BT 2007 Annual Report Download - page 18

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.
Openreach
Openreach was established in January 2006. Following a
strategic review of the telecommunications market by Ofcom,
BT undertook to put responsibility for our access network in the
hands of one distinct organisation within the BT group that
would offer communications providers – including other BT lines
of business – fair, equal and open access to the crucial first mile
of network and underpin the future development of the
industry.
Openreach now provides services to around 400
communications providers in the UK, connecting millions of end
users’ premises to their telecommunications networks by fixed-
line local and backhaul connections.
At the heart of Openreach’s operations are the 20,000 field
engineers who install, repair and upgrade lines, ensuring that
households, offices and other premises have reliable local access
to the telephony, internet and other services offered by their
communications providers.
For the 2007 financial year, Openreach reported for the first
time as a separate line of business. Revenues were
£5,177 million, driven by strong market volume growth, which
more than offset the impact of a price reduction for WLR
(wholesale line rental).
Equivalence Management Platform
The EMP (equivalence management platform) was established in
June 2006 and is the largest IT capability of its kind in the UK
telecommunications industry. The EMP is the transactional
platform that will underpin all Openreach’s interactions with
communications providers. It was designed to deliver service
with a greater degree of automation, processing up to 100,000
orders a day and with the capacity to carry out up to 60,000
line checks an hour.
Products
Wholesale Line Rental
WLR, which enables communications providers to offer
telephony services with their own brand over BT’s network,
currently generates around two-thirds of Openreach’s revenue.
We anticipate that this will decline as customers increasingly
migrate to LLU. In December 2006, Openreach achieved a
significant milestone by placing the first live order for its new
WLR capability, WLR3 (wholesale line rental analogue), on an
equivalent basis via the EMP.
At 31 March 2007, Openreach was providing more than 23
million WLR lines to BT lines of business and over 4.2 million to
other communications providers. Of the lines provided to other
communications providers, over 3.5 million were WLR analogue
lines (up 46% on the 2006 financial year) and 689,000 were
WLR digital lines (up 52% on the 2006 financial year).
Local Loop Unbundling
LLU, which enables communications providers to use the
Openreach lines connecting BT exchanges to end users’ premises
and to install their own equipment in those exchanges, is
another key Openreach product.
There are two types of unbundled line:
ra fully unbundled line gives other communications providers
the exclusive use of the copper line
ra shared access line only gives other communications
providers the use of the high-frequency channel used for
broadband – the line will also be used by the customer’s
fixed-line voice provider.
In February 2007, we achieved the milestone of 1.5 million
non-BT communications providers’ unbundled lines, an increase
of 640% since Openreach was created. Combined with BT’s use
of unbundled lines, this brought the total to 10.7 million (BT
lines of business – 8.8 million; non-BT customers – 1.9 million)
in the UK as at 31 March 2007, with 21 communications
BT Group plc Annual Report & Form 20-F 17
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