July 2005

BT’s investment in their new 21st Century Network (21CN) is all over the news at the moment. 21CN is intended to result in a shift from ‘capacity to capability’, enabling cost savings, a new environment for rapid product launch and new customer focused services. The programme is being discussed in numerous forums and from almost every perspective. Technical, market, investment, regulatory and commercial viewpoints each identify different and often conflicting pros and cons, risks and opportunities. So how is the industry or customer supposed to understand the bigger picture and start to gauge the real impact? What is BT actually planning, will we realise the opportunities or fall at the obstacles, and what does it mean for business? Richard McCallum, development director at alternative network operator THUS plc, investigates.

Next Generation Networks (NGN) are having a massive impact on the way operators are building out their networks and exploiting the capability to provide intelligent new services. The advent of a new breed of enhanced technology, the dominance of IP, ubiquitous availability of broadband services and the convergence of voice and data, as well as wireline and wireless, are revolutionising the world of telecommunications. This revolution is opening up opportunities for new operating models, new cost models and new service models. 21CN is BT’s programme to exploit this telecoms revolution and, although it will be the major catalyst for change in the UK over the next three to six years, it is only one part of the overall picture. Competitors such as THUS who already have NGNs will have a clear field until BT catches up.

BT’s primary objective for driving forward 21CN is the saving of more than £1billion per annum. The costs of building and running an NGN with converged voice and data are significantly lower than those incurred with a traditional telephony network and cost savings will inevitably filter down to customers. Other UK telecoms operators will also benefit because BT 21CN will raise market awareness of products and enable competitors to interconnect more widely.

The telecoms industry is typical in that operators strive to differentiate and compete but it also relies upon effective interworking to operate more effectively. Future services will depend upon end to end quality, end to end intelligence, integrated backend systems and uniform tools for customer care and administration. For such services to be truly successful they will need to work across multiple networks, so it is in everybody’s interest to embrace integrated NGN and fully engage as an industry in getting it right.

Such collaboration will provide an opportunity for NGN success, but we should not underestimate the scale and complexity of the challenges, not least the need to gain consensus amongst the numerous players, each with different agendas for protecting their business. Each has a desire to ensure its historical business investment and market share is protected. Each also wants to be best positioned for the future market.

If effective models of collaboration cannot be worked out, BT will still rationalise its network, achieving significant savings, but severely restricting other benefits of such a network. Rather than speed up development of new services, progress will actually be slowed, systems integration costs will escalate, regulatory intervention will throttle innovation and we will end up with an NGN limited to the delivery of little more services than we have today. Luckily we haven’t reached this situation yet and the signs are that it will not be the case.

There is sufficient momentum in the industry to make sure that by one means or another tomorrow’s NGNs, including 21CN, will become a reality, and customer services will make a leap in terms of the level of sophistication offered. At the heart of the whole initiative is convergence, which will be both an opportunity for cost savings and new service introduction. Much of the furor around BT’s new network is focusing on VoIP, but this is by no means the only advanced service that will be offered. Triple play, convergence and specific data controls such as digital rights management and authentication are all on the list of layered services that BT plans to offer either directly or in partnership with other operators. Interworking between operators will therefore be vital to wrapping these various services for end users.

The architecture for a future inter-operator NGN is typically based on open standards, both for the core functionality and the integration of operational and business support systems. A common difficulty with standards is that they can be open to interpretation, but one of the useful by-products of 21CN is that it will force the industry to overcome differences of interpretation and lay down unambiguous rules for implementation. The end result will allow end users to be access agnostic and even network agnostic, enabling basic services to be offered across multiple networks, with advanced services being the point of differentiation between operators.

A major worry is that if BT offers these services as a bundle on their network, then the incumbent could use its inherited market power to gain the same sort of monopoly on these services as it has with its current network, squeezing out competition and creating a new dependence on BT for UK enterprises. Ofcom is currently battling with this one, trying to preempt measures that would stifle competition and innovation, while not wanting to overregulate the industry or prejudge what form future competition may take. There are no easy answers and so the debate continues.

Nevertheless work on 21CN is truly well underway. Not only have decisions been made on the preferred hardware suppliers, but also industry liaison is driving towards consensus on objectives for deployment.

Once the core foundations of 21CN are in place and there is the critical mass to guarantee national availability of NGNs we will start to see rapid service evolution. Short to medium term availability of new services may well be driven by other operators who are further advanced than BT in the rollout of their own converged IP/MPLS networks, VoIP softswitches and online customer portals. Operators such as THUS who are organisationally more agile than BT and who are less constrained by legacy platforms will be able to gain a head start and help shape the early stages of evolution. These operators will be able to pioneer new services and drive customer expectations, but will also integrate later with BT’s 21CN in order to offer universal access when available, thereby future proofing the customer base.

In conclusion, NGN and 21CN present the biggest opportunity of the last 20 years for the evolution of telecoms in the UK. Customers will witness the emergence of intelligent new services, improved speed to market and lower pricing, initially via alternative operators’ NGNs and eventually via an integrated mesh of standards based, quality of service enabled networks, including BT’s 21CN.

Carriers such as THUS currently have a head start, standing apart from BT in the levels of service they can offer, but BT’s emergence in the game does not come as bad news. Once BT is on board, it brings tremendous marketing muscle. Customers will be more aware of the services on offer and competitors will be able to interconnect more easily. BT’s roll-out plans are extremely aggressive, starting in 2006, with legacy networks completely replaced by 2010.

With a project of this magnitude, there are risks for all concerned: for BT the risk of costly delays, and for its competitors the risk of loss of focus. However for companies such as THUS, who have already made the investment, the era of next generation networks cannot come too soon.