BT Wholesale Racks Up a High-end Managed Services Contract with Vodafone UK for National Fixed-line Offerings for SMEs

| Sep 11, 2009 | Wholesale Telecom Services | Competitive Update

| Analyst: Joel Stradling

Current Perspective: Positive
Vendor Importance: Moderate
Market Impact: High

Event Summary

September 9, 2009 -- BT Wholesale extended its contract with Vodafone UK in a five-year deal to provide fixed IP-enabled voice and broadband in a packaged enterprise-class managed service. Vodafone plans to launch Vodafone One Net, an integrated fixed, mobile and data service, to UK SMEs. BT Wholesale’s fixed-line offering matches Vodafone’s nationwide mobile coverage to give Vodafone customers national broadband at the highest speeds available.

Analytical Summary

• Current Perspective: Positive on BT Wholesale’s contract win with Vodafone UK to supply the latter with a range of fixed-line services, because the UK wholesaler is proving to the market that it can provide solid services unhindered by any constraints or obligations to BT’s retail divisions. Moreover, BT Wholesale has a successful string of major wholesale project wins under its belt, taking the carrier higher up the value stack with managed services. Finally, retail customer-win momentum on Vodafone’s part will drive traffic onto BT Wholesale’s infrastructure assets to generate ROI.

• Vendor Importance: Moderate to BT Wholesale, because the operator is executing one of its main stated missions, namely to penetrate deeply into managed large-scale carrier-to-carrier service projects, which it needs to do to fulfil its goals. Overall, the carrier needs to evolve its business strategy beyond dumb pipes to offering higher-value managed services.

• Market Impact: High on the UK carrier-to-carrier market, because BT Wholesale is notching up win after win among major clients, such as KCOM back in June 2009 (see BT Wholesale Confirms Position as De Facto Network Outsourcing Partner with KCOM Deal, June 25, 2009) and now this Vodafone deal. BT Wholesale also serves four of the five major mobile operators in the UK, and this move packs yet more cement around a well-entrenched position in the market. Competitors are therefore under great pressure to announce the next major UK wholesale deal, and they will be eager to win back some or all of the business that BT Wholesale has already won.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Wholesale Telecom Services | More information

Recommended Competitor Actions

• UK wholesale players can consider developing a managed services portfolio as a means to add value and counter low margins for dumb-pipes and to complement the somewhat commoditized bandwidth market. Smaller players need not consider going head-to-head against BT Wholesale for accounts in the order of scale of this KCOM agreement, but can rather concentrate on more realistic cherry-picking. Any internal expertise in service provisioning and maintenance is billable, and consulting divisions can be put in place to explore this market opportunity.

• ntl:Telewest can inform the market that it has very strong on-net reach for good control and competitive SLAs for delivering wholesale products. The carrier also has the national scale to match BT Wholesale in areas of customer support and network outsourcing. Finally, the company can point to its industry-leading online portal that approximately 180 carrier clients use to order new services, as well as generate quotes, carry out network feasibility studies and access documentation.

• Cable & Wireless can present its single IT system for delivering highly efficient internal processes for ordering and provisioning circuits over a lower OpEx base, which passes on savings to wholesale customers in turn. The carrier is able to give more accurate price quotes, while faster provisioning (which is reducing order lead times by up to 30%) makes its wholesale portfolio more competitive.

• Cable & Wireless can further point out that it is making its entire portfolio of managed services for enterprise customers available on a wholesale basis and it intends to make some wholesale managed services available in the UK and internationally in advance of their enterprise equivalents in the future. This will put the operator in a stronger position versus BT Wholesale. The first example of this is an assured rate, uncontended DSL business-to-business broadband product, which will be launched in the UK to wholesale customers in August 2009, available from all 802 unbundled exchanges.

Recommended End User / Customer Actions

• BT Wholesale is a reliable supplier, and one that has the scale of operations to offer outsourcing for a fully managed network service. Established resellers, including those with their own networks, should investigate whether it is faster and more cost-effective to procure innovative services through BT Wholesale rather than building them themselves.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Wholesale Telecom Services | More information

Top