21st Century Network

BT Group PLC
09 June 2004



NR0444                                         June 9, 2004



                 BT ANNOUNCES NETWORK TRANSFORMATION TIMETABLE


  • Mass migration of customers from PSTN to IP based network to begin in 2006


  • Majority of customers' PSTN services on IP network by 2008


  • Trials of voice services on IP network and fibre to the premises announced

  • Increase in customer choice, control and service flexibility


BT today set out the timetable for the transformation of its UK networks. It
announced a five year programme to underpin the next generation of converged,
multimedia communications services. Mass migration of customers onto the new
network will begin in 2006 with the majority due to be completed in 2008.

BT's 21st century network (21CN) programme will create the enabling
infrastructure for the growth of BT and the UK telecommunications industry. It
is set to completely transform BT's networks, delivering increased customer
choice and control.

BT Wholesale chief executive Paul Reynolds said: "The 21CN programme will
deliver our vision of a converged, multimedia world where our customers can
access any communications service from any device, anywhere - and at broadband
speed.

"21CN will drive a radical simplification of BT's operations including
significantly lower costs and the capability to launch new services to market
faster than we can today. It will empower all our customers, giving them
control, choice and flexibility like never before."

The major elements of BT Group's overall strategy including ICT, mobility,
broadband, netcentricity and portfolio transformation are underpinned by the
21CN initiative.

Over the next five years 21CN will transform BT's business and its cost base,
removing duplication across the current multiple service specific networks and
creating a single multi-service network. Total capital spend on the 21CN
transformation will be within the previously announced BT capital expenditure
envelope of £3 billion per annum. From this year about two thirds of the annual
spend is directed to 21CN and other new and intermediate technologies and this
proportion is expected to increase. That investment in future infrastructure
will enable BT to deliver growing cash savings which are expected to amount to
£1 billion per annum by 2008/9.

An early deliverable of this transformation is the first phase of the migration
of services from the existing UK public switched telephone network (PSTN) to a
multi-service internet protocol (IP) based network which will carry both voice
and data services.* As a precursor to large scale migration of voice and other
PSTN based services from 2006, the first stage will involve the bypass of the
core PSTN network link between two major network nodes at Cambridge and
Woolwich. An extension is planned later to Faraday exchange in London.

An initial 1,000 customers served by local exchanges connected to Cambridge and
Woolwich will trial end to end voice and data services over the core IP network
link.

Paul Reynolds said: "Today the 21CN vision starts to become reality. This is
among the most important and ambitious infrastructure transformation programmes
in communications anywhere in the world and will put Britain at the forefront of
communications innovation.

"But 21CN is more than a next generation network. It's about providing and
supporting the next generation of services for all our customers; it's about
supporting and generating revenues and profits for shareholders, and it's about
supporting and delivering for the communications industry and the economy as a
whole."

In addition to making broadband available from exchanges serving

99.6 per cent of people by summer 2005, BT is aiming to have broadband dialtone
available to most of its customers in the UK in five years time. Customers will
be in control of their own services and will immediately be able to switch the
line to broadband use themselves without requiring physical work at the
exchange, whatever device they use to access the broadband network.

BT also today announced trials to test the technical and commercial issues
associated with the possible deployment of fibre optic cable in the UK local
access network. These limited trials are looking particularly at the economics
associated with providing services to new build and greenfield site
developments.*

BT is today formally launching the procurement process to select long term
suppliers, which may not necessarily be those involved in the trials and early
implementation stages. Contracts for the main rollout phases will be awarded
following a formal competitive tendering process which will be concluded by the
end of 2004.

Note to editors:

* For details of the trial migration of voice services onto an IP based network
and the fibre to the premises trial see BT news release NR0445 issued today June
9, 2004.

Photographs of Paul Reynolds, BT Wholesale chief executive, and 21st Century
Networks related images are available via BT's picture library hosted by
Vismedia at www.vismedia.co.uk

A live webcast of BT's press conference will be available at 10.30am British
Summer Time June 9, 2004, at www.btplc.com/presentation.

                 ---------------------------------------------


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
  news releases can be accessed at our web site: http://www.bt.com/newscentre



Forward-looking statements - caution advised

Certain statements in this press release are forward-looking and are made in
reliance on the safe harbour provisions of the US Private Securities Litigation
Reform Act of 1995. These statements include, without limitation, those
concerning: transformation of BT's networks and cost base; benefits to customers
of the 21CN programme; anticipated capital spend on 21CN transformation and
expected cash savings; timescales for delivery of 21CN; and delivery of
instantly available broadband.

Although BT believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations will
prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.

Factors that could cause differences between actual results and those implied by
the forward-looking statements include, but are not limited to: material adverse
changes in economic and financial markets conditions in the markets served by
BT; future regulatory actions and conditions in BT's operating areas;
technological innovations; developments in the convergence of technologies; and
the anticipated benefits and advantages of new technologies, products and
services, including broadband, not being realised. BT undertakes no obligation
to update any forward-looking statements, whether as a result of new
information, future events or otherwise.






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 overseas, particularly in
Europe, but also in the Americas and the Asia Pacific region. British
Telecommunications plc, a wholly-owned subsidiary of BT Group plc, 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 2004, BT's turnover was £18,519million with profit
before goodwill amortisation, exceptional items and taxation of £2,016million.

For more information, visit www.bt.com






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