Incumbents are now faced with competition on all fronts: from second-tier telecoms companies exploiting new technologies, such as Voice over Internet Protocol (VoIP) and cellular operators to new entrants in the wireless broadband space. In fact voice in mature markets has become so commoditised that it's almost given away as part of bundled services.
BT (previously British Telecom), one of the first of the monopolies to experience competition in a liberalised environment is a vastly different company to what it was in the Eighties. A subsidised and inefficient public corporation in the pre-liberalisation era, it's now a wholly owned private entity.
"Liberalisation of Britain's telecoms sector, which preceded the privatisation of BT, placed the company in a more vulnerable position. As a listed company our obligations and focus have drastically changed over the years," Oliver Campenon, BT president for Europe, Middle East and Asia, told journalists invited to tour Adastral Park, BT's innovation hub in Ipswich.
Split into three divisions - BT Global, Retail and Wholesale Services - the transformed company now offers a broad range of IT management, security and electronic storage to the enterprise market. Accounting for about 45% of the group's £20bn (R280bn) turnover, BT Global contributes the bulk of group revenue.
"We anticipated a gradual decline in voice revenue over the years and the fact that voice now accounts for less than 10% of group revenue counts little to our prospects," Campenon says. In a bid to improve its appeal in the ICT security network sector worldwide, BT recently folded managed security software specialist Counterpane into its stable. Conservative estimates by research group IDC value the global electronic security industry at more than $30bn/year.
Says Campenon: "Electronic security is a key issue for multinational companies. If you're a company with a presence in 170 countries worldwide and carrying trans-Pacific traffic for multinational corporates, you've got to guarantee security."
In the British market, which accounts for the bulk of the retail division's revenue, BT has overhauled its legacy network, replacing it with an IP network. "We've got to invest in modern infrastructure if we're to keep up with competition from up-starts in the wireless space."
With the recent acquisition of Spanish WiFi start-up FON, BT has stepped up its plans to blanket Britain with wireless Internet coverage. BT chief technology officer Matt Bross says the acquisition of FON will create blanket urban WiFi coverage and allow the fixed line operator to compete at least partially with mobile operators in offering Internet access on the go.
Currently, BT's British clients mainly use WiFi to connect their laptops to the Internet wirelessly at home or at the office. BT hopes that a countrywide WiFi network would boost uptake of BT's Fusion service, which enables clients to switch between fixed-line, wireless and mobile networks according to which is the most cost effective. The incentive to clients is cheaper calls over the WiFi connection. In exchange for opening up part of its network for public use, Bross says BT broadband clients will in turn get free access to the network throughout Britain, including its 2 000 existing public hotspots and more than 190 000 hotspots operated globally by FON.
"We spend close to £3bn/year on research and development. Adastral Park - BT's company's technology incubator - has been the source of most of our novel technologies," says Bross. The concept of IPTV - where television is delivered to a household over a broadband link - is one of Adastral's latest technologies.
"We started offering IPTV services earlier this year and if anticipation from clients is anything to go by, subscriber figures set to be released when BT announces its year-end results next month are certain to vindicate our investment. It's worked in most European markets and I can only hope that it will take the British market by storm," says Bross.
More than geographical expansion and acquisitive growth, BT's huge investment in innovation is largely the reason it's managed to stay afloat amid fierce competition from "upstarts". Perhaps a good lesson for our fixed line operator Telkom, currently faced with a similar predicament in SA's new telecoms era?
Mwanza visited Adastral Park in Britain as a guest of BT