Select Committee on Science and Technology Minutes of Evidence

Memorandum submitted by British Telecommunications plc

  BT plc is probably the largest user of technology in the field of engineering and physical sciences in the UK. Its position as a major player on the global scene will also ensure its continuing demand for new and innovative technology.

  BT plc had a turnover of £14.9 billion in the fiscal year 1996-97 and employed 128,000 people. Around 4 per cent of turnover is currently assigned to R&D in the areas innovative services and systems, this equates to nearly 6,000 people. In addition BT is spending £2 billion annually in ensuring that its network is state of the art. Of the 4 per cent spent on R&D some 11 per cent of that is centrally funded and dedicated to the long term future of the company. Nearly £5 million is spent externally with academic institutions world wide, however the majority are in the UK.

  BT is a major user of technology operating in the market sector that is showing probably the largest changes of any industrial sector at the current time. The convergence of telecommunications, computing and content ensures that technological innovation, and perhaps more importantly, an understanding of how to utilise innovative technology to good effect, will be an essential ingredient in this business for the foreseeable future. All of this guarantees that BT has to be at the leading edge of innovation to protect its market share in core business whilst allowing it to expand into new markets both in the UK and globally.

  BT has an excellent record of innovation ranging from the introduction of monomode fibre, so enabling the communications revolution, to the first large scale trial of interactive services to homes and businesses. The capability to innovate and be at the leading edge of technology has been achieved through an internal process known as "Foresight" where we have coupled business objectives, R&D ideas and innovation. In this process, the marketing and the research arms of the business are working ever closer. This has placed the company at the forefront of R&D innovation globally. We have concentrated on core business whilst working in partnership with our key suppliers to deliver more generic solutions. Academia has also played a key part in our strategy by supplying people with new competencies to both complement and refresh the intellectual assets of the company. Similarly we have strategic collaborations on both national and international funded research. Our reasoning can be summarised as "We compete to grow our market share. We collaborate to grow the market".

  The Industrial Application of Government-funded Researech—we are supportive of government-funded research schemes, eg LINK, particularly in areas of technology that can be considered as embryonic. We support strong linkage between such schemes and the Foresight programme and would welcome greater emphasis on funding activities where foresight has identified particular weaknesses in the UK science and technology base.

  In some senses, the ability to apply research which has been funded by the Research Councils is limited by the visibility of who is doing what research. The development of a database similar to the Regard Database developed under the auspices of ESRC together with the provision of a public www based interface would be a welcome step towards the public dissemination of technological information and should be adopted by the other councils.

  Roles of Government Laboratories and Independent Research Organisations—with an increasingly complex and rapidly moving technology sector such as telecommunications it is becoming increasingly difficult to perform all R&D in house. Indeed it can be argued that this is also not desirable in the world of alliances and mergers. BT has always contracted out, wherever possible, non-core research and development to independent research organisations, e.g. ERA. We have made little use of government laboratories as they have tended not to operate in our technology sector. However, with the "privatisation" of DERA then this position is beginning to change—albeit slowly.

  Intellectual Property Rights and Patenting—BT has always adopted the policy of patenting and protecting its own IPR wherever possible mainly as a defensive mechanism. We have taken a low risk strategy to licensing out IPR. With suppliers, both academic and industrial, we have adopted a more flexible attitude, only insisting on rights to exploitation. We believe that in the academic sector we pay the full costs of the research in order to maintain the rights to IPR if we believe the work to be core to our business. However, in most cases we are sensitive to the needs of universities to publish the results of their work.

  A problem which can arise is the conflict between the need for academics to publish in a timely manner and the need for confidentiality to be retained prior to a patent application being made. There needs to be greater recognition of patents within the assessment of academic performance as an indicator of worthwhile and quality research rather than patents being viewed more as a hindrance to publication of a good paper.

  Financial support for New Enterprises—This has historically not been a large part of BT's portfolio, however, in the new market place we see this as an increasingly important part of our armoury in acquiring new technology. In more general terms we do not believe that financial support for new enterprises is as readily available as it is in the US. Until the UK can instil the culture of entrepreneurial risk taking then it is not going to have the effect the UK government desires.

  Role of the Foresight Programme—BT is very supportive of the Foresight Programme as conceived by the UK Government and we are pleased to see that it models our own internal process. BT also has a number of people that are involved with relevant panels. We have replied to the recent request for comments and suggestions as to how the next wave of Foresight should proceed. If you require a copy of this document then please contact Dr Graham Davies, Research Programme Manager, BT Labs, Martlesham Heath, Ipswich, IP5 3RE, Tel. 01473 646883,

  The Role of EPSRC in Technology Transfer—We believe that to consider the role of EPSRC in terms of technology transfer alone is a misconception. BT is involved with EPSRC primarily for the skills and competencies that academic researchers can bring to the company. The use of academia for the generation of new products and services is not in our opinion their major role although we have used them in some small part for that purpose. Our experience is that this has to be managed in a very focused manner in order to achieve quality deliverables in acceptable timescales.

  Recommendations of the Science & Technology Committee—It has become apparent that recent government involvement and encouragement towards implementing the recommendations of the Science and Technology Committee are now beginning to bare fruit in the technology community at large. Through the Foresight programme the networks between academia, industry and central government have gained in strength. There is a general willingness amongst all parties to become involved in the process and to ensure that implementation of the foresight recommendations are made for the good of the UK both in terms of wealth generation and improvements to the quality of life.

  Genuine partnerships have evolved and it is recognised that the Research Councils have made great strides to take on board the message of relevance in their programmes without sacrificing the innovation that has been their strength. In particular for BT we have been pleased and benefited from the restructuring of EPSRC so as to ensure that IT and Communications now have a high priority amongst the panels. The shortage of skills in this important technology area is now being addressed.

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Prepared 16 February 1999