British Airways has selected virtual-network operator Vanco to manage a portion of its telecoms infrastructure in a bid to drive down communications costs across the airline.
The deal, announced at Vanco's annual customer and employee networking event in Budapest, will see the telecoms provider design, implement and manage an Internet based IPSec virtual private network across 155 BA sites in 64 countries.
Under the agreement, Vanco will manage a network involving up to 80 different telecoms infrastructure providers to meet BA's requirements for an ADSL-based system across Europe, Africa, the Asia-Pacific region and the Middle East. The companies say the deal is a multi-year, multi-million pound agreement.
"We are confident that the Vanco virtual-network operator approach will deliver the high service levels, flexibility and lifetime cost benefits that our business requires to maximise its ability to remain successful in the 21st century airline environment," said Gordon Penfold, head of IT business development and information security at British Airways.
Vanco's founder and chief executive, Allen Timpany, said the deal represents another victory for his company's business model, where it effectively acts as a tough negotiator between telecoms infrastructure providers and enterprise customers.
The airline industry has typically only chosen from within a small, specialist pool of network operators including companies such as Equant, but Timpany said the deal could provide the momentum needed for other airlines to follow BA's lead and look for cost-reductions by exploring other carriers.
"This deal represents us managing around 20 percent of BA's estate. Traditionally there have only been one or two suppliers in this market who have had a stranglehold for 30 or 40 years. The airline industry will see BA's action and take initiative from that," he said.
Although it has a very low profile outside of its immediate sphere of operation, Vanco is quietly challenging the existing status quo in the telecommunications sector. This flexibility provided by Vanco acting as buffer between the corporate customer and the telecoms provider has attracted a lot of high-profile companies over the recent past to sign up with the virtual operator including Ford, Pilkington, Avis Europe and Virgin Retail.
Tony Johnson, IT director of Virgin Retail, explained that his company's decision to go with Vanco rather than deal with a telecoms company direct had been rewarded when troubled provider MCI was facing possible bankruptcy, as Vanco was able to swap the retailers systems onto BT's systems without incurring any significant penalties.
"If we had been tied into MCI it would have been very different, so right there Vanco's virtual network model paid off and in return we added a one year contract extension," he said.
Johnson explained that Virgin Retail -- which runs and operates Virgin's high-street presence including its Megastores -- recently migrated to an MPLS ADSL network, managed by Vanco which has resulted in increased network availability, increased bandwidth and cost savings.
"The fact that we have signed a five-year deal with Vanco -- we don't sign a five year deal with anyone these days -- says it all about our relationship," he said.
Vanco also argues that not only are end-user organisations finding it increasingly difficult to broker financial contracts with telecommunications infrastructure providers, IT managers in those organisations are having to spend too much time carrying out admin tasks that should be taken care of by the carrier.
"Asset-based carriers are failing large enterprises on both counts -- they are holding prices high after a customer is in a contract and failing to deliver a good level of service," said Timpany. "It's incredible that so many IT executives have to spend a huge amount of time on core WAN management that their service providers should be responsible for."
Vanco sponsored a survey by research company ICM which showed 32 percent of European IT executives spent one day or more per week managing aspects of their wide area networks that they would traditionally expect to be the responsibility of a network service provider.