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Optical/IP

Huawei Helps BT Launch Video

U.K. incumbent operator BT Group plc (NYSE: BTY; London: BTA) will unveil a raft of broadband services tomorrow (Thursday) that includes at least one service based on systems from Chinese vendor Huawei Technologies Co. Ltd.

The consumer videoconferencing service, cutely called VizzitMe, allows up to four individuals with DSL connections to engage in a real-time video chat. It's been in trials for several months, during which time BT has provided the service and the necessary headsets and webcams for free in return for user feedback. The free trial is due to end on March 31.

This project is just one example of Huawei's penetration of BT. Another example is EEscape Ltd., an operator planning to launch nationwide VOIP services next month. Eescape is 49 per cent owned by BT, and BT Wholesale is housing and managing the Huawei softswitches that will be used to provide services (see EEscape Deploys Huawei VOIP Kit).

Thursday's announcement, though, is all about BT's own broadband services strategy. BT will also announce its VOIP-over-DSL plans and outline its video-on-demand and TV-over-DSL strategy. This takes BT into new territory. Previously, it had offered VOIP services to customers of its cable operator rivals NTL Inc. (Nasdaq Europe: NTLI) and Telewest Communications Networks plc (Nasdaq: TWSTY) but had stopped short of offering VOIP to its own customers (see BT Gets Aggressive With VOIP).

All these services are designed to increase the average revenue per user (ARPU) levels from BT's broadband customer base, which currently stands at about 1 million and growing. Boosting such revenues is vital to the European incumbents that are facing the erosion of their traditional voice revenues (see Eurofile: Empire Building).

But while the launch and provision of such services is increasingly important for broadband service providers, they're not likely to generate enormous amounts of revenue in the near future, says Tim Johnson at broadband market research firm Point Topic Ltd.

"The value of additional services and extra hardware components to broadband customers works out at about £1.50 [US$2.73] per month per customer on a global basis at present. I expect this to double during the course of this year," as more carriers launch services similar to BT's, says Johnson.

The Point Topic man adds that, in addition to VOIP, conferencing, video, and broadcast services, security is proving a decent source of additional revenue for some broadband providers. He says Canadian incumbent BCE Inc. (NYSE/Toronto: BCE), a.k.a. Bell Canada, has been particularly successful in selling additional security services and software to its broadband customers.

— Ray Le Maistre, International Editor, Boardwatch

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