Local Loop Unbundling charges

BT Group PLC
16 December 2004


December 16, 2004

                             BT RESPONDS TO OFCOM'S
                           LLU MARKET REVIEW FINDINGS
BT today welcomed the conclusion and findings of Ofcom's Local Loop Unbundling
(LLU) market review, a process designed to stimulate infrastructure investment
in the UK communications market.
Paul Reynolds, chief executive of BT Wholesale, said: "BT has been working hard
with Ofcom since May on this issue, and these price reductions are absolutely in
line with what we jointly agreed then. I believe they are right for the
industry.
"Price alone isn't the only issue though: BT has worked productively with the
Adjudicator and the industry to develop suitable processes. Together with this
package of price changes we believe the right climate has been created to
develop a market in which those who are willing to innovate and invest can reap
appropriate rewards."
By investing in new automated processes, BT has been able to significantly
reduce LLU costs and these savings have been converted into price reductions
which have been progressively introduced since May 31 this year.
The full range of price changes that will be implemented on the 1st January are
detailed in the Ofcom statement. The headline changes relate to the connection
and rental prices for fully unbundled and shared lines. The price of new fully
unbundled line connection dropping from £223.33 to £168.34 and a conversion of
an existing line from £88 to £34.86. The shared line product has reduced
connection price from £37 to £34.86 and the rental from £27.12 to £15.16.
The table below summarises these changes to existing pricing from today's
determination, with the proposed prices from the August consultation included as
reference.
             Existing      Proposed price - August         Today's determined
             Price         consultation                    price
Shared LLU
MPF            £37.00              £37.03                  £34.86
Conn
Shared LLU
MPF            £27.12              £12.64                  £15.60
Annual
Rental
Full LLU MPF
Transfer       £88.00              £50.70                  £34.86
Full LLU MPF
New            £223.33             £192.64                 £168.38
Connection
Full LLU MPF
Annual         £105.09              TBA                     TBA
Rental

When compared to the May 2004 prices, the changes represent overall reductions
of 70% for line sharing (as promised in May 2004), 29% for a new fully unbundled
line and 33% for a fully unbundled transfer. (Note: All prices are ex vat, and
percentage reductions relate to the cost of connection/transfer plus one year's
rental).




About BT
BT Group plc is the holding company for an integrated group of communications
businesses and 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.

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 March 31, 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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