Broadband development news

BT Group PLC
03 February 2005



                                                                February 3, 2005

       BT WHOLESALE UNVEILS FURTHER BROADBAND PRICE AND PRODUCT DEVELOPMENTS

BT Wholesale today announced plans to deliver higher speed broadband services
throughout the UK together with a range of wholesale broadband pricing
initiatives. The changes include more competitive wholesale broadband pricing in
response to service provider requests to support the continued explosion of end
user take up of broadband connections.

These customer focussed plans help develop the competitive environment for the
industry envisaged in today's BT response to the Ofcom Telecommunications
Strategic Review (see News Release DC05 - 057).

BT plans to deliver higher speeds from its wholesale ADSL products to meet
increasing demand for more bandwidth-hungry applications such as video. Trials
are scheduled to begin in April 2005 with a view to launching higher speed
services nationally from the autumn.

Firstly the company plans to trial upping the speeds on lines that will
currently support existing 2Mbit/s ADSL services to deliver speeds between 2Mbit
/s and 8Mbit/s dependant on line characteristics. In addition BT Wholesale plans
to run initial trials of ADSL2+ technology to support higher speed services of
up to 18Mbit/s. Further details of the timing, scope and location of the trials
will be provided over the next few weeks.

From April 2005, BT Wholesale plans to reduce the wholesale cost to service
providers of BT IPStream ADSL products by an average of about 8 per cent in
areas where there is a combination of high customer demand, high take up and
lower costs. The reduction will be delivered as a rebate to the service provider
of £1.10 per BT IPstream Home end user and £1.40 per BT IPstream Office and S
product end user.

The company announced it will also reduce the costs for BT Datastream ADSL
service providers at the same time to ensure continued compliance with the
regulatory margin rule. Given current market and regulatory conditions, BT said
it does not expect to make any further significant price changes to the existing
ADSL IP Stream rental charges over the next 12 months, other than potentially
some changes to support the take up of higher bandwidth services.

BT Wholesale has also announced it plans further price cuts for Local Loop
Unbundling operators. BT would hope to cut the monthly rental on the fully
unbundled local loop product by a similar proportion to the BT IPstream
reduction. This will be subject to the speedy and satisfactory conclusion of two
related Ofcom consultations and the wider review as well as following normal
regulatory processes.

BT Wholesale chief executive Paul Reynolds said: "At more than four million ADSL
broadband connections and growing, and close to two million cable broadband
users, broadband in the UK is rapidly becoming a mass market service. Broadband
service providers want a choice of broadband service delivery and the ability to
differentiate their services to end users. The broadband volumes we see today
allow us to address both issues of cost and choice, and will help maintain a
sustainable, competitive broadband portfolio.

"Ultimately our 21st century network programme will deliver the speed and
functionality service providers want for the future. Today's news means we are
bringing improvements on-stream more quickly to give wholesale customers the
choice of the wholesale delivery mechanism they adopt for broadband; be it the
end-to-end BT IPstream option; end user access via BT Datastream; or by local
loop unbundling.

"We are fully committed to seeing LLU a success. Industry interest has grown
significantly since BT delivered price reductions of up to 70 per cent on shared
LLU over recent months. We've also recently introduced a range of new products
that allow simpler migration between operators and a further range of other
industry requested products and automations will be launched progressively in
the coming months. We are committed to continuing our work with the industry to
improve the operational processes surrounding LLU".

By the end of March 2005 LLU operators will be providing service from more than
600 exchanges with many of them having multiple operators providing service. New
LLU deployments, in many cases, will be the simpler, cheaper new range of
co-mingling products launched in October 2004. BT has agreed an LLU Industry
Plan that will provide a platform for operators to grow towards their forecasts
of 1million total LLU lines by December 2005.

Paul Reynolds said: "In a highly competitive market all service providers need
competitive input prices and flexibility to differentiate their products. These
developments strengthen the broadband portfolio for all wholesale customers -
including local loop unbundlers and service providers who do not wish to become
infrastructure operators."

Earlier this week BT revealed details of the next 500 exchanges to be upgraded
to provide symmetric broadband (SDSL) service. By April 2006 a total of 1300
exchanges covering more than two thirds of UK businesses will be able to provide
SDSL.

Notes to editors:

   • Please note the proposed BT IPstream changes do not affect BTpublished
    prices and are being delivered in the form of rebates to service providers.

   • The plans to trial ADSL2+ follow the recent proposed changes to the
    Access Network Frequency Plan (ANFP) - the regulation underpinning the use
    of DSL technologies in BT's copper network. The changes to the ANFP to
    permit the use of ADSL2+ are required before this technology standard can be
    deployed in the network.

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About BT

BT is one of the world's leading providers of communications solutions serving
customers in Europe, the Americas and Asia Pacific. Its principal activities
include IT and networking services, local, national and international
telecommunications services, and higher-value broadband and internet products
and services.

BT consists principally of three lines of business:

• BT Retail, providing fixed and mobile communications services and
solutions and IT and networking services to more than 20 million business and
residential customers in the UK. It is also a leading UK internet services
provider.

• BT Wholesale, providing network services and solutions within the UK
to more than 600 fixed and mobile operators and service providers including the
provision of broadband, private circuits.

• BT Global Services, providing IT and networking services
internationally to meet the needs of multi-site organisations with European
operations. BT Global Services operates in more than 130 countries and also
offers international carrier services.

In the year ended 31 March 2004, BT Group's turnover was £18,519 million with
profit before goodwill amortisation, exceptional items and taxation of £2,013
million.

BT Group plc is listed on stock exchanges in London and New York. British
Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group and
encompasses virtually all businesses and assets of the BT Group.

For more information, visit www.bt.com/aboutbt



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