1. Gary Taylor Director of Mobility & Convergence 25 November 2004 The Future of Telephony Welcome to the world of Fixed Mobile Convergence

2. Reinventing home entertainment A true multi media experience which will transform the way we communicate A fusion which allows customers to enjoy the best of both worlds Enabling businesses to deliver the most appropriate information or communication when and where required Convergence sits at the heart of the future Voice and Data Fixed and Mobile Comms and IT Media and Network

3. Reinventing home entertainment A true multi media experience which will transform the way we communicate A fusion which allows customers to enjoy the best of both worlds Enabling businesses to deliver the most appropriate information or communication when and where required Convergence sits at the heart of the future Voice and Data Fixed and Mobile Comms and IT Media and Network

4. Breaking the shackles of PSTN PSTN Infrastructure Voice Fixed Devices The Voice Application is embedded in the Infrastructure IP Infrastructure Flexible Devices Video Voice Messaging Voice as an Application Enhanced Flexibility Releasing Innovation

5. VoIP innovation….. we have been first to market for voice over IP ‘BT is broadening its use of VoIP and going with the trend of traffic migrating away from the legacy of the public switched telephone network in favour of mobile services and Internet protocols Other operators should closely manage their plans for VoIP’ Gartner Dec 2003 Emulating normal telephony BT Broadband Voice BT Broadband Voice launched in December adds immediate value to Broadband Demonstrating BT as a technology leader - first to market gaining experience Complements BT Together

6. 70% of IPT sales now include LAN sales BT has doubled its LAN market share Revenue growth from £80m to £154m New ways to communicate with BT Communicator New incremental revenues from customers using BT to communicate with voice and text IP Telephony Unified Communications IP Contact Centres Unified Conferencing Enterprise Adoption of IP Applications Access to new integrated communication markets delivering new market opportunities worth over £300m to BT Source: Forrester, Giga Research We see VoIP as an opportunity… 0% 10% 20% 30% 40% 50% 60% 70% 80% 20032004200520062007

7. Reinventing home entertainment A true multi media experience which will transform the way we communicate A fusion which allows customers to enjoy the best of both worlds Enabling businesses to deliver the most appropriate information or communication when and where required Convergence sits at the heart of the future Voice and Data Fixed and Mobile Comms and IT Media and Network

8. Reinventing home entertainment A true multi media experience which will transform the way we communicate A fusion which allows customers to enjoy the best of both worlds Enabling businesses to deliver the most appropriate information or communication when and where required Convergence sits at the heart of the future Voice and Data Fixed and Mobile Comms and IT Media and Network

9. ‘Today our lives are complicated by multiple networks and devices resulting in duplicate applications and information and numerous service contracts and bills’ A fragmented world of services and devices

10. Each world brings its benefits Quality & Reliability Cost Bandwidth Convenience Personalisation Mobility

11. In the future, we will be able to access all our applications and information on our choice of device, utilising the best network available with one customer experience A joined up world

12. Delivering the vision Five key building blocks 1. Building a mobility customer base

13. Building a mobility customer base BT Mobile has in excess of 300,000 business and consumer connections BT was the first to launch a public wireless broadband service - BT Openzone - now with in excess of 7,000 hotspots in prime UK locations and a global footprint through the Wireless Broadband Alliance of some 20,000 hotspots BT Global Services offers managed mobile, managed BlackBerry, secure remote access, managed applications and sales/field force automation BT is fast becoming the UK leader in secure, network centric, machine-to-machine (M2M) applications

14. Delivering the vision Five key building blocks 1. Building a mobility customer base 2. Developing and delivering compelling convergence propositions

15. Convergence Propositions Case Study - Project Bluephone Combining the value of Broadband with mobile services –Enhancing the value of your broadband connection –Increasing data speeds to your mobile handset (phase 2) Protecting the customer from technology Devices move seamlessly across networks Reduced price calls when in the home or the office Mobile handset-centric Mobile feature set on the fixed network Service to the 11% of UK homes with no (or poor) coverage Initially using class 1 Bluetooth (in-building range of 20-25 metres)

16. HLR MSC broadband How it works UMA technology: Access Point in the home acts as a cell site and connects to GSM network via broadband line Calls and data sessions are placed and received exactly as they are today on GSM networks Supports any wireless bearer e.g. Bluetooth, Wi-Fi Enables in-call handover between Access Points and GSM cells 3G

17. Delivering the vision Five key building blocks 1. Building a mobility customer base 2. Developing and delivering compelling convergence propositions 3. Developing and delivering ‘one’ converged customer experience

18. One Converged Customer Experience One number One bill One point of contact One directory One voicemail Convergence - ‘Now its coming, nothing will ever be the same again’ Ovum 20th May 2004

19. Delivering the vision Five key building blocks 1. Building a mobility customer base 2. Developing and delivering compelling convergence propositions 3. Developing and delivering ‘one’ converged customer experience 4.Driving industry investment and innovation - including the development of next generation devices

20. Industry Investment & Innovation Fixed Mobile Convergence Alliance (FMCA)  Chaired by BT  Supporting BT’s strategic aims for a wide device market  2 primary goals  accelerate telco entry into the Convergence market by sharing trial results and technology selection decisions  drive handset vendor support by issuing product requirements for the key Convergence technologies  Founding members (BT,Korea Telecom, Swisscom, NTT Com, Brasil Telecom Rogers Wireless) represent 145 million customers  New members announced in October 2004 - AT&T Corp (US), Bezeq (Israel), Cegetel (France), KPN (Netherlands)

21. Delivering the vision Five key building blocks 1. Building a mobility customer base 2. Developing and delivering compelling convergence propositions 3. Developing and delivering ‘one’ converged customer experience 4.Driving industry investment and innovation - including the development of next generation devices 5.Building a network and platforms with seamless converged capability

22. Reinventing home entertainment A true multi media experience which will transform the way we communicate A fusion which allows customers to enjoy the best of both worlds Enabling businesses to deliver the most appropriate information or communication when and where required Convergence sits at the heart of the future Voice and Data Fixed and Mobile Comms and IT Media and Network

23. Reinventing home entertainment A true multi media experience which will transform the way we communicate A fusion which allows customers to enjoy the best of both worlds Enabling businesses to deliver the most appropriate information or communication when and where required Convergence sits at the heart of the future Voice and Data Fixed and Mobile Comms and IT Media and Network

24. Moving To SIP SIP and UMA are complementary – leadership in UMA is important to capture SIP leadership Wi-Fi VoIP Double play - Convergence to the mobile and wireless for the laptop Leverages BT’s investment in its fixed network – high speed and low cost – brings fixed network economies to bear Integrated with BT’s 21CN

25. 21C - A Platform for Mobility & Convergence Away from Home or Office At Home Around the Office At Hot Spot Mobile Network GSM/GPRS & 3G with Vodafone Wireless Access WiFi Residential Broadband Access DSL & Cable Enterprise Networks LAN & WiFi PSTN BT 21C Network 21C SIP/IMS Infrastructure for VoIP, Video, Messaging & Broadband Data Services Converged IM/SMS/MMS Interfaces to Vodafone Network Legacy Interfaces to PSTN Converged Voicemail

26. Presence Information Personal Profile Manager Integrated Communications Vision Unified Directory Voice Application Many Devices Supported Single Secure sign-on (One Identity) Collaboration Messaging IM & email Integrated with leading applications The future of integrated communications

27. Dramatic Change BT Transformation Customer Solutions not Products Converged Network Universal Communications Company Customer Transformation Personalised Customer Service Converged Mobile Devices Single Set of Applications and Information Industry Transformation SP not just Fixed or Mobile Operators A Converged Communications Market New partnerships