BT Group PLC is teaming with Cisco Systems Inc. to develop and sell a new range of converged IP (Internet Protocol) services in the U.K. and Europe, in a move that they say will allow local businesses and governments to reduce costs by gaining extra capabilities from their networks.

Under the joint initiative, the companies will be working on deploying IP VPN (Virtual Private Network), IP telephony and broadband teleworking services, among others. The campaign will initially be focused on markets in the U.K., Germany, Spain, Ireland and the Netherlands.

For companies looking to upgrade their networks, deploying an IP VPN is cost-effective, said Nicky Walton, a telecom analyst with IDC in the U.K.

She added that she believes companies will be looking to deploy IP services, but telephony won't drive the market. Instead, services such as unified messaging, and presence -- or the ability to see when a user is logged onto the network and available -- will be the initial drivers, she said.

However, Walton added that service providers may have to educate customers about the advantages of converged IP services.

This is not the first collaboration between the U.K. telecommunication firm and the U.S. networking giant. The companies have already allied to deploy BT's new metro Ethernet, BT Transform, and an MPLS (Multi Protocol Label Switching) VPN-based business platform that allows businesses to access a variety of voice, data, video services and applications, such as e-learning and video-on-demand.

The companies said that new converged voice and data services will be available within months, although they did not specify which services they would be rolling out first.