IBM inks £500M voice, data deal with Lloyds

IBM said Monday that it won a £500 million (AUD$1.25 billion), seven-year services contract to help move U.K. bank Lloyds TBS from its traditional voice infrastructure to a converged voice and data network.

The deal aims to improve connectivity for more than 2,000 Lloyds national branches and 4,200 automated teller machines (ATMs) by putting the bank on a dedicated high-capacity fiber, DSL (Digital Subscriber Line) and MPLS (Multi-Protocol Label Switching) network, IBM said.

The infrastructure transfer will take place over 20 months and hopefully demonstrate how other large banks and retailers can benefit from moving to converged fiber optic networks, according to IBM spokesman Bill Mew.

IBM predicts that Lloyds' branch communications will gain eight times their current bandwidth at a quarter of the price. Lloyds currently uses a traditional voice infrastructure comprised of PABX (private automatic branch exchange) switches, PSTN (public switched telephone network), VPN (virtual private network) and managed services, with a large chunk of its contracts held by BT Group and Cable and Wireless.

Big Blue beat BT on the deal partially because it is offering lower network tariff prices in conjunction with its carrier partners, Mew said.

"IBM isn't entering the telecom market but we are partnering with other companies working in this area to provide an interesting step change," Mew said.

IBM tapped Vtesse Networks to provide the fiber optic network, and Vanco Group for network integration and management. A variety of carriers will connect the Lloyds' branches and ATMs.

The project will be one of the largest in Europe to implement voice over Internet Protocol (VOIP) telephones, with almost 70,000 VOIP phones due to be installed, as well as take advantage of the wealth of unused fiber optic cable in the country, IBM said.

Mew added that the U.K. is a great case study for how to maximize existing, unused bandwidth. The U.K. has some 40,000 miles of fiber optic cable but only 5 percent is currently used, in part due to high tariffs, Mew said.

He added that IBM and its partners are offering a way to use the bandwidth at lower costs, and that the project could easily be replicated for other large companies, and in other regions with a wealth of fiber optic cables, such as the Benelux countries (Belgium, the Netherlands and Luxembourg).

Lloyds said that it plans to use the new infrastructure to reduce incremental bandwidth costs, allow it to consider bandwidth hungry Web-based applications and facilitate better communication with its customers.

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