Broadband Breakthrough

BT Group PLC
03 April 2003



NR0313                                                             April 3, 2003

                          BT IN BROADBAND BREAKTHROUGH




  • ADSL broadband to be brought within reach of 90 per cent of UK homes
  • Wholesale prices to be cut
  • Support for more public sector partnerships to accelerate demand




BT today announced great news for Broadband Britain with radical plans to bring
mass market broadband within reach of 90 per cent of UK homes. These plans are
based on technological breakthroughs and cost saving initiatives. The company
also revealed that wholesale prices will be cut from May 1.

In addition, BT said that public sector demand could be aligned to help
accelerate the roll out of broadband. This will help local campaign groups in
their efforts to bring broadband to their communities.

Providing a major update on the company's broadband strategy, BT chief executive
Ben Verwaayen said that BT was well on track to hit its target of one million
ADSL connections by the summer, having recently passed the 800,000 mark. He said
the speed of this progress is generating economies of scale that will help BT
continue to reduce costs and progress beyond the one million figure.

Technological Breakthroughs

He also announced that BT had made a series of technological breakthroughs that
would, for the first time, bring ADSL within potential reach of 90 per cent of
UK homes and small businesses. This represents a major advance from the current
enabled footprint of 67 per cent.

The new initiatives mean that about 600 additional exchanges can now have
trigger levels set taking potential coverage to 90 per cent. These represent the
level of demand needed to make it commercially sensible for BT to take the risk
of upgrading an exchange with ADSL. Within a week BT will announce trigger
levels for the next 200 or so exchanges that, if enabled together with those
exchanges that have existing trigger levels, would take coverage up to 85 per
cent. The remainder will be announced by early summer.

Central to the setting of the new triggers is a technological development that
enables exchanges to be linked together so that the costs of connecting them to
the core BT network are reduced. This is one of several developments that will
lead to cost savings and help BT set the new trigger levels.

This is in addition to BT extending the reach of ADSL broadband up to 6kms from
the exchange. This separate development means that up to 98 per cent of people
connected to an ADSL enabled exchange will be able to access the technology.
This means close to 600,000 additional people will be able to access broadband
from June.

BT chief executive Ben Verwaayen said: "Today's announcements mark a major
milestone in the creation of Broadband Britain. BT has managed to overcome the
challenge of bringing affordable broadband within reach of 90 per cent of UK
homes and I am sure the news will be welcomed across the UK."

Prices slashed

He also revealed that BT would boost the market even further by cutting the
wholesale price of broadband from May 1. This is possible due to factors
including reduced cost of equipment and network efficiencies. The monthly fee
for the wholesale consumer product will be reduced by up to £2 and there will be
even larger savings on BT's wholesale products that are aimed at service
providers who serve small businesses. Prices for the 500kbs, 1Mbs and 2Mbs
products will be slashed by over 50 per cent.

Mr Verwaayen said: "These price cuts will benefit everyone from service
providers to consumers and businesses and will ensure that the UK continues to
have some of the lowest prices in Europe."

Public sector action

BT said that the purchasing power of the public sector could drive demand even
faster. This would reinforce BT's efforts to accelerate take up and roll out
within the 90 per cent footprint and help get beyond it.

In particular, BT said that government plans to enable schools and GP's
surgeries with broadband would benefit the whole community if implemented in a
way that helps reduce trigger levels in non-enabled exchanges. This would speed
up the roll out of ADSL and bring the benefits of broadband to a far wider
audience than just the public sector. It would also be in alignment with the
government's over-riding objective of having the most extensive and competitive
mass market for broadband in the G7.

Mr Verwaayen added: "The challenge ahead is to ensure that exchanges hit their
trigger levels as quickly as possible. The registration scheme has been a
runaway success with more than 300,000 expressions of interest and it will be
boosted significantly as the government starts to bring broadband to every
school and GP's surgery."

BT also highlighted the success of public private partnerships. Several of these
have been developed - notably in Cornwall and Scotland - and the impact has
shown how successful they can be in driving take-up. BT hopes that further
partnerships can be replicated widely.

Other technologies

One scheme where such support could work is BT's Exchange Activate programme.
This innovative scheme - to bring broadband to smaller exchanges - will be
launched this summer following successful trials. It will be useful in extending
availability to the UK's smallest communities.

BT also stressed that, as well as launching Exchange Activate, the company was
working hard to develop other solutions to bring mass market broadband to every
part of the UK. Options being explored include satellite, mesh radio and other
forms of wireless broadband.

Mr Verwaayen concluded by saying: "2003 could be a seminal year in the drive to
achieve Broadband Britain but only if the whole industry pulls together with the
support of the government. Such an approach would benefit consumers, businesses
and the UK itself."

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

Notes To Editors

BT Wholesale has notified several price changes that will come into effect from
May 1, 2003. Among these are reductions in the monthly rental fees for its
IPStream Home 500 and IPStream Office range of products (listed below). There
will also be a discount scheme. Connection charges for IPStream end users will
remain unchanged.
Product                      Current monthly fee                 New monthly fee
IPStream Home 500            £14.75                              £13.00
IPStream Office 500          £40                                 £18
IPStream Office 1000         £60                                 £28
IPStream Office 2000         £80                                 £38



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