reaction

” This tentative step into the online advertising world is all about the longer-term dream of developing a new revenue stream for BT…In theory, advertising on the IPTV platform should be a winning approach for advertisers. It provides the facility to mix classic TV advertising (and the immersive qualities that video and the ‘lean back’ environment entail) with the accountability and targeting capabilities of the internet. In practice, it is still very difficult for IPTV operators to break into the advertising supply chain — most, at least in Europe, do not own any advertising slots, and most still lack the audience scale that really puts them on the radar for advertisers. “

” This trial is important because it allows BT to begin building those relationships, both with agencies and brands, in order to gain a real foothold in the advertising supply chain…And it won’t be only BT and its advertisers that look forward to these results. There will be wider industry interest in the trial, especially with regard to how tolerant consumers are of advertising inserted into their video downloads, how much advertising can be incorporated, and when. ”
– Annelise Berendt, senior analyst at Ovum. [BT, Ovum, VNU, 6 December 2007.]

BT fudges BT Vision predictions

Following recent media coverage of BT’s downgrading of expectations for BT Vision numbers (originally reported by BTwatch in June 2007 — BTwatch, 2007.06), BT has given a variety of reasons for why it has not failed against its original targets.Some press outlets were informed that when BT said it would attract “hundreds of thousands” of subscribers by the end of 2007, this meant the financial year ending in March 2008 (which, technically, is FY08, not FY07). Elsewhere, BT performed some semantic gymnastics, reportedly telling website Informitv that when it referred to “hundreds of thousands of customers by the end of 2007” in its original press release, “we meant a number in the hundreds of thousands”, which it claims it satisfied by reaching around 100,000 signed-up customers. At the time of the BT Vision launch, BTwatch reported that BT had said it expected to have around 200,000 customers at the end of 2007, based on comments from the official launch. However, this presentation, unlike other older presentations from BT, is no longer available on the BT website.

BTwatch also recently noted that BT is struggling to meet its downward revised target. Although it claims to have signed more than 100,000 customers, it is far from certain when this number will contribute to actual revenue-generating connections rather than consumers on a waiting list. BT said it is standing by mid-term targets of between two million and three million customers within three to five years of the service launch — therefore setting itself a minimum target of two million BT Vision customers by the end of 2011.

[The Register, 9 November 2007; Informitv, 13 November 2007.]

TABLE OF CONTENTS

2 BT Group
2 Community;
Executives;
Pensions
3 strategy and operations
3 Appointments;
Research
4 21CN
7 BT Retail
7 Broadband
8 Vision
9 Customer service;
Devices
10 Competitors;
Business
11 Redcare
12 BT Global Services
12 Acquisitions
13 Awards and accreditations
14 Contracts;
Global financial services
15 NHS contracts
17 Partners
18 Americas;
Asia;
Conferencing
19 Europe
20 Middle East
22 BT Wholesale
22 Contracts
23 Partners
24 Openreach
24 Fibre;
Partners
25 LLU
25 Undertakings
27 Regulatory
29 City Reports
30 INDEX

INDEX

A
Accenture, 15
Aibel Group, 14
ANDA Networks, 4
Arete Research, 27
AstraZeneca, 3
Audax, 11
Automobile Association, 8
Azul Systems, 24

B
BAE Systems, 3
BBC Worldwide, 8
BMW, 14
Bradford & Bingley, 2
British Broadcasting Corporation, 2, 8, 9
BSkyB, 7, 9, 27
BT Group, 2, 3, 4, 28
BT Exact, 2
BT Global Services, 12, 13, 14, 19, 20, 21
BT Conferencing, 18
BT Germany, 14, 19
BT International, 16, 18, 19, 20
Infonet Switzerland, 17
International Health Advisory Board, 20
N3SP, 16
Net2S, 12
BT Retail, 5, 7, 10, 23
BT Business, 10
BT Internet Radio, 9
BT Ireland, 19
BT Redcare, 11
BT Tradespace, 10
BT Vision, 8, 9
BT Wholesale, 5, 22, 23
Directors
Rake, Sir Michael, 2
Executives
Barrault, François, 12, 14, 20
Beal, Matthew, 6
Boustridge, Michael, 16
Bross, Matt, 4
Carbonari, Antony, 8
Clark, Chris, 19
Davis, Sally, 22
Fitzpatrick, Brian, 23
Geldmacher, Jan, 19
Hill, Stuart, 16
Jie Zhang, 3
Lereuth, Karsten, 21
McCormack, Aaron, 18
Nazi, George, 4
Patel, Chet, 11
Verwaayen, Ben, 28
Windsor, Colin, 24
Ex-executives
Davies, Stewart, 2
Openreach, 24, 25, 26, 28
WLR3, 25
Strategy and Operations, 3
21CN, 4, 5, 6, 13, 21, 23, 24
BT Design, 6, 24
Consult21, 5
India-UK Advanced Technology Centre, 4
C
Cable and Wireless, 3
Carphone Warehouse, 10
Opal Telecom, 10
TalkTalk, 10
Cerner, 15
Ciena, 4
Cisco Systems, Inc., 14
Citigroup, 27
Close Brothers, 2
Competition Commission, 2, 27
Coors Beer, 8
Credit Suisse, 17

D
Department of Innovation, Universities and Skills, 3
Deutsche Telekom, 28
E
Eircom, 3
Etisalat, 14
European Union, 28
European Commission, 2, 28
F
Federal State of Saxony, 19
FIFA, 8
Føroya Tele, 23
FremantleMedia, 8
Frontline Technologies, 12
G
GlaxoSmithKline, 3
Google
YouTube, 9
H
Hewlett-Packard, 13, 14, 15
Hiro Media, 8
Huawei Technologies, 6
I
ICM, 9
IDX, 15
I.Net, 12
Infosys, 4
Innovation Scorecard, 3
Intel, 8
Intergence Systems, 4
Internet Service Provider Association, 5
Isobar, 8

J
JD Power and Associates, 7
K
Kingston Communications, 3
L
Lockheed Martin, 15
LogicaCMG, 15
M
Midas Communications Technologies, 4
Mitsui & Co Energy Risk Management, 15
N
National Health Service, 15, 16, 20
N3, 16
NPfIT, 15
NMSWorks Software, 4
Norwich Union, 8
NTT, 3
Nuetel Communications, 21
O
Ofcom, 24, 26, 27, 28
Carrier pre-selection, 25
LLU, 25, 26, 27
Richards, Ed, 24, 26
Strategic Review of the Telecoms Sector, 26
Wholesale line rental, 25
Office of the Telecommunications Adjudicator, 25
OTA2, 25
Ovum, 9, 13

P
Paramount, 8
Point Topic, 7
Portugal Telecom, 28
R
Radianz, 14
Raytheon, 15
Renault, 8
S
Sasken Communications, 4
Serco, 15
Setanta, 27
Sharedband, 23
Sonus Networks, 18
Swisscom, 17

T
Technologies
Broadband, 5, 7, 8, 10, 16, 18, 23, 24, 25, 26, 27
ADSL2+, 5
VDSL, 25
Convergence, 13
Ethernet, 4
ICT, 13, 17, 20
IP, 14, 17, 18, 19, 21, 22, 23
IPTV, 8, 9
Java, 24
NITS, 13
R&D, 3
VoIP, 14, 16, 19
Wi-Fi, 16, 18
WiMAX, 18
Tejas Networks, 4
Telefónica, 28
O2 Europe, 2, 16
Telekom Austria, 28
Thomson, 19
Tiscali SpA, 7, 10
Top-Up TV, 27

U
Uswitch, 10
V
Vanco, 3
Virgin Media, 7, 9, 22, 27
Vodafone, 19
W
Warner Brothers, 8
Wipro Ltd, 4
World Cup, 8

Written by AB · Filed Under KnowBT 

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