21st Century Network Trials

BT Group PLC
09 June 2004



NR0445                                                              June 9, 2004



       BT TO SWITCH VOICE CALLS TO IP AS 21ST CENTURY NETWORK TAKES SHAPE

  First 1,000 customers to trial high quality voice services on new IP network
                                      link

        BT to trial limited wider use of optical fibre in access network



BT's transformation of its network to deliver the next generation of
communications services took a step forward today with the announcement of a
pilot for the switch-over of voice calls to an end to end IP (Internet Protocol)
based network.

BT also announced trials of niche deployments of fibre to the premises,
aimed at testing the technical and commercial issues involved.

BT Wholesale chief executive Paul Reynolds said: "We've been talking about our
vision for our 21st century network and today marks the start of the transition
from planning stage to physical implementation.

"The 21CN programme will deliver today's services at better cost by removing
duplication in our networks and underpin the delivery of services customers will
want in the future. For customers, the end result will be a complete experience
- one based on convenience and ease of use of all communications services
including mobility, video, data services and voice."

As a precursor to large scale migration of voice and other PSTN based services
from 2006, the first stage in the migration pilot 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.

From October 2004, BT will divert voice calls between these network nodes to the
21CN specific IP network. Calls will be carried using IP packet technology
rather than the circuit switched technology used on PSTN. The switch-over will
be seamless from the customer's perspective and service quality will be the same
or better than on PSTN.

The next stage of this pilot involves the installation of new equipment at 18
exchanges in South East London, Kent and East Anglia - which are connected to
the network nodes in Cambridge and Woolwich. This equipment, known as multi
service access nodes (MSANs), will carry voice and data services onto the core
IP based network, initially for 1,000 customers by January 2005.

Paul Reynolds added: "We want to be absolutely clear that using IP technology in
our network for our premium quality voice services is a gulf apart from the new
budget voice over the internet services being launched almost daily by a wide
range of providers.

"We believe we can provide these services over IP at the same or better than the
high standards of quality and reliability people expect from the PSTN today.
These calls are not going over the internet. They will be carried on our
dedicated high capacity IP networks which also carry data and broadband
services.

"Adopting IP as the common transport method is both cost efficient and
facilitates technology, systems, product and service convergence. BT's vision is
that voice will be one of many applications run over an IP network in our 21st
century network world."





BT today also announced 21CN programme fibre to the premises trials at
Martlesham Heath, Suffolk; at Kents Hill, the Bolbeck Park and Walnut Tree
developments in Milton Keynes; and at the Waterfront Studios business centre, at
Silvertown in London's Docklands.

The trials will provide telephone and broadband services over fibre for up to
1,500 homes and businesses. The first trialists will have their fibre lines
installed and working in October 2004 and the trial will run until September
2005.

Paul Reynolds said: "As part of our 21CN programme, BT is looking at the
potential that fibre in the access network can deliver for our customers and the
investment and operational requirements that go with it. If the commercial case
is proved, we could begin to consider the role that fibre may have further out
in the network in the future.

"We expect the real benefits of this trial to be in informing our thinking on
the relative costs and benefits of deploying fibre, rather than copper, to homes
and businesses in green-field sites or new-build developments."

BT's 21CN programme aims to migrate the company's existing multiple, service
specific networks to a single converged multi-service IP based network. It
includes work towards increasing the bandwidth of services provided over the
copper access network as well as the trials of fibre deployment.

Paul Reynolds added: "At this stage we don't envisage a widespread
deployment of fibre to the premises or the cabinet in the near or medium term.
While we believe the use of fibre can help deliver better operating costs in
terms of maintenance, we need to balance this against the cost of installation
and systems developments. These trials will help to shape our thinking and help
us make strategic investment decisions."

Note to editors:

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

PSTN to IP transformation trial

The initial customers to use IP based networks for end-to-end services
previously carried on the PSTN will largely be BT employees in the exchange
areas below. The deployment to these trialists will provide valuable information
about the technicalities and practicalities of the future large-scale migration
of services. The pilot will be extended to 3,000 customers in June 2005 prior to
large-scale migration in 2006.

Exchange                    County                 RDA
ADDISCOMBE                  Greater London         London
BELSTEAD                    Suffolk                East of England
BEXLEYHEATH                 Greater London         London
BROMLEY                     Greater London         London
CATFORD                     Greater London         London
CHERRY HINTON               Cambridgeshire         East of England
CRAYFORD                    Greater London         London
DARTFORD                    Kent                   South East
ELTHAM                      Greater London         London
FELIXSTOWE                  Suffolk                East of England
GROVE PARK                  Greater London         London
IPSWICH TOWN                Suffolk                East of England
KESGRAVE                    Suffolk                East of England
ORPINGTON                   Greater London         London
SIDCUP                      Greater London         London
WHITTON                     Suffolk                East of England
WOODBRIDGE                  Suffolk                East of England
WOOLWICH                    Greater London         London

BT has selected the following companies to support the PSTN to IP pilot:


        •     Marconi is supplying core network Softswitches and
              multi-service access nodes (MSANs) for voice services.

        •     Alcatel is providing IP ethernet switching equipment.

        •     Siemens is supplying metro media gateways and Juniper core and
              edge routers.

Fibre to the premises trial

The fibre to the premise trial will involve the installation of new fibre optic
cables between a BT exchange and the property of those taking part. Telephone
and broadband services provided will be on a second line in parallel to services
currently provided over the BT network. Optical network units at the exchanges
and customer premises to manage the interface between the fibre and BT and
customer equipment.

ECI is supporting the fibre to the premises trials by supplying optical network
units for use at customer premises and optical line termination equipment at the
exchange.

Supplier contracts

BT is today formally launching the procurement process to select long term
suppliers for 21CN, 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 that will be concluded
by the end of 2004.



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.

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


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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 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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