BT’s 21st century network promises a brave new world

• BT unveils ambitious five-year plan to transform its UK networks to IP
• Mass migration of customers from PSTN to IP-based network will begin in 2006, with the majority of users transferred by 2008
• Telco estimates annualised cost savings of GBP1 billion once the new network is completed
• But some see BT’s 21st century network (21CN) programme as a multi-million pound gamble by a company facing the threat of losing its core voice telephony market to rivals

BT has unveiled a radical five-year plan to switch its entire PSTN to a single IP-based network capable of handling the next-generation of converged, multimedia communications services. The company’s 21st century network (21CN) programme announced yesterday, aims to deliver a suite of services including high speed internet access, TV-style broadcasting, VoIP, and handsets that work on fixed and mobile networks, anywhere, on any device, and all at broadband speed, in what is being hailed as an ambitious attempt to set a new ‘de facto world standard’. Over the next five years the incumbent plans to spend up to GBP3 billion per annum, as part of its existing capex targets, with 21CN accounting for two thirds of the total, to transform its business and cost base, and remove duplication across its current multiple service specific networks. Once completed the telco says that 21CN will radically simplify its operations and help realise annualised cost savings of GBP1 billion by 2008-09.

According to Paul Reynolds, chief executive of BT Wholesale, the mass migration of customers to the new IP network will begin in earnest in 2006, with the majority being transferred by 2008. As a precursor to the large scale migration BT has announced that from October 2004 it will begin bypassing the core PSTN network link between Cambridge and Woolwich, allowing 1,000 customers to trial end-to-end voice and data services over an IP network link. The next stage of the pilot will see the former monopoly installing new equipment in 18 exchanges in South East London, Kent and East Anglia to link to the Cambridge/Woolwich node. The multiservice access nodes (MSANs) will be available for 1,000 customers by January 2005. BT plans to hold talks with more than 50 equipment vendors and telecoms-related companies before awarding contracts to build the network at the end of the year.

BT’s 21CN programme marks a major sea change in thinking, from a world of increasingly antiquated legacy networks and an over reliance on decreasing voice revenue streams, to a more competitive environment dominated by digital networks and IP-based services. However, some analysts suggest that the move has been forced upon the operator due to its over dependence on its PSTN. The company is seen as more vulnerable than its counterparts around the world: it spun off its mobile arm mmO2 in November 2001 and has thus far failed to establish itself as a force in the pan-European internet access market. But with many telcos focusing on the wireless market BT is taking a calculated risk and stealing a march on the competition by investing heavily in its wireline network. By altering the mix between how it spends money on replacing old infrastructure with single purpose equipment such as DSLAMS, and instead installing new more sophisticated MSANs, BT will be able to deliver not only DSL, but also video hosting, VoIP and other advanced services without significantly altering its long-term investment programme.