BT joins operations outsourcing trend

BT Group told its employees last month that about 500 of them in the design and operations units were about to become Alcatel-Lucent employees as part of a seven-year global outsourcing deal.

The news came just weeks after another major equipment vendor, Nokia Siemens Networks, officially took over operations of Embarq's legacy voice network — the most significant deal of its kind in the U.S. market, where carriers are reportedly much more protective of their own operations.

In the U.S., Alcatel-Lucent has had an intimate relationship with AT&T since 2004, when it was named chief integrator of the carrier's crucial fiber-to-the-node deployment. But if vendors are to take over the network operations of large U.S. telcos any time soon, it's easier to imagine them doing so for legacy networks, as in Embarq's case, rather than for something as critical to a carrier's overall strategy as AT&T's U-verse. And in any case, a telco would have to navigate the effect of such a move on its relationship with its labor unions.

Small telcos entering complex new businesses, such as IPTV, often are seen as good candidates for these outsourcing deals because they lack the expertise needed to master new markets. But such small telcos might see less upside to outsourcing than their big brothers. For example, when asked about outsourcing operations to vendors, Bob Currey, CEO of Consolidated Communications — the nation's 13th largest telco, which also offers triple-play services — told Telephony, “Not at our size.”

Still, Embarq is finding that outsourcing — and the institutional knowledge and experience it brings — is a good way to cut the costs of new service deployment. This fall, the company reported having shaved nearly 20% of its per-home fiber-to-the-premises deployment costs by letting a supplier, Corning, install the fiber while Embarq installed the electronics.