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Technical details: Bross insists that BT will strive to integrate communications, electronics and biotechnology in order to offer tailored services to its customers.

It’s not your grandma’s phone company any more,” says Matt Bross, CTO of the 160-year-old British institution. And the Oklahoma-born tech-head is not kidding. After being burdened by huge debt from its past as a government-owned monopoly, British Telecom Group (BT) decided in 2001 to transform itself from a company reliant on the old fixed line network, into one based on the latest in web technology.

And so was born the 21st Century Network project — a groundbreaking masterplan to convert the UK’s ageing telecoms infrastructure into a single internet protocol (IP) network with the ability to handle voice, data, email and even movies. Now buoyed by a successful transformation, with new wave revenues exceeding 35% of BT’s earnings, the telecoms giant is bringing its techno-revolution to the MENA region.

“The opportunities in this region are phenomenal and the multi-site, multi-national companies that can benefit from our network IT services are many,” says Bross. “The strong centre of gravity of those are European companies looking to work internationally, and businesses like Dubai Ports World (DP World), that need help in their global acquisitions, in taking the cost out of their operations and addressing the global marketplace faster,” he adds. In fact, DP World — whose deal with BT stems from P&O’s previous partnership with the telecoms group — is one of 300 BT corporate customers in the Middle East. Other notable regional partners of the US$40bn-a-year communications giant include HSBC, Visa, Siemens and Dell. The group, which has had a presence in the Middle East for over 20 years, recorded 56% revenue growth between 2005 and 2006, with new wave revenue making up US$3.67bn in Q3 of 2006. Last year BT Middle East’s revenues grew by US$31.4m.

Having cashed in on an IT start-up in the 1990s, Bross — a former employee of Contel, Mastercard and Williams — joined BT in 2002. As the story goes, a then-retired Bross met BT CEO Ben Verwaayen in a New Jersey café. Having lost US$4.3bn in 2001, BT and Verwaayen were desperate to turn things around and called on the IT wizard to spearhead the group’s technological transformation. A dubious Bross remained unconvinced, until Verwaayen began scrawling his masterplan on the nearest thing to hand — a napkin.

With BT now fully recovered and reaping the rewards of its change in direction, Bross is looking into the future of technology. And he certainly seems excited by what he sees. “[We are looking at] the confluence of biotech, communications and electronics for the enrichment of human life, that will be meaningful in a way that we haven’t even imagined, to help cure conditions and troubles,” he says.

Predicting that some “remarkable” technology will be unleashed in the next five to 10 years, Bross believes it is the combination of the organic and inorganic that will shape the future. For the IT whizz, one of the most “amazing” examples of new technology is something he saw at the recent World Economic Forum in Davos: “Imagine a grass seed that you spread on a field that grows as normal grass would, but with this new technology, certain patches of the grass may be red,” he explains. “You don’t want to step on the red patch because there’s a land mine beneath it.”

BT’s own foray into biotechnology is the launch of a new organically-grown battery for mobile phones that looks set to replace toxic and environmentally damaging Lithium-based batteries.

“It is a clear substance that functions as a battery and is biodegradable unlike conventional batteries. The idea is to have them commercially available within the next two years,” says Bross.

On the back of the successful IP drive in the UK, BT Group launched its 21st Century Global Venture in Dubai last year — that aims to advise telcos on next generation networks based on IP standards. With the company setting-up its regional headquarters in Dubai, Bross sees the emirate as a lucrative opportunity for the group. “The region has tremendous wealth and if you look at Dubai’s projected growth in the ICT space, I think it’s going to be well in excess of 12%, which is larger than the growth planned in India of around 10%,” he says confidently.

Referring to the delayed launch of the UAE’s second mobile operator du however, Bross admits that ongoing growth in the region’s telecoms sector will not be without its difficulties. “Introducing privatisation and deregulation is complex on any day in any geography,” he explains. “Just imagine a (telecoms) start-up of enormous proportions where you’ve got to build processes, systems, methods, train people, develop a culture, develop an identity — these things are not done overnight,” he adds.

While the UAE’s Telecoms Regulatory Authority has denied media reports that a third operator is currently in negotiations for a licence, Bross nevertheless envisages that the liberalisation of the telecoms sector will continue.

“More choices in the UAE will stimulate expansion in the consumer, small to medium sized and corporate space in such a way that there will definitely be additional operators [coming here].”

In BT’s evolution from a state-owned, narrow-band phone company into a technology-driven services business, Bross has witnessed a rapid rethinking of the group’s corporate strategy. And he believes that an increasing focus on innovation has been the key to the company’s recent record results, which include 19 consecutive quarters with earnings-per-share growth.

“It’s changing in a fundamental way and the benefits are starting to show up in the financials of the company,” says Bross. “From the labs inventing stuff and putting it into the market to our people around the world turning over innovation rocks, the goal is to fuse global innovations together with the best people of BT and get them in front of the public fast.”

In an effort to continue developing new technology and delivering it across the globe, the company has built its modern business model around an “open innovation strategy.”

“I believe that never in history has there been so much meaningful innovation going on, even during the dotcom boom, which really saw a lot of cloning of good ideas,” Bross explains.

“There are great ideas coming out of China, India, Latin America and Asia. We are strongly trying to explore opportunities wherever they exist, and fuse them to bring the best thinking the world has to offer,” he adds.

The main focus of the new strategy is to allow external developers, wherever they may be, to use BT’s hardware and software to work on new ideas. Highlighting the need to “innovate the way you innovate," Bross says: “The number of new ideas that can be developed and brought to market is ultimately constrained by the size and wealth of the company's research and development department. This can be potentially disastrous given the fact that new technologies become obsolete in no time these days or get rapidly cloned or reverse engineered.

“Rather than years or months, the window of opportunity for a new product innovation to carve out an appreciable market niche may be as short as weeks or even days," he adds.

As well as changing its development strategy, the group has begun flexing its financial muscles with a number of recent high-profile acquisitions in various markets.

Earlier this month the company took control of Mumbai-based IP communications business i2i Enterprise, in a move that will make BT the largest foreign global carrier operating in India today. In a deal worth around US$1.12bn, the group has also entered a strategic agreement with international finance institution Credit Suisse. Over a minimum of five years, BT will provide a broad package of services to increase operating efficiency at the bank. While Bross refuses to comment on whether BT is looking into making any Middle East acquisitions, he does admit that the company is targeting the region for rapid growth in the coming years.

“You’ll see us working increasingly with companies coming into the Middle East, and we’ll be able to help them get out of the region and address the global market.” And, on the strength of the success of the 21st Century Network project in the UK — that is estimated to save BT around US$1bn a year in costs when fully launched in 2010 — the company also aims to launch the IP revolution across the region.

“There is a lot of interest from telecoms operators the world over,” Bross says. “We will be helping the 71 different operators in this region transform their networking systems into next-generation networks.”

If the words of the American IT wizard are proved true, then the Middle East’s ICT sector could be set to follow BT in the cost-effective, super-efficient IP revolution over the next few years.

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