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BT: 21CN Slips, IPTV Nears

BT Group plc (NYSE: BT; London: BTA)'s 21CN next-generation network project will run over schedule by a year, with the final 20 percent of broadband and voice connections migrating to the new all-IP network in 2011, the operator's CEO said during today's second-quarter earnings presentation. (See BT Reports Q2.)

The carrier has repeatedly stated, since it first outlined its grand plan in June 2004, that the business case for the £10 billion (US$19 billion) 21CN project depends on decommissioning its 16 legacy networks by the end of 2010. (See BT Moves Ahead With Mega Project.)

But in April this year, cracks in the deadline started to appear, though the carrier played down the magnitude of any extended life for its PSTN. (See BT Says 21CN Deadline Hasn't Moved.)

The overhang, though, is not insignificant. CEO Ben Verwaayen today laid out a revised migration plan showing that, in 2010, only 80 percent of BT's broadband and voice connections will have been migrated to the new platform, with the remaining 20 percent switching across in 2011.

That means a significant chunk of BT's legacy infrastructure will still be in commission in 2011, a scenario at odds with the project's tight business plan.

But the carrier is defying any suggestion that the new timetable will affect its balance sheet. Verwaayen told analysts at today's results meeting that the cost of the project hasn't changed, and a BT spokeswoman added that the business case also remains the same.

That business plan includes a reduction in annual operating costs of £1 billion ($1.9 billion). (See BT Moves Ahead With Mega Project.)

Executives involved in the 21CN transformation have noted on a number of occasions that they're learning as they go and constantly making changes and new decisions, so confirmation of the extension will surprise few people. And that learning process is also leading to new revenue opportunities. (See BT Rethinks 21CN Core Strategy, Ubiquity Leads New Round of 21CN Deals, BT's Learning From Google, and BT Cashes In on 21CN.)

Even with the adjustment, BT's 21CN timetable is still very aggressive. The first residential customers will be migrated onto the all-IP network in Cardiff, Wales, at the end of November, followed by a further 350,000 customers in the region in and around the Welsh capital over the following nine months. (See BT Plans Welsh Migration.)

Verwaayen says 21CN network upgrades are ongoing in 100 U.K. cities at present, that about 10 percent of the next-gen core network is built and operational, and that 75 million trial voice calls have gone across the new infrastructure.

BT vision for Xmas
The other BT timetable of interest to analysts, peers, suppliers, and customers is that surrounding the launch of the carrier's IPTV service, BT Vision. (See BT Unveils IPTV Service.)

The carrier has been saying for a while now that it will launch the service "this Autumn," which, it points out, ends on December 22. "I've become an expert on the seasons," quipped Ian Livingston, CEO of BT Retail, the division that will market and sell the service to U.K. consumers.

He refuted suggestions that the launch would be low key and limited -- "We are going to be very ambitious, and there are going to be some very exciting services" -- though he said the service would "build up" from its initial launch.

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mrblobby 12/5/2012 | 3:35:15 AM
re: BT: 21CN Slips, IPTV Nears Surely what is meant is that BT has 16 legacy networks, the PSTN being one of them?...
digits 12/5/2012 | 3:35:13 AM
re: BT: 21CN Slips, IPTV Nears Mr Blobby
Well spotted. I left in a rogue PSTN as I jiggled my words around. BT has, it has stated, 16 legacy networks, including its traditional switched voice network.
Correction made.

Personally, if BT can pull this off in 2011 it will deserve to survive into the next era of comms services. It's such a monumental undertaking.

The main thing is to do the job right. Better to say it will be 10 years late than to switch over to a network that couldn't handle the U.K.'s traffic.
I'm not sure that many people at a government level here in the U.K. have considered what it would mean for Britain's role in the global economy if, for any reason, the 21CN was relied upon before it is properly ready.


mrblobby 12/5/2012 | 3:35:08 AM
re: BT: 21CN Slips, IPTV Nears What I find absolutely amazing is that nobody seems to question BT's central thesis, namely that 21CN is business case-driven. Here's some evidence to the contrary:

- As many operators around the world know, Ericsson is very aggressive in withdrawing support for their legacy equipment (particularly the AXE10) in order to force their customers to replace it.

- Despite the above, BT has awarded a single-vendor inode contract to Ericsson, thereby expediting the downfall of the one company that could keep Ericsson in check in that space. To top it off, Ericsson then bought Marconi.

This suggests that BT was forced into 21CN. Given the ongoing criticality of PSTN revenue to BT, 21CN is needed for the very survival of the company, pushing the business case to 2nd place on the list of priorities.

I've not seen anyone ask BT execs questions along these lines.
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