The vision of the future BT portrayed this week at an Australian conference was so far removed from how Telstra's David Quilty has described the British telco that I wonder if they were talking about the same UK.
Much has been said about BT, the largest carrier so far
to undergo operational separation, and its relevance to the current
debate about the potential separation of Telstra.
Yet with the national broadband network (NBN) deadline set, and
an increasingly petulant Telstra now saying it is "100 per cent
clear" the company
will not build the NBN "if further separation is required", I
couldn't help but feel a bit embarrassed for us all while
listening to a BT executive speaking at the recent Genesys G-Force
conference in Melbourne.
Mark Baines, head of converged communications infrastructure
with BT Design, is one of the key figures behind the construction
of BT's multi-billion-dollar 21st Century Network (21CN) project, a £10 billion overhaul of Britain's telecommunications
infrastructure paralleling BT's recent structural separation.
If we believe Telstra's rhetoric, separation is tantamount to
simply shutting off the local copper loop and reverting to using
smoke signals to communicate. "Overseas experience has already
proven that separation does not work," new Telstra mouthpiece
David Quilty was
quoted as saying. "It increases costs, reduces efficiencies,
limits future innovation and, most importantly, kills off
investment."
Not in BT's case, it hasn't. Indeed, the vision of the future
Baines portrayed is so far removed from what Quilty describes that
I wonder if we're talking about the same UK.
Now, mind you, Baines didn't say BT was totally happy about UK
regulator Ofcom's decision to open BT's infrastructure to
competitors. "The UK has quite a strong regulatory environment,
and we've basically had to give about 4.5 million unbundled lines
to our competitors," Baines said in a tone that showed that the
change had not been exactly a walk in the park.
However, he was quite positive about the changes that separation
has forced upon BT: namely, to get its act together and modernise
its infrastructure. The 21CN will be entirely IP-based and that
(combined with a strong commitment to SIP, or session initiation
protocol, a universal way of connecting VoIP and video calls) means
home phone services will never be the same again.
"Innovation really means IP," Baines said, "and our core
network is going to be SIP. By 2011, in the UK, the traditional
home phone in your home will no longer exist. You will be on
broadband by default, and you'll have to write to BT to ask to opt
out."
Think about this for a moment. Just three years from now, Baines
is saying, IP telephony will form the basis of a completely new
phone system. Instead of paying for a vestigial PSTN line just so
they can get broadband, consumers, mum-and-pop businesses, and
everybody else will get broadband as their basic communications
service. IP phones will become standard equipment, carrying voice,
video, and other services into customers' homes over the 21CN's
fast data connections.
By 2011, in the UK, the traditional home phone in your home will no longer exist.
BT's Mark Baines
This is Quilty's idea of how separation "limits future
innovation"?
BT expects the 21CN to deliver annual savings of £1 billion from
total costs of around £10 billion. But Quilty says separation
"increases costs" and "kills off investment". Huh?
Here's one benefit of separation Quilty hasn't yet weighed in
on: to deal with ever more-demanding customers, Baines is helping
BT completely re-architect its contact centre, which will use SIP
on top of the 21CN to help BT's 30,000 customer support staff work
together all over the world.
This will significantly cut the cost of the 400 million customer
calls BT handles every year, as well as enabling the customer staff
to field support requests lodged via the Web, instant messenger,
video-conferencing and other methods.
"We're losing significant margin in wholesale services,"
Baines said, "and get increased demand from our customers to speak
to us on whatever channel they want to speak to us on. Voice is no
longer the main channel."
There you have it: BT's own account of some of the changes
separation has wrought. As far as I could tell, the worst thing
separation has done to BT is to force it to shake off decades of
legacy technology, stop trying to milk the PSTN to within an inch
of its life, and get on with the business of building a better,
bigger, faster, modern and global telco that provides exceptional
customer service.
No wonder Telstra is running away from this stuff as quickly as
it can. Our own largest carrier has been on a years-long effort of
cost-cutting and lay-offs, is
stonewalling against the same unions whose support it will need
to build the NBN, and even went so far as to brag in its latest
annual figures that it had slowed down the trend of people
abandoning their fixed lines.
That's right: Telstra slowed PSTN's decline to just 3.2 per cent, with
the number of retail access lines increasing by 87,000 during
2007-2008 compared with a 5,000-line decline in 2006-2007. "We continued
to add retail customers, defying the trends of our global peers,"
the
CEO's report proudly says.
David Quilty (Credit: Telstra)
Were it not for full disclosure rules, Telstra would probably
have neglected to concede that it lost 572,000 fixed-line customers
during the year as they rushed to ULL-based services.
Telstra turned a record $3.7 billion profit last year, but it
wasn't by charting a conciliatory and realistic path to the future;
it was by fighting change, baring its teeth at competitors and
regulators, and stripping back in customer service and every other
area it could get away with.
Just consider those fixed-line customers Telstra signed up, 600,000 of them, according to the report, who are now locked into
contracts that left them little recourse when Telstra
raised line rental rates yet again last month.
BT is talking about delivering VoIP to an entire nation, but
Telstra is so eager to protect its fixed-line cash cow that it has
yet to offer VoIP services to its customers: defying both
international trends and the inevitable weight of progress.
Indeed, we have heard very little about Telstra's long-term
vision, apart from rhetorical threats to walk away from the NBN if
it doesn't get its way.
Telstra loves to argue that separation has stymied investment in
the UK, but Baines' story suggests that separation has in fact
motivated BT to pour billions of dollars into a network that will
keep it at the forefront of the world's telecommunications
providers.
And, he pointed out later in his speech, this network
has been designed from the ground up to facilitate
interconnectivity with competitors: an important capability in any
open market.
Separation behind it, BT seems to be looking towards a bright
future. Can Telstra say the same?