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BT’s 21CN – Reversing a Victorian Tradition

England is near the top of the list of countries I don’t like to visit. My wife likes watching the tedious Victorian England dramas of BBC “Masterpiece Theatre”. I last about 10 minutes until their images force memories of stuffy rooms, bad heating, weird ergonomics and truly god-awful food to resurface.

There is one exception to my stereotype. British Telecom’s (BT) 21st Century (21CN) initiative. No Victorian Bric-a-Brac here.

I’ve spent some time ripping apart BT21CN in order to understand the short and long term impact on the telecom equipment and component supply chain. So far, I really like what I see.

There is a ton of information on 21CN in the public domain. BT has stated transparency is an important characteristic of this initiative and it shows. The 21CN website is a good place to start.

MSAN – King of the Ring

Most impressive is BT’s commitment to take all voice and data services at the edge and homogenize them into IP and Ethernet. The star of the show is the MSAN (MultiService Access Node), a DSLAM-on-steroids. All protocol complexity is pushed to the extreme edge of the network and collapsed into the MSAN, which feeds an Ethernet and IP core.

Every voice line is converted to VoIP right where the copper pair is terminated. All 30 million of them. DSL services are provided from the same linecard. BT is using these systems to rollout ADSL2+ to 95% of households nationwide. There’s no separate DSLAM, POTS termination, SONET/SDH Add Drop Mux. MSAN collapses all.

Fractional TDM based Frame Relay and IP services (500k lines!) are packetized and bundled right at the POP. If it isn’t TDM leased line (E1 or bigger), it gets packetized and sent through the core using MPLS. BT has indicated that support for fractional rate leased lines after 2012 is questionable.

The Major Players

Fujitsu (FJTSY) and Huawei provide the MSAN boxes that sit at the edge of the network and act as the bridge between legacy services and an all-IP core, while providing robust support for transporting legacy TDM containers. This is a 40% share of project capex, or $2.8 Billion Dollars.

Speculation was rife several weeks ago that Huawei had lost it’s MSAN contract. I’ve subsequently learned that it is the optical transport contract that Huawei is struggling to keep. Ciena (CIEN) and Huawei are providing the optical transport equipment, though multiple people have informed me that Ciena is capturing a greater share due to problems with the Huawei solution. This is rumor, not fact, so don’t assume it is true.

It certainly was a shock to me, as I have long expected and written about how Huawei will meet initial success in western networks through it’s optical transport equipment. Regardless, I expect the optical transport portion of the contract to be the least important in both strategic and dollar terms. In the near term BT is bootstrapping all of their old transport equipment and not buying a great deal of new kit.

Cisco (CSCO), Lucent/Alcatel (ALA), Siemens (SI), Juniper (JNPR), and most recently Nortel ::ticker(“NT”) supply a motley assortment of switching and routing gear. The picture is murky but it appears to me that, as usual, Cisco wins and everyone else is invited to ensure a decent hand of poker.

Much attention is focused on all the vendors named in the 21CN contract, but the reality is one MSAN vendor is likely to capture at least 1/3 of total capex. It will either be Fujitsu or Huawei. If you have an opinion, please do share.

The Death of TDM Access

Going forward, TDM as an enterprise access technology is over in the UK. BT announced a new contract win with ADVA (ADVOF.PK) to deploy Ethernet demarcation boxes using a multitude of backhaul technologies, mostly fiber and mid-band Ethernet. This is part of their push to roll out Ethernet services.

This is a really big deal. Instead of forcing another copper TDM connection down the throats of their customers (you thought English food was bad) BT will be offering carrier grade Ethernet connectivity, fiber based in some cases.

Anyone betting on Ethernet over PDH or any native TDM as customer connectivity should be concerned. All legacy TDM based Frame Relay and PPP protocols are homogenized into IP right in the MSAN. New customers will be receiving Adva boxes using copper or fiber based Ethernet. It’s safe to assume those E1 lines used for voice will vaporize sometime shortly after.

TDM based optical transport (i.e. SONET/SDH or Ethernet over SONET/SDH) is still used throughout the network to transport both legacy TDM leased lines and IP services.

It is notable that even with a network as radically advanced as BT’s, SONET/SDH still plays a central role, Ethernet over SONET/SDH in particular. Take that, evil anti-SONET Sith Lords. I will fight you to the last.

VoIP 2.0

The other notable characteristic of BT’s architecture is they chose not to rely on TDM to VoIP conversion while using legacy copper TDM termination equipment. This choice, if a trend for other carriers, is death for companies like Sonus (SONS), who provide a solution that bootstraps existing TDM investments. The drawback to their solution is they end up adding more equipment and complexity rather than reducing it.

BT embeds the VoIP functionality right into the MSAN, and does the conversion as close to the customer as possible. This has the effect of reducing, not increasing network elements and is the only long term method for driving down operational costs.

As carriers aggressively deploy low-cost DSL and DSL penetration increases, the MSAN model makes more and more sense. There won’t be legacy TDM connections for Sonus to convert as the edge equipment itself will incorporate this function.

I believe companies like Acme Packet (APKT) are better representative of the long term future of VoIP and other connection based services yet to be invented. Once VoIP is a pervasive service, the growth will be in managing and securing the connections successfully, not converting legacy TDM connections.

Conclusion? Sonus = Carrier VoIP 1.0, Acme Packet = Carrier VoIP 2.0.

Summary

The Victorian age of Telecom is nearing an end, with it’s assortment of bric-a-brac equipment destined for retirement.

BT 21CN is a sleeker, flatter, radically modernistic alternative these Victorian networks of old. If successful, Tech historians will draw parallels between Victorian interior design of the 19th century and Telco Central Offices of the 20th century. More Gropius. Less Cruft.

I could write pages about how much I don’t like England…. somehow the country doesn’t match the fine characteristics of the people who live there.

The author is long Acme Packet.

Discussion

Comments are disallowed for this post.

  1. Replacing the traditional voice exchange with an MSAN will save BT huges amounts in operating costs. I have seen at least one BT representitive quoted as saying 21CN is profitable within two years of starting the rollout because of these savings.

    Posted by Colin Whittaker | February 27, 2007, 7:31 PM
  2. * good post
    *BT has done a good job in publicizing their network and getting vendors to design for it. ( kind of like many of the examples in the recent Wikinomics book by Don Tapscott … open it up and let vendors compete. )
    * The MSAN can be an economical box if the PHYs are kept simple, if it tries to be overly back-wards compatible it will become yet another CoSine box.
    * The real star of this network is not covered in your post though. It is the hosted application support in the “NOC”. BT talks about all the “new services that can ride on top of this network”. That is where BT is hoping to, and has the best chance, to make revenue. It’s the application overlay … not the network.
    * … I like travelling to England. Have had many great trips there. the food has improved dramatically in the past 20 years ;-)

    Posted by Iain | February 27, 2007, 7:54 PM
  3. Rule #1 – Eat Indian food while in Britain.

    I think the idea of applications being the savior are what BT hopes will be the star of the network. The inverse of that outcome is 100 independent application providers and BT is just a fat, dumb, pipe.

    While I really want to see carriers succeed, the reality is call waiting and caller ID are their last great inventions.

    Posted by Andrew Schmitt | February 27, 2007, 9:41 PM
  4. The new regulatory regime means that BT have to open up their dumb pipe to other “Communication Providers” on an equitable basis. BT has now reorganised internally so that one part of the company will run the transport/access and another part of BT will act as its own Communication Provider which will compete with all the other guys on equal terms.

    What about Fibre to the Premises – BT will role this out initially to greenfield sites. Once people see what it can do then the days of DSL are numbered.

    Posted by John Badger | March 1, 2007, 5:58 AM
  5. BT Ran a FTTH test and subsequently said it was not necessary.

    If you read the internal BT documentation, they talk a lot about VDSL being the next upgrade step.

    Posted by Andrew Schmitt | March 8, 2007, 3:56 PM
  6. One correction. Huawei has not lost either its optical or MSAN business with BT. It is fujitsu that has lost all of its MSAN business and Ciena that has lost most of its optical business. The party that benefits from both of these is Huawei. Believe it.

    Posted by Curtis Johnson | April 12, 2007, 8:02 AM
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