Why is British Telecommunications PLC studying ant colonies, jellyfish, and slime molds at its research labs in southeastern England? It's hoping nature can help solve one of its most critical business problems.

BT estimates that the cost of overhauling its phone network the traditional way - rewriting software, replacing switches, swapping copper wires with higher-capacity optical fiber - could top $46 billion. Spending $4 billion a year, it would take more than a decade to finish the job. And by then, the overhaul would be out of date.

So BT has hired biologists and entomologists to scour the natural world for alternative solutions. 'Biological organisms do complex things with very simple software, while man's unbelievably complex systems can only do very simple things,' explains Peter Cochrane, BT's research head. By studying creatures such lifeforms as ants, BT hopes to find a faster, cheaper way to 'evolve' its network and make it manage itself.

Conga-Line Avatars
A former telephone lineman who joined BT in 1962, Cochrane, 51, says new technologies such as mobile phones and the Internet are putting enormous pressure on BT's network. For instance, if a car wreck halts traffic on a major highway, the network is swamped by cell-phone callers.

To cope with problems like an overloaded or damaged network line, one of his teams has invented a software program modeled on ant colonies. The idea is to send out 'ants,' or intelligent agents, to explore alternate routes through the network. Each ant returns, almost instantly, with information on how long it took to travel between different parts of the network. With information from thousands of ants, the network can reconfigure itself to bypass the problem in less than a second - far faster than the several minutes BT typically needs now for the same task. And it allows the network to become self-managing. Last summer, BT shipped the first product based on this program to MCI Communications Corp.

That's just one of dozens of projects under way at the 4,000-person BT Labs on the outskirts of Ipswich. One innovative effort explores something called 'shared spaces.' This Internet technology lets people see each other in the same virtual environment using 'avatars.' In January and February, BT, British Broadcasting, and Sony tested the system with more than 2,000 BBC viewers, who could move around and interact in three dimensions. One online party, for example, ended with a virtual conga line of 45 avatars snaking around a virtual beer tent.

Where is all this heading?
Eventually, Cochrane expects people and technology to converge--creating what he calls 'homo cyberneticus.' An anatomical model of this new species towers near the door of his office decked out in real devices. Dressed in a vest that uses the heat of the body to power all the technology, the model also wears a visor that can spray TV-like images or data directly onto the retina, allowing the user to read E-mail or study a map while walking down the street. 'People will be walking around online in the early 21st century,' Cochrane insists.

Ian D. Pearson agrees. A hard-core Star Trek fan, the 36-year-old is the labs' resident futurologist. He predicts there will be a 'massive' convergence of computing and telecom in 5 to 10 years. Pearson also believes that desktop boxes will disappear, replaced by more cuddly interfaces. His favorite example is a computerized robot that 'looks like a kitten but doesn't bring in dead mice,' he says.

Pearson, who has been invited to the Pentagon to explain his ideas, jokes that it's easier to visit the U.S. Defense Dept.'s inner sanctum than penetrate security at BT Labs. That may be a legacy of World War II, when scientists from BT's predecessor company built Colossus, the world's first programmable computer, which broke the Nazi high command's secret codes. Even then, BT scientists were ahead of their time.

Julia Flynn in Martlesham Heath, England