Verwaayen said collaboration, and the innovation that comes from working with others, will be vital to transforming BT from an old-style telco into a new services- and customer-driven company. "Innovation is vital -- we need a willingness to learn and to open our minds. BT staff have engaged globally with 625 startup companies" in the past quarter and are bringing back ideas. "That stimulates more debate, which is good. We are creating a good pipe of capabilities so we have enough products for the future."

    Collaboration, headded, "needs to be a natural thing to do," and he called out two partners in particular to show the different types of relationships BT is developing. He cited the work with Sony Corp. (NYSE: SNE - message board) -- the two companies are working to add video and voice call capabilities to the electronics giant's PlayStation products -- and Oxford University, home to Britain's brightest young brains (and, conversely, members of the Royal Family). "Oxford is helping us to manage some of our major programs… We're going to build a pipeline of talent" from the University's intellectual treadmill, said BT's CEO.

    Other partners afforded a brief mention include Intel, Hewlett-Packard Co. (NYSE: HPQ - message board), Vodafone Group plc (NYSE: VOD - message board), and Microsoft Corp. (Nasdaq: MSFT - message board), which is helping BT develop its Web services strategy and products, and also supplies the technology behind BT Vision.

    Verwaayen and Ian Livingston, CEO of BT Retail, waxed lyrical about BT Vision, the carrier's video-over-broadband service, which has had a slow start despite a high-profile marketing campaign in the U.K. -- it currently has just 20,000 subscribers. (See BT Pushes IPTV.)

    The good news for BT is that it has a growing base of broadband customers to pitch the service to. It now has more than 3.8 million retail DSL customers, giving it a 40 percent share of the U.K. DSL market.