BT Makes Vendors Share Their Code

BT Group plc (NYSE: BT; London: BTA) is breaking new ground in more ways than one with its strategy for the 21st Century Network (21CN), its next-generation infrastructure (see BT Moves Ahead With Mega Project).

Not only is the U.K.'s incumbent carrier planning to switch off its circuit-switched voice network, or PSTN, by the end of this decade and run all its voice and data traffic over a single IP network, but it is insisting that its 21CN suppliers hand over the source codes of the systems to be used in the new network.

The £10 billion (US$18.6 billion) 21CN "is the most radical plan in telecom today, and the vendors share that view," said Paul Reynolds, the CEO of BT Wholesale, the division of the U.K. carrier responsible for 21CN, at a London conference, Next-Gen Voice 2005, earlier this week.

"We have demanded that our strategic suppliers for the 21CN be our partners," and buy into BT's approach to interoperability, said Reynolds (see BT Pushes for Flexibility).

"We have defined APIs [application programming interfaces] and have demanded that the vendors deliver systems based on those APIs." And to ensure that those demands are met, "we have demanded access to the key source code of the suppliers' products."

Reynolds added: "A number of the biggest vendors resisted, but everyone has eventually moved on this."

Just asking systems vendors to hand over their intellectual property seems groundbreaking in itself, but to get the equipment suppliers to agree shows how much the vendors covet BT's 21CN business -- and shows that major carriers are wielding much greater power over the direction of their networks than ever before.

But it's not like the vendors caved in and agreed to provide their source code straight away, according to Joe Kelly, chief spokesman for BT's 21CN.

"I'm sure we're not the first to ask for it, but I'm sure we're the first to get it," says Kelly. "No one was queuing up to say 'Yes please!' so we had to renegotiate. But those that are still in the 21CN process have all agreed."

So how will the process work? Kelly says the final details have yet to be ironed out but that it will involve the code being held securely by BT and a trusted third party, as yet unidentified.

BT still isn't identifying those companies that are still in the running for 21CN deals, though Light Reading has already established that fewer than 10 -- including Alcatel (NYSE: ALA; Paris: CGEP.PA), Cisco Systems Inc. (Nasdaq: CSCO), Huawei Technologies Co. Ltd., Juniper Networks Inc. (Nasdaq: JNPR), Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), and Siemens Communications Group -- are among the shortlisted few. Those that are successful will need to deliver their own equipment, plus those of their partners, to BT's specifications (see BT Has 21CN Shortlists).

Reynolds told the London conference that the list of strategic 21CN vendors will be announced by the end of BT's financial year (March 31).

So what do vendors make of BT's source code demands? As this article was published, those we had contacted were still mulling their responses.

Reynolds describes the 21CN strategy as "scary, exciting, and very very challenging, but we have no choice. And all the other incumbents will have to do the same thing. The 21CN is the enabling infrastructure for growth. At the moment we are spending a lot of time and money on just standing still, but standing still is not good enough."

"And we have to move fast. Price reductions are cutting £500 million [$929 million] off our revenues every year. If we can't switch off the PSTN by the end of this decade then the business case goes bust," he told the London conference.

BT will announce its latest quarterly results tomorrow, February 10.

— Ray Le Maistre, International News Editor, Light Reading

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