By Richard Thurston, 23 November 2006 09:05
NEWS
BT's delayed £10bn network upgrade should have taken a full decade to install, according to one of the telco's top executives.
Instead it decided to try to complete the upgrade in just five years, due to the cost pressures of running its complex national networks.
The upgrade, which BT calls its 21st Century Network (21CN) will replace 16 national networks with one single IP network. BT originally said the project would be carried out between 2004 and 2009 but the completion date has since slipped back to 2011. This is the first time the telco has admitted the programme should have taken a decade.
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Speaking at the DigiWorld Summit in France, Paul Reynolds, the chief executive of BT Wholesale and one of the most powerful men behind the project, said under BT's "normal" timescales the upgrade would have taken 10 years.
Insisting 21CN can and will be completed in five years, Reynolds said: "It is an enormous programme. When we ran that through our normal timescales, the answer came back after many iterations twice as long as we're currently going for. Everyone said: if you try to go any faster you're taking too much risk, it can't be done."
But Reynolds said 21CN must be completed as a matter of urgency so the telco can stop spending money on 16 separate networks.
He said: "Meanwhile [during 21CN's deployment] you still had 16 old platforms accumulating cost. The business case is bust. So the economics said we had to do it within five years. So we worked backwards, from the angle of five years, rather than forwards from our conventional speeds. Our folks have stepped up to it."
Reynolds also revealed BT has abandoned its trials of fibre to the home. He said: "We have worked extensively on the operational testing and deployment of fibre: fibre to the cabinet and fibre to the home. But for widespread fibre deployments, I've yet to see a business case that pays for the deployment.
"We have an architecture that supports fibre. BT's position on that is that we are using it in greenfield sites. But on the copper-replacement strategy, the incremental revenues for massive investment are not immediately apparent."
Had the trials been successful, users across the UK would have gained speeds of up to 100Mbps to their premises.
Reynolds added BT would offer fibre to the home or business only if other carriers demanded it from the telco. He said ADSL2+, which will be rolled out at the same time as 21CN, will provide sufficient bandwidth instead.
The chief executive added that BT expects to realise its projected cost savings from 21CN of £1bn per year from financial year 2008/09, saying cost savings would rise from then on. Despite the delays, he also said 21CN would be completed on budget, which BT says is £10bn.
BT will also meet its estimated date for the first migration to its new IP networks, albeit only just. Five-hundred users in Cardiff will be migrated to 21CN on the night of Monday 27 November.
Richard Thurston writes for ZDNet UK
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1. Alvin Ernest
I think BT's 21CN is a bold and very well publicised project... The ordinary public can probably, now remember that BT is building a new network, and expectations have been set accordingly. So I think in managing public perception of how BT is doing against its competition - 21CN is a job well done!
However, saving £1bn is another matter altogether... I think that whatever savings BT realises from 21CN will be quickly absorbed by the fragmentation of the emerging end user markets. I always worry that people expect too much savings from IP... I believe that IP comes with its own paradox... no doubt it is a consolidating force in creating the NGN core; but it must also enable the multitude of end user applications and end user devices. These are essentailly new competencies that telcos must develop - these will require huge investments...
IP is facilitating the shortening of product/service lifecycles, so telco must also develop a product/service "factory" mentality, again this will take time and money... The emerging NGN will (as normal in telecoms) be a work in progress for a long time; no matter what targets are set...
To begin with, on the demand-side the produst/service "factories" are only just getting started ... also it must be noted that the underlying creative process for product/service creation is proving to be a dispersed activity bringing unexpected innovators to the party; and moreover this is moving at an unprecedented pace....