BT chief sets out plan for next-generation broadband and wireless mobile services

Wi-Fi is significantly cheaper than 3G, claims BT chief executive

BT, like its rival network operators, is trying to offer its business users more than just internet access and a telephone service.

For Pierre Danon, chief executive officer at BT Retail, the division of BT that provides network and telecom services to businesses and residential customers, this will involve a focus on broadband, outsourcing and wireless services.

The company has begun to reinvent itself. In October BT offered mobile services for the first time since the 2001 demerger with BT Cellnet, now O2.

Last week BT signed a deal with Siebel where it will offer Siebel's CRM Ondemand hosted service to UK businesses for £50 per user per month.

The Siebel agreement is the first step for the phone giant to offer hosted applications to users over a broadband connection. By April 2004, Danon expects to offer further applications.

BT has begun differentiating its various networking services for businesses.

Small business users are enthusiastic about ADSL, which can offer broadband access at relatively low cost, but BT also offers costlier leased lines to achieve similar results - always-on high-speed internet access.

Danon believes businesses that need to run intensive applications and need guaranteed quality of service will still see the value in leased-line deployments. He has reduced the cost of moving from ADSL to make leased line more attractive, but there is still a price premium of 40% for users making the move. "Before the reduction it was 200%," Danon said, which he admitted was "ridiculous".

In February 2004 Danon intends to roll out an SDSL service which will allow users to upload data at 1.5mbps. Current ADSL users can download data at 512kbps, but the upload speed is limited to 128kbps.

"SDSL will provide even more competition to leased lines," admitted Danon, who said one benefit of SDSL over ADSL was that it could support several data channels, rather than the single channel available on ADSL. "Voice over IP on ADSL is not possible because there is only a single line." But with SDSL there are four channels, allowing small and medium-sized enterprises to start using voice over IP.

One of the big questions for users is whether there will be a "killer" application for mobile technology. Danon is optimistic that one will emerge, but he does not know from where. Nevertheless, BT is heavily backing Wi-Fi.

Danon said BT had already rolled out almost 2,000 hotspots through the company's Openzone service. By summer 2004 "there will be 4,000 places in the UK where users will be able to run video telephony sessions from a laptop PC, where the costs will be four to five times cheaper than 3G", he said.

Given the expected growth in wireless hotspots and the adoption of GPRS, Danon conceded that users might not need 3G services. They would simply connect to the nearest wireless hotspot in order to access mobile data services, and when they move out of a hotspot zone to an area not covered by Wi-Fi, they would switch to GPRS.

"Today I have a trial for Wi-Fi hotspots in Portsmouth which can cover an area of 7km each," he said. Intel, he added, has just announced Wi-max, a technology that, in 2005, will enable the hotspots to extend to 50km.

"There is a lot of mileage for Wi-Fi technology and its derivatives," said Danon. He did not think Wi-Fi would make 3G redundant and added that BT had invested in both types of technology, unlike some of BT's rivals. "I have not spent £5bn on buying a 3G licence, I have spent £10m to provide 3G," he said.

BT supplies outsourcing services and, at the same time, outsources tasks it does not believe are core to its business. The company has outsourced its own desktop IT to Computacenter in a move that Danon believes can benefit staff. "I received irate e-mails and the unions demonstrated outside our building," said Danon. Six months on, he has had no further complaints.

According to Danon, BT's own outsourcing operations offer greater opportunities for telco engineers than end-user companies. His main concern is offshore outsourcing. It "forces people in the UK to move up the value chain and become more competent, adaptable, valuable and serviceable," Danon said.

This could be good for UK business in the long term, said Danon, as the challenge of offshore outsourcing would force everyone in a business to provide a better service.

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