BT Wholesale

BT Wholesale is evolving into a leading provider of innovative business solutions. Our 21CN programme is replacing the existing network and will provide the platform to offer a seamless customer experience. The 21CN will provide the opportunity for our communications provider customers to develop new and compelling consumer products.
     In the UK wholesale market, we provide network services and solutions to over 700 communications companies, including fixed and mobile network operators, ISPs (internet service providers) and other service providers. We interconnect with more than 180 other operators, as well as carrying transit traffic between telecommunications operators.
     In the 2007 financial year, revenue from our wholesale activities increased by 3% to £7,584 million.
     New wave revenue was £1,097 million, up 17% on the 2006 financial year. This increase was driven by the continued growth of broadband as well as a strong emphasis on building innovative network solutions.
     We have a long and successful tradition of delivering network-based connectivity to the carrier and intermediate telecommunications markets throughout the UK. We have a number of agreements with service providers and mobile operators to upgrade their IP capability. In addition, we have used our expertise and geographic reach to provide bespoke data housing solutions.

Deliver on broadband
At 31 March 2007, 5,558 exchanges had been upgraded, making broadband available to more than 99.9% of the UK’s homes and businesses. When, in April 2002, we first set targets for broadband penetration in the UK, there were under 150,000 DSL connections, and exchanges covering just 66% of the population had been upgraded for broadband. Including cable customers, over 50% of all UK homes subscribe to broadband.

We continue to look for commercially viable ways of bringing broadband to those customers for whom availability remains an issue. We continue, for example, to explore the feasibility of installing broadband equipment at locations closer to the customer than the BT exchange, as well as the possibility of delivering broadband over existing fibre cables. As a demonstration of our commitment to delivering higher-speed broadband to UK consumers, 74% of wholesale broadband lines were at least 2Mb at 31 March 2007 compared with 59% a year earlier.
     We are now conducting in-house trials of broadband speeds of up to 24Mb. By continually upgrading exchanges across the UK to support this service, we are providing the UK market with a stable, high-speed broadband service with the widest national coverage in the world.
     In addition, we have enhanced broadband line stability to ensure that customers can run more bandwidth-hungry applications, including video, gaming and music downloads, at the same time as sending/receiving e-mails and surfing the internet.

Managed network services
In September 2006, Vodafone UK signed an agreement with BT, to buy DSL broadband and fixed-voice capacity from us in a move which gave it immediate nationwide coverage, rather than installing its equipment in our exchanges.
     By opting for the BT IPStream product, Vodafone UK is able to provide a broadband service to its customers without the need to invest in its own fixed-line network. As part of this deal, we are managing the service end-to-end and incorporating functions such as customer service and billing operations. Vodafone UK’s service, Vodafone at Home, was launched in January 2007.
     From May 2007, the charge for BT IPStream was reduced by up to 9%, with a second round of price reductions planned for January 2008. There will also be opportunities for further savings for communications providers at high-density exchanges – the current scheme, which covers 561 exchanges, will be extended to 1,016. BT DataStream customers will also have opportunities to benefit from this enhanced rebate scheme.

Mobility for wholesale customers
In the 2007 financial year, we saw continued growth in the UK wholesale mobility arena – increasing the volume and value of wireless-originated traffic over our network.
     A key element of our wholesale mobility offering is BT Movio, a service that delivers digital broadcast television and radio to mobile handsets over the DAB (digital audio broadcasting) spectrum. The first mobile operator to re-sell the BT Movio service is Virgin Mobile.

Traditional services for wholesale customers
At the same time as growing our new wave business, we continued to implement our strategy of defending our traditional business – selling a wide range of capacity and call-based products and services, including regulated interconnect services and new, non-regulated products and services. We maintained our focus on the cost reduction opportunities that arise as our business changes.

Twenty-first century network
We believe that our 21CN programme is the most ambitious business transformation programme in the global telecommunications industry today and one of the largest ever investments by a private sector company in the UK’s infrastructure.
     An end-to-end, next-generation IP network, 21CN provides the platform to transform the customer experience by ensuring that the delivery of converged services is fast, efficient and highly cost effective. It will bring new voice, data, broadband and multimedia services to businesses and homes quicker than before, and give customers more control over the way they use these services. And it will enable us to rationalise and transform our services portfolio.
     In November 2006, the first customers, in the village of Wick, near Cardiff, were moved onto the 21CN infrastructure for live running. This was the first stage of a rollout programme, which anticipates that around 350,000 voice lines and around 80,000 broadband lines in South Wales will be moved onto 21CN by the end of 2007. To achieve this milestone, we designed and built the largest network testing facility in our history; rebuilt around 20% of the UK’s national telecommunications infrastructure; installed 21CN equipment at more than 100 sites around the UK; and laid more than 2,300 kilometres of fibre optic cable. We also invested more than 1,500 man-years in developing new IT systems to support the new network.
     During the 2008 financial year, we plan to increase the pace of investment and operational activity to prepare for the national migration of customers to the new network. The plan is that the full, national rollout of 21CN will be substantially complete by the end of the 2011 financial year.
     We have also set up a 21CN global venture which will enable us to market the experience we have acquired of designing, building, testing and delivering networks on the scale of 21CN to other network operators around the world. The services we offer range from consultancy to design and build.
     We are committed to building open, transparent and inclusive relationships with the rest of the industry and launched Consult21 in the 2005 financial year in order to promote a shared understanding of the 21CN vision and the progress we are making towards it. Since then, many of our wholesale customers have contributed on a regular basis to this major industry consultation process.