Charles Bligh, MD of TalkTalk Business and IBM veteran, tells CBR about how the network shifted from being a peripheral consideration to an IT service and an enabler of business.
CBR: You started in IT 26 years ago; how have IT priorities changed since then?
I started at IBM in the 80s, when the mini-computer revolution was still very much in full swing and the client server was only in its infancy. So it’s been a massive shift, with the cloud and everything else becoming more network-centric.
Centralised comuting with cloud models has come back in vogue. We went from where everything was centralised in the 60s and 70s, to being client-server with things being put out into the networks to get more empowerment and flexibility.
To some degree, things have come full circle. We’re now centralising all of those disparate islands that we’ve spent twenty years pushing out into branch offices and in client servers, so that we’re getting value from our data with network computing.
Right now we’re using the best of cloud, networking and central mainframe computing in a hybrid fashion.
To glue all of it together you need a fantastic network in the middle, or a series of networks; the internet is made up of lots of networks as well as private networks.
I ran IBM’s mainframe business in Asia-Pacific for a couple of years in the early 2000s, and everyone said that the mainframe was dead. The reality is that centralised computing is far from dead as a framework for delivering data analytics.
Whether you do it on a mainframe or a collection of blade servers, the reality is that you need centralised computing, as opposed to branch level and putting lots of processing out of the branch. That’s essentially what cloud computing is.
But what is constant throughout the 1990s, 2000s and certainly will be for the next 20 years, is network-centric computing.
CBR: In a business context, has telecoms become another IT service?
I think it’s becoming more blended. Where the cloud starts, the on-premise computing starts, the branch level is becoming very blurred. You’ve seen telecoms companies getting into IT around the world in the last 15 years.
It hasn’t been hugely successful and they’re all madly starting to sell them off; BT Global Services is the only one left that I know of, of scale. IT companies have tried to get into networking; the reality is that it blends.
The thing about IT, as well as networking, is that it is an innovation play. The fundamentals of how you build your network actually drives how your company runs, where you put processes and the central computing is so intertwined with the business model.
I was at IBM very much at the C-suite dealing with the managing directors of businesses about how their companies ran. More and more in the last four years at TalkTalk, considering our scale as one of the top three or four networking companies, we’re invited to talk to the C-level execs about how the network is intertwined with their business model.
It’s no longer that they just need some telephones and a few data connections. It of course depends on whether the company has a cloud model, whether they want to be more on-premise and whether they are global in nature or domestic-facing.
The networking side is an innovation play and it’s very much at the heart of business models.
CBR: How does the network drive business?
A great example is retail. We’re all using click-and-collect now. In the old days, a shop would mostly work in offline mode: collecting cash, making sure you understood what you had sold and uploading at the end of the day to replenish your stock.
In those days, you needed an offline network that would occasionally connect back and that was how your company worked. The central part of your company would be very much transaction-based processing for the warehouses and financials.
Now, in a retail sense, you need as much capacity to send to the stores in terms of data as well as the stores sending data to you at the warehouse, because some companies are doing 24-hour or 12-hour same-day click and collect.
At that point your business model is saying that if you want to utilise your bricks investment, you have to put the network at the heart of that strategy or it will just not work.
You put in as much upload as well as download; you put in different types of technology that are resilient. Typically when you do that you can save a lot of money by doing wi-fi in-store and voice convergence.
There are lots of examples in other industries as well, of how the business strategy is intertwined with how you build your company with infrastructure.
In the old days, you would have dial-up and we weren’t front-and-centre of the strategy, because they could function without us. Now companies can’t function without us. It’s a fundamental enabler.
CBR: How long has this been the case?
I think IT has always been a fundamental enabler since the 60s when it was a competitive advantage. With the network, you would just assume there was some sort of linkage. Now the network is fundamental.
Also, a lot of companies are now relying on third parties, for example for credit-checking or online stores. You’re so reliant on others to deliver your services. The connectivity to your company is so important.
It’s interesting in the SME area; we’re seeing a rise in the number of small companies spending an awful lot of money on connectivity. Instead of ringing up and saying they want broadband for £30 or £40 a month, they’re saying they want a fibre Ethernet for £1000 a month.
They are prepared to pay substantially more because it’s so core for them. If it’s off the air for a few days or a week it’s so damaging.
We’ve been quite surprised by small companies really over-indexing on their connectivity. I see this in the direct business, which is a small part of what we do, but increasingly through the 700 business partners we work with; they are saying this is what is powering our 40 to 50 percent data growth every year.
CBR: Your fibre can provide 1Gbps connectivity. There is much demand for this among businesses, but in a consumer context, do you think that habits will change to use this capacity?
We’re already starting to see that. As we’ve gone from ADSL to fibre-to-cabinet in the UK, you’ve gone up literally five to eight times the speed. Of course the upload and download speeds for businesses are just as important.
A company said to me that with broadband it took them all night to update their website with photo and video; with 1Gbps it happens in fifteen minutes. So upload and download are really important.
We’ve seen, with fibre-to-the-premises, usage grow by almost 3 to 4 times. When you get fibre into your home and business, you use it almost 4 to 5 times more. Once it is there you work out ways of using it more productively. In the home, obviously, a lot of it is video. In business it all of a sudden changes the way they work.
We think all businesses should have the right to have broadband in the UK at great prices. We’re disappointed that BT still has the monopoly on business broadband. We’re trying to champion business customers having a choice.
CBR: On that note, do you think the government is doing enough to support the roll-out of broadband?
There have been some successes. The government is doing a certain amount with the BDUK scheme.
We didn’t agree with how the original plan worked, but the way it is working at this point in time makes sense and we’re seeing an uptick in fibre as a result.
It comes back to the fact that as a carrier we’re wholly reliant on Openreach for the majority of our services. The pricing we get from them means that the price that we charge subdues the demand for connectivity. Frankly it’s 50 percent service and 50 percent price.
The current service from Openreach for the last 10 years on their business product has not been great. The opposition spokesman has come out calling for the separation of Openreach.
We’ve insisted that for both consumers and businesses, a separate Openreach would be more efficient, it would invest its capital in a better way and more in tune with its customers rather than what’s good for the whole BT group.
They would invest much more in their Ethernet business and it would grow faster if they did that.
CBR: Was the government too in bed with BT over the BDUK tender?
I think if you go back to the BDUK scheme, it was always going to be difficult for anyone non-BT, with the current regulatory regime, to make an investment case work.
You needed far more access to infrastructure, you needed access on the data of where things were built. It was not one-sided in so far as the way the structure was built, it’s just the way that BT has access to more than anyone else and has infrastructure in the ground.
Unless there were subsidies or something to skew investment for new entrants, it would always going to be really difficult if not nigh-on impossible to make the BDUK scheme work.
I definitely don’t think the government were in bed with BT or anything. I think they probably tried to really make it work but fundamentally BT had access to information and infrastructure. Economically and without substantial subsidies for new entrants it wouldn’t work.
The story has moved on; the question then is how do you make it work going forward. Separating Openreach, so it works for all of its customers rather than its customers and BT Group is the way to go. It’s the next logical step once you say that the previous arrangement doesn’t work.
That’s why we welcome the strategic review from Ofcom, because that puts fairly and squarely the role of the infrastructure provider at the heart of the economy. We are trying and hoping to make it successful in York with Sky and CityFibre in York, but the reality is it takes a long time to dig.
Even with the access to capital and access to engineering resources to get a meaningful scale, this means it is some years away.
For the next decade, all roads lead back to having a much more efficient and focused infrastructure provider to provide for other carriers in the channel.
It’s just such a logical argument that people are starting to pick up. The alternative is Openreach staying within BT, having the vested interests and not being fully focused on its customers.
CBR: TalkTalk has spoken about broadband as a fourth utility. Is it as essential as other utilities and does this need to be officially recognised?
I think the concept and thought that broadband is the lowest form of connectivity is an essential part of businesses. Whether you’re running a travel agency from your bedroom to large companies and retail, you simply cannot function without it.
Personally, and professionally from TalkTalk, regulating and mandating something is maybe a step too far. The point is it needs to spur investment so that people will invest in connectivity; carriers like us. I think incentives work more than the other way around.
There are certain [things to be done]. As an example, there are two major companies that wholesale fibre-to-cabinet: BT Wholesale and myself. Vodafone do it a bit, but essentially the market is myself and BT Wholesale.
That is the connectivity weapon of choice that most companies would like. I have to buy it at a non-regulated price, therefore the price in the market is too high, therefore for companies wanting to get that it might be out of their reach.
If broadband and fibre are a basic need, you then need to look at the supply chain and work out what’s not working.
It comes back to regulating the price, because BT was the only company that could logically invest in fibre-to-the-cabinet. So instead of regulating the end market you look at what’s not working in the supply chain.
If you regulate too much at the end side you end up distorting market prices. We believe much more that competition drives down prices and access. This is why we’ve been arguing from a business and homes perspective that the supply chain we rely on is not right for consumers.
If you regulated more the access of the product, certainly fibre-to-the-cabinet, you would see more uptake. So you get your same utility concept, that people are able to access it at the right price without having to regulate.
Water is water and gas is gas, but broadband could be two broadbands together, Ethernet, bonded fibre-to-the-cabinet, different Ethernet: you don’t want to stifle the innovation of the product.
CBR: What are your biggest plans for the next few years?
Our focus is very much two things; one is data, which is central to our strategy: providing varying types of connectivity to the channel across the UK. I won’t say democratising data because that is far too grandiose, we are more pragmatic than that. But actually the channel can get access to £15 to £1000 a month at different speeds and pricing everywhere. We are investing heavily to make that available.
The second thing is converged voice and the switch-off of analogue. BT has said it is switching off analogue by 2025. By the sheer weight of work involved it can’t happen in the last five years.
There are huge advantages in voice moving onto data. It saves companies money, it’s more flexible and works better with mobility. There’s a whole range of reasons why IP Voice is better.
Our focus is data and converging all of these legacy products from the last 30 or 40 years onto data with IT. Our channel takes the product and creates even more value around it.
We very much want to be the champion to business; we don’t go direct that much, we’re very much a channel business. We very much want to provide the best data and converged data to the channel for them to drive those solutions.