'Innovation' is a word that Matt Bross, CTO of BT, is fond of bandying around when talking about BT's strategy. But is it just an abstract noun he likes to pump out alongside PowerPoint presentations or is there some weight behind his words?
Bross, appointed to BT in 2002 when he moved from US-based Williams Communications, is leading the nationwide 21st Century Network (21CN) project, in which BT will replace copper circuit-switched networks with a single IP-based core infrastructure. The project is expected to take five years to complete and will cost £10bn.
Trials are currently underway in Cardiff, where a huge migration will see 350,000 lines in the city transferred to the new IP-based network.
We recently caught up with Bross at BT's headquarters.
Why did you choose Cardiff?
We chose it for several really good reasons — namely the innovation driving into Cardiff. The Welsh Development Agency and the ecosystem they have developed make it somewhere that trials of this scale have the highest chance of success.
The Welsh understand that communications is an important part of an economy. They have been very productive in saying they will work with us on this. We looked at 23 [criteria] in the metro. [Cardiff] has a very good cross-section of customers. It's a good environment for what we are doing.
Other telcos seem to be watching the 21CN with baited breath. Would you agree that this makes the UK a guinea pig for the world?
If you look at the 21CN, all of the elements that we are doing can be seen in other domains. We are just bringing them together in the UK to make one end-to-end product. We will collect these from the multiple service networks. There are examples of this but not at this scale. What we are doing is absolutely the right thing for the UK. It will bring the world the best innovations.
It's been de-risked by the trials and where elements have been carried out in other countries. I think BT's leadership role in this is unequal. I think it's the human element of this that makes it the most formidable of its kind. These are the things that most operators have challenges with.
Is BT gearing up to become a media company as well?
I think [BT] has moved from being a communications company to a service company and now is moving to an innovation company.
Will operators shift to virtual networks hosted by BT as a result of the 21CN?
BT through our wholesale business supports a significant number of networks and 300 operators. Through the consultancy of the 21CN we established a number of forums. Other operators can tell us of their needs as they can organise themselves. That's something under current discussion.
How do you feel about Marconi being left out of the suppliers list for 21CN, considering the effect it has had on its business?
BT ran the most open and transparent invitation to tender. The core of that was...
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...to procure technology on a global basis. When we selected, it was by domain. Marconi has been a significant partner of BT and will continue to support other networks. The decision was based on operation, innovation, commercial needs.
21CN is clearly a big step but how has BT's approach to innovation changed generally in the three years you've spent here?
We have shifted from being a leader in creating innovative technology, to being a leader in levering that technology to the benefit of our customers and shareholders. That's a big change, from the pure enjoyment of creating new technology to the greater enjoyment of developing services that make money and help the business.
Today, we're innovating the way we innovate, for example with closer ties to universities and businesses and a focus on work that is commercially viable.
You started at BT in 2002, the same year that Ben Verwaayen became BT chief executive. Is three years really long enough to make significant changes within a company the size of BT?
Three years ago, the entire telecoms sector was in a bad way. BT took some big decisions at that time to rapidly address its debt mountain [which reached £30bn] and that created malleability within BT — an understanding that change was needed and that the old BT wasn't right anymore.
Today, our revenue from New Wave services is growing very strongly and we're taking a lead in the transformation of our network through the 21CN project.
BT is radically different from the way it was three years ago. The debt problem has been addressed, we've changed from just being a telco to also being a major supplier of ICT services, and we've also revitalised our approach to innovation.
But why doesn't BT just concentrate on building and operating the best networks possible, and let other people develop services to take advantage of them? It can't be easy to create a dot-com start-up mentality in a company the size of BT.
BT wants to operate the best networks in the world. But we also seek a more meaningful relationship with our customers in their daily lives. That's why we are doing more in the innovation space.
You can see that is working today in the IT services space, where we've landed £17bn of business in the last three years. We're also building the ability to offer better-networked IT services into our network.
It looks like BT is moving against the general market trend, with HP recently slashing R&D jobs, for example.
The key is that BT has moved to a hybrid R&D model, where we work closely with universities and other businesses. This means we can get greater leverage and thus better results from the funds we deploy, so we bring more purpose-built innovations to market.
If you could change one thing about BT, what would it be?
If I could change one thing, it would be to create a common consensus within BT about the opportunities that are open to us so that all our people were united in pursuing them and had been communicated the risks of not doing so.
It's something we work on continually but I think it's still the one thing that I would love to do more on.