Delivering BT’s 21st century network

Welcome

Presentations byPaul ReynoldsCEO, BT Wholesale

Matt BrossChief Technology Officer,BT Group

Delivering BT’s 21st century network

Paul ReynoldsCEOBT Wholesale

Forward-looking statements - caution advised

• Certain statements in this presentation 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 dialtone

• 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

Delivering BT’s 21st century network

Paul ReynoldsCEOBT Wholesale

BT’s strategy is on track

Traditional focus

New wave focus

21CNtransformation

Long-term partnershipwith our customers

– Improved service– Aggressive & creative

marketing– Price innovation– Reduce costs

– Broadband– Mobility– ICT– Global Solutions

A world where everyone has access to modern communications

0

20

40

60

80

100

April 200026%

July 200266%

November 200380%

May 200490%

Summer 200599.6%

Cov

erag

e %

Note:Percentage of homes and businesses connected to a broadband enabled exchange

Broadband availability in the UK

OECD report

Source: OECD May 2004

DSL Availability in G7

2001 2002 2003 2004 2005

UK

Canada

France

Germany

Italy

Japan

USA

60

69

66

70

67.5

73.5

50

64

70

71

80

70

80

68

85

75.4

79

85

80

90

75

95

-

90

90

-

90

-

99

-

95

-

-

-

-

This is good … but it’s not enough

The changing landscape

• Convergence is gaining momentum

• Convergence needs an underlying infrastructureto deliver and support it

• Customers want more choice, flexibility and control

• Simplicity is key

21CN - three key points

Speed to market

Customerexperience and empowerment

Costtransformation

• We will empower the customer with control, choice and flexibility like never before and offer them communications from anywhere to any device

• We’ll make exciting new services available for customers faster than has been possible before

• We’re reducing our costs – we’ll make growing cash cost savings which are expected to amount to £1 billion per annum by 2008/9

21CN – what it means for BT

• Moving from narrowband to broadband

• Moving from selling capacity to selling capability

• Moving from a product focus to customer focus

21CN - the radical strategy

• Broadband everywhere…

• Replacing the PSTN

• PSTN transformation trial

• A world first for a telecoms company

Broadband dialtone

• By 2009, broadband dialtone will be instantly available to most BT customers in the UK

• Customers can switch lines to broadband use themselves

• No physical work is required at the exchange

21CN – it’s big

•If that sounds big …it’s because it is

• Bigger annual investment than is spent on UK’s motorways and trunk roads

21CN - aligning our investments

MSANProject

Bluephone

Flexible Bandwidth

BTRich Media

BT Communicator

Wholesale Web Call Connect

PSTN/Voice trial

Fibre trialConverged core

EDCService creation

Today Future

21CN - network architecture

First mover advantages

• Supplier product alignment

• Technology start-up funding

• Shared learning and risk management

• Low costs

• Best in class whole life costs

21CN - a new partnership approach

• With all our customers

• With the global vendor community in IT and traditional telecoms

• This is unique in our industry

• Focus on whole life costs

IP

ATM

PSTN

DSL

KStream

PSTN DPCN

PDH

Fibre

Copper

DWSS

ASDH

EndUser

~5knodes

~2knodes

~400nodes

~100nodes

~15nodes

MSH -SDH

~1knodes

Mesh -SDH

Inter-node transmission provided by

SDH/PDH platforms

CWSS

21CN - our current network

IP-MPLS-WDM

DSL

Fibre &Copper

Copper

Agg Box

EndUser

~5knodes

~100nodes

Class 5 Call Server

Content

WWW

ISP

21CN - our simplified networkPSTN Migration Converged Core

21CN - quality

• 21CN services delivered at the same or better quality as we do today

• 21CN will raise the quality threshold traditionally associated with IP to PSTN standards and better

• We are designing this level of quality into 21CN

21CN - systems

• Concurrent systems transformation

• Designed to enhance the customer experience

• Empowering the customer with greater control

21CN - common capability building blocks

21CN - key milestones

2004

2005

2006

2007

2008

Broadband available to 99.6%Strategic vendors announcedBroadband growth on MSAN/combo cardsFirst new service launches based on re-usable capabilities

Mass PSTN migration begins17 new product launches/enhancements based on re-usable capabilitiesNew operations & service management capability in place

Broadband dialtoneavailable tomost customers

Large scale non PSTN service migration begins

2009

Mass PSTN migration reaches more than 50% of customers

PSTN transformation trialDeep fibre trialConverged networkService creationExperience development centre

Key messages

• We’re making broadband available everywhere

• But convergence is creating new opportunities and new customer expectations

• 21CN is a radical transformation for BT

• Narrowband to broadband; capacity to capabilities; product to customer focus

• Announcing important trials on PSTN and fibre today

• Timetable for large scale roll-out outlined

• You’ll hear much more over time

Implementing BT’s21st century network

Matt BrossChief Technology OfficerBT Group

21CN – activities 2004

PSTN trial

Servicecreation

Experience development centre

Converged network

Deep fibre trial

PSTN trial

What and where?• Seamless bypass of core PSTN

network links between three major network nodes (Cambridge, Woolwich London and Faraday London )

• Voice calls between enabled nodes diverted to IP/MPLS network

• End to end calls between enabled customers carried exclusively over IP

• Installation of new MSAN equipment at 18 exchanges in London, Kent and East Anglia

• Equipment includes softswitch, MSANs, media servers and media gateway cards

PSTN trial

When?

• Next generation voice services to first 1,000 customers ‘live’by end January 2005

• Further 3,000 customers ‘live’ by June 2005

• Major roll-out to all regions begins 2006

• Broadband dialtone to most customers by 2009

PSTN trial

Why?• Allows us to monitor transition and robustness pre

large scale migration of all PSTN services to 21CN from 2006

• Helps test quality of services is as good as, or better than, PSTN

• First steps towards 21CN

Deep fibre trial

What and where?• Trials of deep fibre in access

network – to the cabinet and to the premises

• Designed to test the investment, operational, technology and business case

• Providing telephone and broadband via fibre to 1,500 homes

• Trials in Suffolk, Milton Keynes and London

Fibre

Copper

PCP

Deep fibre trialWhen?• First trialists will have fibre lines

installed and working by October 2004

• Trials to run until September 2005

Exchanges

• Kesgrave exchange, Martlesham Heath

• Bradwell Abbey exchange, Milton Keynes

• Albert Dock exchange, London Docklands

Why?

Converged network

• Reducing complexity of our infrastructure

• Eliminating 100,000 network components and significant cost

• Establishing a single platform that is multi-service and future proof on IP

• Optimised for reliability and performance

• Closely aligned to PSTN transformation

• Phased roll-out begins this year

Service creation framework

• Applying the development approach from IT software industry to telecoms

• Creating series of reusable, common capabilities

• First 9 components created 2004/5

• 17 new products or enhancements based on these components to be launched 2005/6

• Increase automation and accelerate time to market for new services

• Help contribute to cost reduction

Experience development centre

• An environment where operations, portfolio, systems and networks are brought together

• Prototype new services, platforms and processes

• Increase speed to market

• Drives the delivery of the end to end customer experience

21CN - key points

• 21CN is the enabling infrastructure for growth at BT and for its customers

• The most ambitious business transformation programme in communications worldwide

• Represents a major investment by BT

• Will put UK at the forefront of communications innovation

• We are delivering now

• Large scale vendor engagement starts today

&Q AQuestions can only be takenfrom the BT Auditorium

Delivering BT’s 21st century network

Delivering BT’s 21st century network

Thank you