BT Group plc (NYSE: BT; London: BTA) is using pseudowire devices from Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) for a groundbreaking Ethernet–based backhaul service for mobile operators in the U.K., Unstrung has learned.

BT Wholesale announced new contracts for managed backhaul services with Vodafone UK and Telefónica UK Ltd. in April and May, respectively, and inked a similar deal with T-Mobile (UK) in July last year. These services use BT's "new 21st Century Network-enabled Ethernet service," according to the operator's press releases. (See BT Still Coy on Ethernet, BT Wins New O2 Deal, BT Sells PBT-Based Backhaul Service, and T-Mobile Picks BT.)

According to an industry source, BT is deploying Tellabs's pseudowire devices at the mobile operator cell sites for the initial deployments and will issue a request for quotation (RFQ) in the next few months for more Ethernet-based backhaul gear.

It is understood that among the operators using BT's managed backhaul service, Vodafone has the most aggressive timelines and ambitious plans for Ethernet-based backhaul. Vodafone wants a few hundred cell sites in commercial service in the next few months. And the operator wants the backhaul service to carry 3G data and voice traffic, and does not want to use the service just for offloading data traffic.

BT is deploying the Tellabs equipment, which is most likely the 8605 or 8607 access switches, for those first few hundred cell sites at Vodafone to get the service started, according to the source.

Tellabs would not comment on whether BT was using its equipment. And a BT spokeswoman said, "We don't comment on rumor and speculation."

Pseudowire devices, such as Tellabs's access switches, are what enable BT to deploy its Wholesale Ethernet Service out to mobile operators' cell sites to transport traffic back to the mobile core network. Pseudowire technology emulates the essential attributes of legacy TDM or ATM service (such 3G cellular voice and data) over a packet network.

But Vodafone, along with O2 and T-Mobile, appears to be among a minority of mobile operators that are prepared to take the plunge into Ethernet-based backhaul systems. According to a recent Heavy Reading survey, mobile operators are holding back on Ethernet backhaul because of a lack of confidence in the technology and concerns about quality of service problems for their voice services. The Heavy Reading research found that the migration from traditional, costly T-1/E-1 leased lines to higher-capacity Ethernet-based infrastructures is happening slowly. (See Carriers Don't Trust Ethernet Backhaul?)

For BT, the managed backhaul services contracts with the three U.K. mobile operators are together set to be worth more than £700 million (US$1.36 billion) in revenues.

— Michelle Donegan, European Editor, Unstrung