BT’s 21st century network Roger Clark Senior Consultant, Device Strategy Service strategy & innovation BT Group CTO

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, expected cost reductions and growing cash savings from 21CN; benefits to customers and industry of the 21CN programme, and convergence; anticipated investment in 21CN; and timescales for implementation of 21CN. 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; the anticipated benefits and advantages of new technologies, products and services, including broadband, not being realised; and general financial market conditions affecting BT's performance. BT undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Here’s the legal bit - these slides reflect current thinking which may change.

Delivering BT’s 21st century network The strategic overview

BT’s strategy Traditional focus Long-term partnership with our customers Improved service Creative marketing Price innovation Cost leadership New wave focus Broadband Mobility ICT Global solutions 21CN transformation

21CN - three key objectives Empower the customer with control, choice and flexibility like never before including communications from anywhere to any device Offer exciting new services for customers faster than before Reduce costs and grow cash cost savings - expected to amount to £1 billion per annum by 2008/9 Customer experience and empowerment Speed to market Cost transformation

21CN - our current network PSTN PSTN Leased lines Copper KStream DSL ATM PDH access IP SDH VC-12 Fibre SDH access PDH access SDH VC-4 MSH -SDH PDH End User ~5.5k sites ~2k sites ~1k sites ~300 sites ~100 sites ~15 sites

21CN - our simplified network Multi-service access Converged core Class 5 Call Server Copper WWW DSL IP-MPLS-WDM Fibre & Copper Agg Box Content ISP Wireless End User ~5.5k sites ~100 sites Current thinking. No implementation assurances

Mobility is at the heart of 21CN Guaranteed QOS IMS+ Intelligence IP NETWORK IP Multimedia Subsystem (Common intelligence for fixed and mobile) Cellular Operator BT PSTN Service Provider Layer Service Provider Layer Telephony VoIP 3GPP Intelligence Layer - IMS Fixed Access BB ‘Peer relationship’ Circuit/Packet Core Net Radio Network WiFi Home / Office IP Core Net WLAN 21 CN Converged IP Infrastructure WiFi/GSM/3G VoIP Phones

BT’s 21st century network The changing landscape

Customer centric convergence Voice and Data Fixed and Mobile A seamless, intuitive converged service that runs across multiple devices Seamless services that are independent of access method Comms and IT Media and Network Service management that runs across both domains with end to end performance guarantees Device independent media services available over any network

Presentation to customer 21C Vision “A world where all our customers feel empowered and are treated as individuals” Flexible Mass customisation Infrastructure Intelligence & Functionality Easy to use Trusted Presentation to customer Personalised

A new customer experience Service Convergence Customer experience Revenue increase Customer pull Customer Benefits Network Convergence Cost reduction Operator push

It’s not about the PC anymore! Broadband modem PC Internet

This is complex to manage ! It’s about services Entertainment Security Residential Gateway PC This is complex to manage ! Internet Gaming Personal content Voice services

And it’s not just about the home… It’s beyond the home - seamlessly And it’s not just about the home… Internet Residential Gateway PC Voice services Security Entertainment Personal content Gaming Home To do this requires common “capabilities” that are network independent Hotel/Hotspot Office

21CN – common capabilities Applying the development approach from IT software industry to telecoms Creating series of reusable, common capabilities Increasing automation and accelerating time to market for new services Contribute to cost reduction For discussion purposes. No implementation assurances

Common network intelligence layer Application Layer – (Web Services – Parlay etc) Intelligence Layer Authentication Monitor Control Accounting Intelligence Layer Presence Authorisation Common Data Model – LDAP interface Flexible user interface Web, DTMF,Voice Mediation and Billing Interface Protocols – INAP, MGCP, SNMP, CORBA, GMPLS, etc Transmission Layer PSTN & Data Internet 3rd Party New Gen Networks Backbone Networks PSTN Database contains Tel Numbers E164 (single, fixed, mobile, personal) URLs, Subscribed services, Location, Presence etc

A Joined up World

21st century network will empower customers with control, choice and flexibility like never before

great data or video voice messages, any device, at any time? Wouldn’t it be great if… …you could access voice messages, data or video Read slide copy any device, at any time? on

great Wouldn’t it be if… home phone, PC, mobile PDA? …you could share your personal contact directory across your home phone, Read slide copy PC, mobile & PDA?

Already these services are becoming a reality…

unimagined not the whole story… BT’s 21st century network But that’s not the whole story… …the power of BT’s 21st century network will support these and other services as yet unimagined

21CN - key points driving a radical simplification BT’s enabling infrastructure for growth a world class customer experience greater control, choice and flexibility today’s most complete, exciting and ambitious business transformation industry consultation and supplier implementation is underway it applies to our international business too

Thank you