May 1, 2009
BT Group plc (NYSE: BT; London: BTA) says it has slowed down its £10 billion (US$14.9 billion) 21CN process and has withdrawn an initial converged service because it wasn't likely to be profitable. But the carrier denies it has abandoned its next-generation voice platform migration plans.
Suggestions that BT had put the brakes on its voice migration plans, which involve moving its voice services to an all-IP platform and retiring its TDM-based PSTN switches, emerged Friday in a research note issued by Jefferies & Company Inc. analyst George Notter.
Notter's note centered on the role that VOIP equipment vendor Sonus Networks Inc. (Nasdaq: SONS) is playing in BT's 21CN program. Sonus was drafted into BT's plans in late 2007 to provide a specific application known as the Access Gateway Controller Function (AGCF), which provides a point of interaction between the core IP and access networks. (See Sonus Fills BT's IMS Hole.)
Notter believes Sonus jumped at that opportunity, "despite the fact that it was small and required significant R&D" to "curry favor in advance of a larger network transformation opportunity at BT."
Now, though, the analyst believes Sonus has lost that opportunity because BT is believed to be rethinking its 21CN voice network architecture. "More specifically, the carrier has suspended/halted the project as they're finding their network design (essentially replacing the access infrastructure with MSANs) is too expensive," he writes.
Notter adds: "We believe that any larger VoIP network transformation opportunity is gone... The news is disappointing. Just a few months ago, our industry contacts were telling us that Sonus had the inside track on winning this very large follow-on deal at BT."
Has BT suspended its voice technology migration plans? The carrier says that's definitely not the case, though it admits its pace of change has slowed and that one specific planned service has been dropped because of cost issues.
"We're continuing to migrate customers to the 21CN voice platform in South Wales to prove industrial scale before beginning migration outside South Wales from next year," BT Wholesale spokesman Joe Kelly tells Light Reading.
Kelly adds: "We've decided to proceed on a slower basis than originally envisaged, reflecting the changed economic outlook and to make the programme simpler for BT and the other [service providers]...
"We've also been looking at how the voice architecture integrates with a fiber-led future." (See BT's Fiber to the Hype and BT Preps FTTC Trial.)
The carrier won't comment on its relationships with individual vendors, but it would appear that at least one incremental, and potentially lucrative, opportunity that Sonus might have been hoping to land at the U.K. carrier has been shelved.
Kelly noted that BT had "considered a converged voice and broadband service but withdrew it as the price point wasn't attractive" to BT Wholesale's service provider customers.
It seems BT had done more than consider it: It had actually marketed the offer, called Wholesale Broadband Connect Converged (WBCC) to its wholesale customers. The plan was to provide a service that integrated a packetized voice service into the broadband channel -- a more efficient way of providing the services than by using separate channels.
According to Kelly, BT's wholesale customers liked the sound of it. "But we couldn't develop it at a competitive price point," so the service was scrapped, at least for the time being.
The BT man notes that the carrier has just completed the construction of its new IP core and transmission networks, and has been rolling out ADSL2+ broadband services, initially to 40 percent of the U.K. population, with plans to extend that further this year.
The carrier has also built out an extensive network of 615 Ethernet service nodes, which it says it will extend this year. (See BT Business Adds Ethernet and Ethernet Benefits From 21CN Rethink.)
Sonus had not responded to our request for comment as this article was published.
BT first unveiled its 21CN plans in June 2004 and announced its initial group of key vendor partners in April 2005. (See BT Moves Ahead With Mega Project and BT Unveils 21CN Suppliers.)
— Ray Le Maistre, International News Editor, Light Reading
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