When it comes to surviving in the cut-throat telecommunications world, British Telecom - one of the world's oldest communications players - has a tactic different from that of its global rivals chasing the latest mobile technology to provide new services. BT's strategy has been to aggressively spend to build a national fibre-optic broadband network that supports high-definition video transmission and the high bandwidth needed for the next generation of mobile technology. Chairman Sir Michael Rake says the company is not interested in bidding for spectrum to own a mobile network. It would rather own the backbone of a high-speed broadband network that will ensure the firm's core competitiveness. BT competes with more than 400 voice service providers and takes in only 11 per cent of the revenue generated in traditional voice service, a far cry from its dominant fixed-line player status until 1984, when the market was liberalised. Sir Michael says BT's task was to create broadband for Britain and the next phase is to upgrade the broadband network to a fibre network. 'We are working hard on the fibre roll-out to 12 million people by 2012 ... We will be expanding the fibre network for higher bandwidth to meet the high-definition video demand which will occur in the coming years,' he said. 'I think we will see a great take-off in demand ... Fibre network with super-high speed broadband is critical. I think these changes are similar to the ones from the tape to CDs, or VHS to DVD.' Sir Michael said a general move to high-definition television would drive the need for multiple streaming of video to homes and offices. 'You don't need 100 megabits at the moment, but it will be very important in the next several years.' BT plans to upgrade 40 per cent of British homes to the so-called fibre to the cabinet technology by 2012, targeting the urban and suburban areas. With the technology, the optical-fibre network will be installed in the 'cabinet' or the hub, from where the standard copper wiring will connect it to users. This will offer speeds of up to 40 megabits per second. With the upgraded network to be implemented this year, the transmission speed will be raised to 24 megabits per second and 7 megabits for high-definition video. However, this is an interim solution until the fibre system takes over. 'We will provide fibre to the cabinet which provides flexibility to connect to the premises,' Sir Michael said. 'We remain optimistic on the regulatory framework to help us get a proper return. That's the interim stage before fibre comes in the next four to five years.' While BT is a rarity among global telecommunications firms not to own a mobile network, it still includes mobile services in its packages by renting mobile network capacity from operators. Sir Michael said concentrating on building the broadband network was a means for the company to have a clear focus and not be swayed to spend to chase the fast-developing mobile technology. BT's fixed-line business model is similar to that of AT&T, France Telecom and Deutsche Telekom, although they all have mobile subsidiaries. Analysts say integrated telecommunications operators usually command a higher valuation as convergence, in which operators bundle the traditional fixed-line business, mobile and internet connectivity in the same package, is the industry trend, as opposed to the infrastructure-based BT model. 'Telecommunications operators need to provide integrated services, which bundles fixed line, internet and mobile in a package,' said Marvin Lo, an analyst at Daiwa Institute of Research. To counter the pressure from the fall in average revenue per user, Sir Michael said, the company offered bundling packages with fixed-line services, broadband and also television services through broadband to boost revenue. BT Vision is part of the firm's broadband offering, with 400,000 to 500,000 customers. By delivery through the internet protocol-based television technology, it provides more interactivity and customers can download videos and DVDs. 'It's a very economical and effective means of access. In the 21st century, we need to have more broadband, more IPTV, and we need video on demand,' he said. This is where the demand for content enters. BT is now looking for joint ventures with broadcasters ITV and BBC as a way of meeting that demand. BT is also pushing hard in the content access field because in Britain, just one pay-television operator controls 95 per cent of premium pay-television content. 'In principle, we have to wholesale our network to others, so the content should be also for wholesale. 'So in future, the key to BT Vision in the 21st century is the access to more content with a level-playing field,' said Sir Michael. 'We face a huge pricing pressure. The pricing has gone down so much that the way to sustain us is fibre. 'BT used to be inefficient. But now we have invested heavily in customer service and our network, so delay in customer appointments in the past two years has gone down from days to minutes. With the new technology, we need to deal with customers and create our cost structure that'll allow us to be profitable. That's our challenge.' There are challenges on other fronts, too, especially amid the current downturn. There are 150,000 people directly or indirectly working for BT. The company plans to cut this by 15,000, of which 11,000 are with the contractors. The company also carries the burden of 300,000 pensioners. Sir Michael said BT had a huge pension scheme, so the company needed to reduce the contractors' payroll.