The custom telco

In December we interviewed Sally Davis, who took over as the CEO of BT Wholesale (BTW). The new BTW is now shorn of the network, which is now part of the group strategy and operations division, and is purely a channel to market - a move Sally described as "liberating".

As a channel, BTW has had a good year, having announced major deals with T-Mobile, the Post Office, and most recently Virgin Media amongst others. We asked Sally about the BTW strategy going forward. She highlighted four areas:

- Managed network services. Traditionally wholesale has been all about offering highly regulated connectivity products. BTW is now offering more complex solutions to a range of its communication partner (CP) customers. For example, the Virgin Media deal comprises network management, management of suppliers, and the transfer of people into BTW. Sally said there are more managed services deals like this in the pipeline, and this will be an area of focus in 2008.

- Customer experience. With the rolling back of regulation as part of the Telecoms Strategic Review (TSR) this creates the opportunity and incentive to rationalize and improve the commercials around how BTW provides service.

"Let's work together to improve the overall customer experience" was how Sally described this opportunity. The process improvements from the IT rationalization part of 21CN (BTs next generation network program) help, but billing and contracts areas are also under the microscope.

- Innovation. Sally believes BTW needs to innovate more. 21CN is the basis on which new services will be provided. She referred to the Ethernet products to be supplied as part of this deal. She also highlighted content distribution and partnerships as opportunities too.

- Broadband. Broadband continues to grow and will continue to be important to BTW. In April next year BTW will be able to offer services at up to 24Mbps through the Wholesale Broadband Connect product based on 21CN.

The strategy is what we would expect, and could be summarized as more-of-the same. But we think that to label it this way is to miss the point. What we are seeing here is the start of a gradual shift away from the traditional "calls and lines" towards the provision of complex tailored solutions.

This may appear semantics, but it is not. The shift from old to new will make BTW look more like BT Global Services in the future where the network is part of a broader service and not an end in itself. This is a break with what BTW has been in the past, but is what becoming a managed services company (not just a network provider or regulated services) is all about.  Achieving this will be a big challenge, and will require both a re-skilling and possibly a repurposing of BTW.

In a number of recent articles we have commented on how the wholesale market has matured. During our discussion with Sally this was a point that kept coming back to us. CPs have worked out what it is they want to be and how to compete, and they now trust BTW to provide them with service whilst they compete with BT's Retail and Global Services arms.

CPs recognize that they need to differentiate themselves, and focus on what matters most to them and outsource the areas that don't to trusted suppliers like BTW.


BTW also works extensively with CPs to address customer service issues and has developed tools to help diagnose problems end-to-end. While this is the BTW side of the story, it is indicative of a greater maturity in the segment as the debate is no longer about regulator adjudications and CP complaints. It also demonstrates that Sally's point about partnerships is not a wish, but the way it has to be done today.

So if all in the garden is rosy, why are BTW revenues in decline (BTW revenues fell by 4% in the quarter ending 30th September 2007)‾ The answer is threefold - revenues have moved from BTW to Openreach; the fall in transit revenues as CPs migrate onto their own circuits; and the flow through of price reductions implemented last year. Managed network services are seen as the key to turning this around, and so is the area to watch closely in BTW.

Mike Cansfield is Telecoms Strategy Practice Leader with 19 years' experience in the industry.