BT names vendors for 21st Century

British Telecom today announced its selection of preferred equipment suppliers for its so-called "21st Century Network," a $19-billion project to build a nationwide next-generation network over the next several years. The selections were made over a period of two years from among a list of more than 300 hopefuls in what BT called "an extremely competitive process" in "one of the largest single procurement programs ever undertaken in the communications industry."

Fujitsu Network Communications and Huawei Technologies were chosen to supply the multiservice access gear that will link BT's existing access network to the 21CN. Analysts believe this may be the biggest contract in terms of revenue.

Alcatel, Cisco Systems and Siemens were selected to supply metro IP routing and signaling nodes for voice, data and video services.

Cisco and Lucent Technologies were chosen to supply the high-capacity core IP nodes between metro nodes, with Lucent integrating the equipment of its partner, Juniper Networks.

Ericsson was chosen to provide softswitching, service and bandwidth management and network intelligence.

Ciena and Huawei were chosen to supply optical networking equipment including long-haul and Ethernet transport.

Among other things, Julian Hewett, chief analyst at research and consulting firm Ovum, called the announcement a "devastating blow" to Marconi, an existing BT supplier that did not make the list. A Marconi spokesperson told Dow Jones Newswires today that the company could cut 2000 to 3000 employees in the United Kingdom as a result of the lost opportunity. Ovum analysts were also surprised that Alcatel was not chosen for the access portion of the network, but they were not entirely surprised by the inclusion of Huawei, which they predicted in January was "still in the running, and not just as a stick to force down prices from other players."

Huawei's inclusion "shows an increasing penetration of the low-cost Chinese suppliers into tier-one accounts," said Lehman Brothers analyst Steve Levy in a research note issued today, "although we continue to believe penetration into the U.S. tier-one accounts is not likely in the foreseeable future."

The contracts are most significant for Ciena and Juniper, given the size of their businesses in relation to the potential value of the BT contracts, Levy said.

The current list is not exhaustive, and vendors in the area of systems and service delivery have not been chosen. As well, it's unknown whether BT will include a widespread rollout of fiber-to-the-premises, which could theoretically open a door for another vendor down the road.

BT expects to finalize contracts with the above vendors this summer, including "open standards and a focus on whole-life costs," BT said.