Vendors Sign BT 21CN Contracts

Four of BT's eight 21CN preferred vendors sign contracts, but what's the holdup on the lagging quartet?

December 22, 2005

2 Min Read
Vendors Sign BT 21CN Contracts

Months later than expected, half of the eight preferred vendors for BT Group plc (NYSE: BT; London: BTA)'s next-generation 21CN network have finally agreed to contracts that tie them to the £10 billion (US$17.4 billion) project. (See BT Signs 21CN Deals.)

Ciena Corp. (NYSE: CIEN), Huawei Technologies Co. Ltd. , Lucent Technologies Inc. (NYSE: LU), and Siemens Communications Group have all signed on the dotted line. (See Ciena Finalizes BT Agreement, Huawei Signs 21CN, and Lucent Signs 21CN Contract.)

That leaves Alcatel (NYSE: ALA; Paris: CGEP:PA), Cisco Systems Inc. (Nasdaq: CSCO), Ericsson AB (Nasdaq: ERIC), and Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) still to agree on final details.

BT says it expects the remaining four deals to be completed early in 2006, and that there are no specific reasons for the delays. "These are very complex negotiations, they're very detailed and take a lot to work through," says a BT spokeswoman.

Between them, the eight vendors' deals are expected to be worth about £3.4 billion ($5.9 billion), about a third of the total cost of the network transformation project, which is due to be completed in 2010. At that stage, BT plans to have switched off its PSTN and be running all its voice and data traffic over a converged IP network.

Lucent says its deal, which involves the supply of various Juniper Networks Inc. (NYSE: JNPR) routers for BT's IP core plus deployment and maintenance support services, is worth tens of millions of pounds over multiple years, but wouldn't provide any further details.

The eight preferred vendors were named in April this year, and the contracts were expected to be signed a few months later, but intense negotiations -- with BT believed to have made stringent demands of the equipment firms -- have led to delays in the final deals. (See BT Unveils 21CN Suppliers.)

One source close to the 21CN process told Light Reading that one of the North American suppliers was believed to have been advised by its lawyers not to sign BT's contract as the terms were deemed to be too demanding and not economically viable. BT declined to comment on the issue.

— Ray Le Maistre, International News Editor, Light Reading

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