Ofcom Strategic review

BT Group PLC
23 June 2005


                                                                 June 23rd, 2005


                  BT COMMITS TO SUPPORT NEW ERA OF REGULATION

BT has today announced measures to help support a proposed new regulatory
settlement. This settlement, to be based on guaranteed equality of access to
BT's local network, will deliver regulatory clarity and certainty. This
certainty is essential if companies are to invest and innovate with confidence.

BT has agreed in principle to offer undertakings to Ofcom. The detail of the
proposed undertakings will be published on 30 June 2005. These include a
timetable for key elements of the settlement's implementation. The undertakings,
which are due to be finalised over the next few days - prior to formal
consultation by Ofcom - will ensure every player has confidence in the
settlement and so help usher in a new era of clearly defined regulation. This
will see regulation focused on key areas and rolled back elsewhere.

BT chairman Sir Christopher Bland said today: "This has been a tough journey but
it is important that we have regulation that encourages investment and
innovation. The proposed settlement strikes the right balance and every player
will benefit from the certainty and clarity it provides."

BT chief executive Ben Verwaayen added: "This has been a meticulous process
during which BT has engaged in depth with Ofcom and the industry. We came up
with bold proposals in February that reflected the reality of the market and we
have now committed to a framework to ensure others have confidence in the
settlement.

"It is time to draw a line under twenty years of micro-regulation and to welcome
a new era where regulation is focused where needed and rolled back elsewhere."

BT submitted proposals in February that have now formed the basis of this
proposed settlement. Central to these is the creation of a new business unit
within BT to provide transparent and equal access to the nationwide local
network. This unit - currently known as Access Services - will be highly
regulated and its performance monitored and reported on by an Equality of Access
Board (EAB). This Board will have a majority of independent external members
appointed in consultation with Ofcom. Carl Symon, one of BT's independent
non-executive directors, is the chairman designate of the Board.

A team at BT, under Steve Robertson - chief executive designate of Access
Services - has been developing these proposals through discussions with Ofcom
and industry, and has now provided far more detail on the new unit and how it
would operate.

The unit will have its own headquarters, distinct brand and around 30,000 staff.
It will remain an important part of BT and operate according to clear and agreed
guidelines. Its performance will be monitored against key targets by the EAB.
The unit can be established within months, enabling regulation to be rolled back
rapidly in other areas where appropriate.

BT has also demonstrated its continued commitment to local loop unbundling (LLU)
and wholesale line rental (WLR). In order to further stimulate the LLU market,
BT is to cut the rental price for its fully unbundled local loop product from
£105 per annum to £80 with effect from August 1, 2005. It has also agreed to a
request from Ofcom that the rental prices for IPStream and Datastream (1)- the most
popular wholesale ADSL products currently used by service providers - will not
fall until there are 1.5m unbundled lines in the UK (2).

This move will provide LLU operators and service providers with greater
certainty for their investment plans. BT has provided additional clarity by
confirming the connection charges for the existing range of IPStream and
Datastream ADSL products will fall by £10 from September 1, 2005.

WLR operators are also set to benefit from greater margins for consumer line
rental. BT is to cut the monthly price other operators pay by 50 pence per line
from August 1 2005 before raising the amount its own retail arm charges
(including VAT) by 50 pence later in the financial year. The price other
operators pay for WLR will decrease further next year giving an overall margin
increase of more than 10 per cent(3).

Finally, BT has been working with Ofcom to ensure there is Equivalence of Input
for critical products and services which BT recognises is crucial for industry.
This will ensure all operators have access to the same products, prices and
processes. BT has agreed a series of dates for the implementation of these
changes and incentives will be put in place to ensure BT delivers the changes
against these dates. BT is committed to making Equivalence of Input work.
The structure of BT in Northern Ireland will not be affected.

ENDS

(1)  Rental charges for existing BT IPStream and BT Datastream ADSL end user
access products and rebates provided by the BT IPStream and BT Datastream rebate
schemes. These changes do not apply to SDSL products.

(2) This commitment also covers the rebates that apply to these products. These
rebates will not increase during this period.

(3)  Subject to the completion of the Cost of Capital and Cost of Copper Reviews.



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

Notes to Editors

Access Services (AS) will ringfence most of the longer term regulated parts of
BT within one business unit, allowing regulation to be rolled back in markets
where everyone has an equal opportunity to compete. AS will be committed to
delivering transparent, highly regulated access to BT's local network. The unit
will manage and supply access and backhaul services, including unbundled loop
services, to all BT's wholesale customers. Its management team and its people
will be tasked to deliver efficient management of their business, customer
satisfaction, and equality of access to its services. It will employ around
30,000 employees and have a multi-billion pound annual turnover.

Carl G Symon

Carl Symon was appointed to the BT Board on 14 January 2002. He retired from IBM
in May 2001 after a 32-year career, during which he held senior executive
positions in the USA, Canada, Latin America, Asia and Europe. Carl Symon is
chairman of a number of private companies, a non-executive director of
Rolls-Royce and Rexam

Steve Robertson

Steve Robertson was recently appointed Project Director for BT looking at the
proposal to create a new Access Services Division as part of BT's response to
the Ofcom Telecommunications Strategic Review.

Steve joined BT Wholesale in October 2002 as Managing Director Wholesale
Operations from COLT Telecommunications. At COLT Steve was responsible for the
design, deployment and operation of their pan-European infrastructure as well as
product management and sales for COLT's pan-European business as their Managing
Director.

Before joining COLT, Steve held a number of positions across BT Group including
Director of Data Products and Senior Vice President Network, Systems and
Operations for Concert.

About BT

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 networked IT 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 a comprehensive range of communications and related
    services to more than 20m UK consumers and businesses.
   •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 and private circuits.
   •BT Global Services, providing networked IT services to meet the needs of
    multi-site organisations globally. BT Global Services operates in more than
    130 countries and also offers international carrier services.

In the year ended 31 March 2005, BT Group's turnover was £18,623 million with
profit before goodwill amortisation, exceptional items and taxation of £2,085
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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