BT CEO: "Cannibalise yourself"

Verwaayen talks broadband, IP and mega-deals that may just keep on coming

Fresh from BT celebrating its five millionth wholesale broadband customer, CEO Ben Verwaayen has spoken about his company's track record on innovation and called the UK "the most competitive broadband market" - as well as proudly talking about other milestones in large outsourcing contracts.

Although the UK recently topped a broadband league table measuring progress in the G7 group of industrialised economies there is no shortage of critics of the broadband landscape in the UK, including BT's role.

But Verwaayen was this week robust in its defence. In terms of higher speeds, the ex-Lucent man said: "We will do everything everyone else has done because, guess what, we all buy the same stuff, the same DSLAMs [equipment for local exchanges]."

When asked by silicon.com which company or economy BT and the UK can still learn from he declined to name names. Even South Korea - not a G7 member - received short shrift.

"The numbers game [there] does not tell the whole story," he said, referring to a lack of specialist ISPs and concentrated coverage. "They have done a terrific job and led the way for a long time but it is not the model I'd like to copy."

Alison Ritchie, BT chief broadband officer, in a role that spans both retail and wholesale arms of the telco, said: "Where we have been truly innovative is in extending reach. But it's what you do with it that counts."

Indeed, the debate is shifting as we reach something approaching universal coverage - a figure now greater than 96 per cent and approaching 99 per cent of population, due mainly to ADSL from ISPs and cable company broadband.

BT and others are looking at multimedia applications and networking all sizes of business through broadband.

Voice over IP (VoIP) is a big area of debate and one, says Verwaayen, where BT using broadband connections isn't afraid to play.

Referring to substituting VoIP for traditional circuit-switched voice calls, he said: "It is good to cannibalise yourself."

Verwaayen identified health, education, work and entertainment as areas that will benefit from an increasingly broadband, all-IP environment and said the UK must move from a past of "moaning and bickering" to a present of opportunities, where becoming the best in the world at exploiting a networked economy will mean competitive advantage.

That, he says, is a message that is now getting through loud and clear to other business leaders in the UK that he meets, from all sorts of organisations. Indeed, in the past two years BT has stood out for its ability to pursue broadband and what it calls ICT deals, covering IT services as well as network needs of multinationals.

Recent wins include what Verwaayen calls a "blockbuster" deal with Reuters and non-UK based international organisations. Of these, Verwaayen singled out deals with the European Central Bank and NATO as showing its IP-centric approach also means cast-iron security.

And while in the past BT has hinted that the mega-deals may not come along every quarter, when asked the CEO gave no hint the recent run of big wins is about to dry up.

But while broadband and ICT are keeping up BT revenues as other areas fall away, Verwaayen said "only at year three will we know about profitability" - meaning the telco, while winning lots of ICT business right now, is taking most cost hits early on in contracts.

Verwaayen declined to comment on progress at the company's mobile arm, a virtual operation in partnership with Vodafone. In a very competitive UK market, take-up has been slower than expected and strongly criticised by one leading analyst.