Broadband price changes

BT Group PLC
13 May 2004


NR0430                             May 13, 2004

               BT TO USHER IN NEW ERA OF BROADBAND INVESTMENT

            New LLU services to encourage investment and innovation

BT is to develop new services that should alter the face of broadband
competition in the UK. The company is to re-design and simplify its current
local loop unbundling (LLU) product in the strong belief that such a move will
benefit those companies who are willing to invest and innovate. The move should
also reduce the need for future regulatory intervention and so create greater
certainty for the whole industry to invest with confidence.

In a move designed to enhance and extend infrastructure competition, BT is to
cut the prices for its LLU products by up to 70 per cent in a phased series of
price cuts. The long term aim is that products such as BT DataStream will be
subject to less regulation in areas where LLU has been a success. This should
benefit companies that are prepared to invest.

BT will continue to offer the widest variety of wholesale access products in
Europe. The new LLU product will be closer to simpler continental models and BT
aims to introduce it to the market within six months. Immediate price cuts will
be made to ensure there is sustainable demand prior to launch and to enable
potential customers to plan ahead with confidence.

          The monthly rental price for the existing shared LLU product will come
down on June 1 from £4.42 to £2.26 per line with the connection fee also falling
from £117 to £83.33. Taking both cuts into consideration, this represents an
overall saving of 35 per cent on the current price.

          Prices will be reduced again - making a total reduction of up to 70
per cent - once the full cost benefits of the re-scoped product and the
achievement of certain volumes filter through. Prices for the fully unbundled
LLU product are also to come down initially by an average of 15 per cent.

BT is to make several other changes. These include adjusting the price for
elements of its BT DataStream products to ensure there are adequate margins
between BT DataStream and BT IPStream Home 500. These adjustments will be
announced by the end of May with the margin being maintained with regard to all
BT IPStream capacity based charging products.

In addition, BT is also to introduce a new wholesale calls product for Carrier
Pre-Selection (CPS) operators where they have invested in connecting to a local
exchange. This product will allow them to use BT directly for on-switch or
inter-local exchange calls at a price such that their overall costs can be
considerably reduced. The final product will be developed in consultation with
Ofcom and the industry with interim arrangements to be put in place from July.

BT chief executive Ben Verwaayen said today: "Our announcement marks a major
move towards the telecommunications market of the future. BT has always argued
that a market needs to develop in which those who are willing to invest and
innovate can reap the rewards. This is a significant step in that direction.

"We now have a far clearer idea of how Ofcom sees the market developing and we
share their view that competition based at the infrastructure level will be good
for everyone and for the UK in general.

"Their statements about regulatory certainty are crucial as we have enormously
ambitious plans for the networks of the future and require that certainty for
shareholders if we are going to invest the huge sums required.

"BT took a bold step forward two years ago when it cut the price of broadband
and changed the shape of the broadband industry. This is an equally ambitious
move and one we are confident will have long term benefits for both the UK and
BT."

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Inquiries about this news release should be made to the BT Group Newsroom on its
 24-hour number: 020 7356 5369. From outside the UK dial + 44 20 7356 5369. All
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About BT

BT Group plc is the listed holding company for an integrated group of businesses
providing voice and data services in the UK and elsewhere in Europe.  British
Telecommunications plc, a wholly-owned subsidiary of BT Group, holds virtually
all businesses and assets of the BT group.

BT is one of Europe's leading providers of telecommunications services.  Its
principal activities include local, national and international
telecommunications services, higher-value broadband and internet products and
services, and IT solutions.  In the UK, BT serves over 20 million business and
residential customers with more than 29 million exchange lines, as well as
providing network services to other licensed operators.

BT consists principally of three lines of business:

•         BT Retail, serving businesses and residential customers and including
BT Openworld, one of the UK's leading ISPs.

•         BT Wholesale, providing network services and solutions within the UK,
including ADSL, conveyance, transit, bulk delivery of private circuits, frame
relay and ISDN connections.

•         BT Global Services, BT's managed services and solutions provider,
serving multi-site organisations worldwide.  Its core target market is the top
10,000 global multi-site organisations with European operations.

There are a number of other businesses within the BT group, including BT Exact,
an internationally renowned centre of excellence in IT and networking
technologies. It is also BT's technology and research and development business.

In the year ended 31 March 2003, BT's turnover was £18,727m. with profit before
goodwill amortisation, exceptional items and taxation of £1,829m.

For more information, visit www.bt.com


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