BT Inches Toward Telco 2.0

BT Group plc (NYSE: BT; London: BTA) is only months away from taking a giant leap into the so-called Telco 2.0 world by exposing its next-generation service creation platform to third-party applications developers, the carrier announced today as it reported its third-quarter earnings. (See BT Reports Q3.)

BT has been talking about this Web 2.0 initiative, which it calls Web21C, for a few years now: The move is part of the ongoing £10 billion (US$19.4 billion) 21CN project that will see BT migrate to a converged, all-IP network sometime around 2011. (See BT's Learning From Google, Why Telcos Need Web 2.0, and What's Up With IMS?)

BT’s CTO, Matt Bross, has been particularly vocal about the need for BT, and other carriers, to establish service development relationships with third-party developers (including other service providers), and he presented on the issue at last June’s NXTcomm show in Chicago. (See Carriers Surf the Web 2.0 Wave.)

So what’s BT doing?

Well, it made its Web21C service development kit (SDK) available to developers both inside and outside BT in July 2007. It has by now been downloaded from a public Website about 8,000 times, with half of those downloads being made within the U.K.

Since then, says Joe Kelly, head of communications at BT Wholesale, 20 commercial applications have been developed, some by BT developers and some by independent developers. One is BT Tradespace, a directory and contact Web portal for small businesses.

In addition there are a “couple of thousand” applications being tested in the Sandbox environment set up by Microsoft Corp. (Nasdaq: MSFT). (See Microsoft Unveils Sandbox and Mashup Wins Competition.)

All that development to date has been at arm’s length. Now, though, BT is ready to take things to the next level and open up its service delivery platform -- or the Innovation Platform, as BT calls it -- to those developers, to allow them access to existing service code as it’s made available, work on new applications, and test them to see how they would perform on the BT network.

And this is where that Web21C development ties in with BT’s other 21CN-related news. Today the carrier announced that is set to launch a range of new services in the coming year based on the new 21CN platforms it has been deploying.

Those services are:

  • Next Generation Ethernet: BT has developed a new set of wholesale Ethernet services that, starting this month, it will be marketing to corporate customers and mobile operators. (See BT Sells PBT-Based Backhaul Service.) Kelly says that by the end of March 2009, BT will be offering these new Ethernet services from 1,000 service nodes within the U.K.

  • Wholesale Broadband Connect: ADSL2+ services, offering speeds up to 24 Mbit/s (and maybe even the full 24 Mbit/s, if you happen to live next to the local exchange). The new broadband services are currently being trialed in the East Midlands region of England, and are set to be offered commercially from April 30.

  • Next-generation converged broadband and voice services: Unspecified new IP voice services managed over a broadband connection, most likely linked to BT’s struggling Fusion service.
”These services represent the first very clear launch of new services” based on the 21CN platform, states Kelly. And the key link to the Innovation Platform is that BT expects developers to “add value to those new services, using the service delivery platform and the Web21C SDK, to build new applications that can add value to those existing services.”

21CN revamp
That wasn’t the only 21CN news issued today. During the carrier’s earnings presentation, CEO Ben Verwaayen said BT’s approach to migrating to the new all-IP network had changed slightly: The geographic rollout, and decommissioning of legacy platforms and services, will be driven initially by demands from BT’s wholesale customers rather than by a timetable set by BT.

But despite concerns from financial analysts, Verwaayen claimed that BT is still on course to complete the migration from about 18 separate networks to one by 2011 and that the eventual annual cost savings might even exceed the original £1 billion ($1.9 billion) target.

”I won’t be satisfied with £1 billion -- I expect the benefits to be much greater. There is an enormous amount of cost saving opportunity ahead of us,” said the CEO.

Verwaayen also boasted how the carrier’s third quarter had been another successful financial period, but BT’s numbers fell short of analyst expectations, and the operator’s share price fell by 10 percent to 237 pence ($4.60) on the London Stock Exchange .

— Ray Le Maistre, International News Editor, Light Reading

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digits 12/5/2012 | 3:48:15 PM
re: BT Inches Toward Telco 2.0 Distributed nodes housing Ethernet equipment.
I should have made that clearer -- that is my text, not a direct quote from Kelly.

Essentially BT is going to have 1,000 nodes around the UK that will support the new wholesale Ethernet services in about a year's time.

JaguarsPaw 12/5/2012 | 3:48:15 PM
re: BT Inches Toward Telco 2.0 "... by the end of March 2009, BT will be offering these new Ethernet services from 1,000 service nodes within the U.K."

When using the word service node, is Kelly talking about Fujitsu/Huawei MSAN's here or is he talking about somthing else such as ethernet access boxes from Adva for ex.?

Mostly Harmless 12/5/2012 | 3:48:14 PM
re: BT Inches Toward Telco 2.0 ...at BT Wholesale.

For the past two years they've missed sales targets because they've had little or nothing to sell to their customers (retail ISPs, large enterprises and other UK carriers).

The 21CN platform had been announced, but not available (and then delayed).

The old BT Wholesale network isn't being upgraded (ie. there's a ban on buying new capacity or functionality for the old network), and the services available on that platform are looking very uncompetitive.

So the sales teams in BTW are way behind on their targets.

Let's hope the new platform works when it arrives because they've got a lot of catching up to do.
metroman 12/5/2012 | 3:48:12 PM
re: BT Inches Toward Telco 2.0 MH

That's a very interesting viewpoint that I had not considered. Are BT's competitors like rabbits in the 21CN headlights or are they actually taking advantage of it in the way you describe. I wonder what the impact has actually been?

21CN should be attacked by the competition as the "jam tomorrow" plan. But are they do it?

Mark Sebastyn 12/5/2012 | 3:48:12 PM
re: BT Inches Toward Telco 2.0 Jaguar -

If you are interested in the 21Cn project and vendor implications I would like to invite you to join a small collection of investors who are interested in the same thing. We have about 30 folks who are very knowledgeable.

Mostly Harmless 12/5/2012 | 3:48:11 PM
re: BT Inches Toward Telco 2.0 Hi metroman,
Good question. Clearly the market for wholesale services in the UK as a whole is growing. I know that BT is missing targets, but have not seen a breakdown vs the competition.

So that implies they're gaining share. The data I've seen from international analysts simply isn't granular enough to answer your question, sorry.

Mostly Harmless 12/5/2012 | 3:48:10 PM
re: BT Inches Toward Telco 2.0 ...just re-read my post, by "they're gaining share" I meant BTW's competitors.
digits 12/5/2012 | 3:48:09 PM
re: BT Inches Toward Telco 2.0 Indeed. Wholesale decline at the moment is from reduced interconnect for mobile operators, who are forging their own interconnects, and reduced wholesale broadband as more rivals unbundle the local loop.

BT reckons it can, in the medium and long term, counter those declines, which are quite marked at the moment, by growing its outsourced services business, where it essentially runs customers' networks for them -- a further shift, for some, towards the Netco/Servco model.

common cents 12/5/2012 | 3:48:09 PM
re: BT Inches Toward Telco 2.0 Sorry to bring a degree of fact to an ill-informed discussion (old fashioned, I know) but I've been back through BT's results. BTW has hit its numbers and grown every quarter for the last several years. And read this week's announcement. They're not losing business to their competitors, but to their customers doing things more for themselves.
metroman 12/5/2012 | 3:48:08 PM
re: BT Inches Toward Telco 2.0 Common Cents (perhaps replace cents with decency)

No-one on this post has made unfounded statements as far as I can tell. There are unanswered questions which you have contributed to. I think that wading in with your "ill-informed discussion" diatribe is parasitic at best.

Take a look at the discussion - no-one is trying to put forward unsubstantiated claims - in fact there have been several "good question, not sure of the answer" statements.

If you are the answer, keep it to yourself unless you intend to be polite.

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