Telco cost-cutting: Think big, do flat, advises BT

However successful, incremental cost-cutting initiatives by large incumbent telcos may not materially advance their competitiveness in the post-collapse international telecoms landscape.

“What we have discovered is that if you are looking for cost transformation, simply being more efficient and automating more isn’t enough,” said BT Exact Chief Technology Officer Phil Holmes at the recent TeleManagement World conference and exhibition in Nice, France. BT Exact is the former UK monopoly British Telecom research, technology and IT operations arm.

Reporting on the progress of BT’s radical 21st Century (or “21C”) network transformation strategy, Holmes stressed the importance of sudden, rapid and fundamental changes to the cost base. “You’ve got to first of all move the customers much closer to the operational areas so you can get rid of front line operational staff,” he said. “Then you need to fundamentally change the way you do voice and the PSTN, and we plan to do that in the future over IP. You also need to get rid of a lot of stuff you’ve had lying around for any number of years.”

In the BT case, that last part involves converging discrete private circuit, ATM, PSTN, PDH, SDH, X.25 and IP networks over a single converged broadband multiservice network, with IP and an MPLS core.

The UK public network looks set for a major shake-up. “We are moving to a complete change in the way we provide voice,” Holmes said. “Currently we provide voice using TDM-switched 64 kb/s on a cost-base which is now far too high to meet the competition. It’s also on a set of platforms that are showing their age. We have a detailed plan about the way we will move PSTN from a switched 64 kb/s-based service to a VoIP-based service in future. All of our customers eventually will be receiving their PSTN service over a broadband infrastructure.”

If 21C pans out the way it’s supposed to do, the effect on BT’s national network architecture will be dramatic. The existing main network inventory tally has around 170 core switches; more than 1000 voice switches and data cross connects; 100,000 remote concentrators, DSLAMs and data muxes; and 80,000 primary connection points, or PCPs. The current aim of 21C is to squash this to some 10 core routers, 100 metro routers and 30,000 multi-service access devices, and to accelerate fiber deployment to the PCPs. BT’s estimate is that aggregation at network edge alone will yearly save the group around $445 million.

Asked when 21C PSTN might become a reality, Holmes responded, “It’s actually very much to do with economics and very little to do with technology. If you’re asking when do we expect to move the first customer off the PSTN platform onto a broadband voice platform, I would say within the next couple of years.”

John Williamson, Telephony’s former international editor, is a freelance writer based in the U.K.