BT Group plc (NYSE: BT; London: BTA) ended months of speculation today by naming the companies that will supply the equipment for its 21st Century network, or 21CN (see BT Names 21CN Suppliers ).
Marconi's share price plunged 44 percent on the news this morning, dropping to 270.5 pence, from 482 pence.
Other highlights include the involvement of Chinese vendor Huawei Technologies Co. Ltd. in the access and transmission categories, and the notable exclusion of Alcatel (NYSE: ALA; Paris: CGEP:PA) from the access category.
Alcatel is providing its 7750 Service Router, the former TiMetra IP platform, and its 5620 Service Aware Manager (see Alcatel Eyes Video Market).
Analysts at Lehman Brothers noted that Alcatel's inclusion in the metro category but exclusion from access is "on balance, a slight negative."
Core Routers
No surprises here, as BT will use Cisco and Juniper Networks Inc. (Nasdaq: JNPR) gear, though Juniper isn't named as a preferred supplier.
That honor goes to its partner Lucent Technologies Inc. (NYSE: LU), which will supply Juniper's M320, T640 and TX Matrix routing platforms and its own element management system.
In addition, Lucent's Worldwide Services and Bell Labs divisions will provide "network planning, integration, deployment and support," said the vendor in an official release (see Lucent, Juniper to Supply BT 21CN).
Network Intelligence, or I-node Technology Ericsson AB (Nasdaq: ERICY) is the sole supplier for systems that BT says "includes softswitches, network intelligence, and bandwidth management capabilities." (See BT Picks Ericsson for 21CN.)
Transmission, Optical Equipment Ciena Corp. (Nasdaq: CIEN) and Huawei are the winners here. Ciena, which says it is supplying "switching and transmission and Ethernet transport platforms," had been expected to participate (see BT Picks Ciena for 21CN).
Table 1: BT's 21CN Preferred Suppliers
Access
Metro
Core
I-Nodes
Transmission
Fujitsu
Alcatel
Cisco
Ericsson
Ciena
Huawei
Cisco
Lucent
Huawei
Siemens
Access -- the access domain in this context is the aggregation equipment (multiservice access node -- MSANs) which will link BT�s existing access network, initially carrying voice and data services from end users on to the 21CN core IP-based network.
Metro nodes provide the routing and signaling functions for the unified 21CN network for voice, data, and video.
Core nodes are the high capacity, large scale routers providing cost efficient connections between metro nodes.
i-node is where the service execution functionality is located -- in essence the intelligence that controls services. In the 21CN context, this includes softswitches, network intelligence, and bandwidth management capabilities.
Transmission includes the optical fiber transport infrastructure that connects all nodes in 21CN but also the electronics that convert the signals carried at high capacity over the cables connecting the MSANs, metro, and core nodes. Much of the optical fibre infrastructure is already in place and today we are announcing the preferred suppliers for the optical electronics.
Source: BT Group plc
The key to BT's decisions appears to be economics. "In order to achieve world class delivery of the programme, the selection of suppliers has been about much more than choosing technology and selecting partners," says BT Wholesale CEO Paul Reynolds in a prepared statement. "The commercial agreements, which the company expects to conclude over the summer, will include open standards and a focus on whole life costs."
In other words, the margins are razor thin, and Marconi says it didn't make the final selection because it couldn't meet BT's commercial needs.
"This is a disappointing outcome from a very competitive tender process," said Marconi CEO Mike Parton in a statement. "Our products performed extremely well technically, but we have been unable to meet BT's commercial requirements."
Marconi notes that it will "continue to supply equipment and services to BT under the various, multi-year frame contracts it has in place."
Given Marconi's long history with BT, its exclusion will come as a serious blow. The price squeeze will likely have favored Huawei, though, given its reputation for providing decent quality but low-cost technology.
BT's decisions will have significant implications for all the vendors involved, as the 21CN will provide a shop window into which other major carriers making their own next-generation network plans will peer closely.
— Ray Le Maistre, International News Editor, Light Reading
re: BT Unveils 21CN Suppliers I guess BT's primary criteria was just the cost, not much the technology.. ALA is considered to be one of the best in the Access, and not selecting ALA is, just based on the cost advantage coming along with Huewai's products, though its techincally inferior. ALA is a proven Access leader among RBOCs and the Europe..
BT decision to leave Marconi is a major blow to Marcnois future...
hyperunner, User Rank: Light Beer 12/5/2012 | 3:17:11 AM
re: BT Unveils 21CN Suppliers All the suppliers in this deal have trimmed margins to the bone, and in some cases beyond. Like the GIGBE contract last year, in some ways it's better not to be a winner here! (Only kidding - it's better to have some revenue than none).
I'm puzzled over the split in Juniper supply. Siemens will be supplying the ERX boxes in the Metro portion of this network to do classic BRAS. But then Lucent is supplying the M,and T-series core routers. Is this another way for BT to screw margin out of its suppliers? In other words continue to play off Siemens against Lucent? Also, these are the exact boxes BT is using today in these parts of the network - so shouldn't it be called the 20CN?
I like the comment about BT needing Bell Labs to do the "network planning, integration, deployment and support". IMHO it'll need a few Nobel Laureates to work out how to nail up an end to end service over this mish mash of different boxes!
Marconi stock price is in real trouble - down to -ú2.05 just now. That's a 42% drop on the day. Ouch.
MP_UK, User Rank: Light Beer 12/5/2012 | 3:17:11 AM
re: BT Unveils 21CN Suppliers Have to disagree here. It's true that Alcatel have a very sucessfull DSLAM that works well, but it's totally out of date for a next gen network. It's an ATM DSLAM (although you can get a GE port) it doesn't do VoIP, IP routing, MPLS, etc.
The Huawei box is, as far as I can make out, the most advanced DSLAM available - in terms of protocols supported. FTEL's new DSLAM is up and running, and should be stable for 21CN timescales. Both these companies are very competative on price, and (particularly in the former case) give good support.
Marconi builds a nice DSLAM, with support for lots of protocols. I guess they couldn't / wouldn't sell it cheap enough, a shame for them.
ozip, User Rank: Light Beer 12/5/2012 | 3:17:09 AM
re: BT Unveils 21CN Suppliers Perhaps this is the path of all things but in conjunction with trimming margins to the bone, I understand that these guys have demanded unprecedented disclosure of IPR. This leads down a slippery path for the equipment business who survive on margin exceeding 50% where guys like Dell survive on 12%. Although I would alway argue that many of the vendors waste their good fortune, for some of them it funds risk taking that results in innovation and new technology, and drives the venture business. Change this model and provide all of the IPR to every customer (sounds very ultaistic, just like the GPL) and you end up with only (I mean only) the products that the customer want now and innovation is left to the customers. In my expereience, telco demand the innovation that 50% brings but only want to pay 12%, you cannot have it both ways. If you want to see how this works out, take a look at Cablelabs and the data projects.
Access Master, User Rank: Light Beer 12/5/2012 | 3:17:08 AM
re: BT Unveils 21CN Suppliers Marconi have been digging this whole for themselves for years, their arrogance is well renowned in BT circles.
As for Huawei, the rumour is this was definately not a cost measure. Huawei have reportedly been the best performing supplier in the whole tender process. Quite a feat considering they have only been here a couple of years; the most interesting rumor I have heard is that Huawei are considering a bid for Marconi as this would give them a ready built service organisation.
Graham Beniston, User Rank: Light Beer 12/5/2012 | 3:17:07 AM
re: BT Unveils 21CN Suppliers Ericsson claim that Media Gateways and SBCs are part of the Metro Node equipment, which they describe as "complex". They claim not to know any further details. BT have agreed to brief me on SBCs next week.
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