Bell Canada embraces collaboration with national network of innovation centres

Emerging model for telecom industry

Bell Canada is forging long-term collaborative relationships across Canada to develop innovative products and services that will differentiate the telco in a rapidly changing marketplace. Starting with Nortel Networks Corp in late 2003, Bell has established 10 Innovation Centres and is about to open an 11th in Vancouver for broadband wireless development in anticipation of the 2010 Winter Olympics. The centres complement the network of Bell University Laboratories which Bell launched in 1999 to conduct R&D further upstream.

The centres and the third-party work they facilitate comprise a growing portion of the $1.5 billion Bell spends annually on R&D. They also represent a key component of its strategy for remaining and the technological forefront to meet current and future customer needs. The collaboration they foster implicitly acknowledges that, in a competitive global environment, no single company can succeed by remaining insular.

"It's an ecosystem of centres and it allows us to showcase the stuff we're doing. This is new for Bell. Other companies are following suit so it's a growing concept," says Clayton Mangione, Bell's director, voice network. "A lot of customers buy directly from vendors and we are trying to reposition ourselves as value-add on top of vendor solutions."

The Innovation Centres are challenging the way Bell has traditionally approached innovation and R&D. While the majority of its R&D involves the centres and third parties, Bell is growing its in-house software development capacity to complement its external activity.

"We used to outsource but now we're growing our software development staff," says Mangione, adding that its in-house technology team now numbers more than 500. "We customize and work with vendors because Bell-only solutions are not the most economical way of advancing."

At the Innovation Centres, Bell has instituted its Excite process. These are day-long facilitated sessions held in dedicated meeting rooms where a multidisciplinary team spanning the development process congregates to discuss requirement definitions, solutions development and project plans.

"It can range from the president to the craft guy - people that can make decisions along with people that can make things happen," says Mangione. "It's one hundred percent lock-up and focused to produce decisions and designs quickly."

CENTRES INTER-CONNECTED

The Innovation Centres are connected through broadband and video links as well as through applications and skill sets to ensure complementarity and avoid duplication. More significantly, however, each centre must involve third parties, allowing Bell and its partners to work directly with customers and achieve a degree of success that's unusual in the high-risk world of R&D.

"The Innovation Centres are designed to regain and retain our technological leadership. We're co-locating Bell people with industry experts to drive ideas through to prototypes and field trials within days or weeks," says Mangione. "We need to drive new revenues into the company. We're losing revenue in some areas so we need to gain in others It has to be useful and fast-to-market. The centres are open to industry and pull in the best of the best."

The Bell/Nortel VoIP Innovation Centre is typical of the Innovation Centres - focused on a specific technology area (Internet Protocol (IP) Telephony and multimedia standards) and jointly funded by both companies. The centre has up to 15 projects running concurrently in areas such as proof-of-concept, third party interoperability, activities related to service launch and network architecture.

The Bell/Nortel centre was announced along with a major co-development deal between the two companies, Aliant and Bell West to build an advanced IP-based next generation network. As part of the agreement, Bell committed to spending $200 million over three years on Nortel technology to provide new services to its large enterprise customers.

Bell owns all intellectual property arising from the collaboration. It purchased the systems used to develop products and services and dedicated 12 people to the centre. Nortel provided the space, allocated four people and covered the cost of construction as well as some specialized equipment. To date the three-year agreement has been highly successful and discussions are underway to extend and enhance the collaboration.

"We see it as a key partnership. Bell wants to differentiate their particular offerings in the market," says Mark Cobbold, a Nortel product manager who also manages the Bell/Nortel centre. "A big part of what we do here is bring in third parties and make our products work with their products in the context of the Bell network."

NORTEL BENEFITS FROM CENTRE'S WORK

Bell has already generated considerable revenue through the sale of products and services developed at the centre, such as its Bell IP Telephony and Bell Digital Voice - a pure IP play that runs over the Internet. The latter product has also been modified to produce Bell Digital Voice Lite, allowing customers to utilize a customized set of multimedia features over existing phone lines.

Nortel also benefits from the relationship, working alongside key potential customers and occasionally landing new contracts as a result.

"Our objective is to help Bell launch services in the marketplace ... We gain revenue out of that through right-to-use licences, sale of servers, gateways and other types of products," says Cobbold. "It's a great concept and a great set-up. Bell wanted to do this (establish the centre) and they have promoted the concept ... This is where the industry is heading - these joint ventures with a clear delineation of responsibility. It's good to clarify upfront and create that framework where the teams can work together closely and not be too constrained."

In addition to the Innovation Centre on Nortel's Ottawa campus, Bell also opened a centre last October in west Ottawa. The centre teams Bell with high-tech entrepreneur Terry Matthews and several of his companies including March Networks Corp, Ubiquity Software Corp and Mitel Corp.

R$