O2 and 2e2 converge in joint venture

The twin worlds of IT and telecommunications have been gradually converging for decades, but every now and then the integration takes a few, conspicuous steps forward.

In February 2011, for example, two US telecommunications providers snapped up cloud hosting providers: Verizon Business bought Terremark for $1.4 billion, as Time Warner Cable acquired Navisite for $230 million.

In the UK, meanwhile, a deal was announced that will erode just a little the distinction between mobile telecommunications and traditional business networking services.

Mobile telco O2 has been adding fixed-line voice and data services to its business-to-business portfolio over the past 18 months, with the aim of becoming its customers’ ‘communications integrator’ of choice.

In January 2011, it took the strategy a step further with a joint venture with ‘traditional’ systems integrator 2e2. O2 Unify, as the joint venture is known, consists of a combined ‘pre-sales’ technical consultancy team, which O2 says will allow it to meet the IT networking needs of its business customers.

The first joint offering is a managed wide-area network (WAN) service, and it has won its inaugural customer in public services company Amey.

As 2e2 chief executive Terry Burt admits, yet another managed WAN service is hardly a groundbreaking addition to the industry. “We’ve been doing managed WAN for some time,” he says.

For 2e2, though, the hope is that O2’s experience of providing simple, high-volume network services will rub off on the more complex, less repeatable world of enterprise ICT.

“All system integrators have been guilty of random acts of brilliance – you do a successful project, but then you move on and start again somewhere else,” he explains. “What we want to do with O2 is identify commonalities that we can apply across customers.”

A more modular, ‘productised’ approach to business networking would allow 2e2 to sell further downmarket, he adds. “The ultimate incarnation will be a ‘network-in-a-box’ offering for SMEs.”

O2, meanwhile, hopes to avail itself of 2e2’s familiarity with complex network infrastructure challenges, says O2’s business sales director, Ben Dowd.

“Like any typical mobile operator, our approach has always been to simplify the proposition to make it easy for the customer to understand,” he explains. “When 2e2 gets involved with a customer, it is usually when they have an issue around complexity that needs to be resolved. Complexity is their friend, and that’s what we haven’t got.”

Will this combination of the high-volume simplicity of mobile telecommunications with the managed complexity of corporate ICT be the best of both worlds or a contradiction in terms? O2 Unify is an experiment to answer that very question.

The fact that O2 is partnering with 2e2, not acquiring it, could be seen as a sign that it is hedging its bets. Then again, it has everything to play for.

“The UK’s ICT market is worth £7 billion, and at the moment we’ve got a 0% share,” says Dowd. “The only way is up.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media (now Bonhill Group plc) from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The...

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