Transcript Slide 1

UK’s DSL broadband market is growing rapidly
% DSL Household Penetration
Percentage increase in DSL lines in Q2 2003
29%
15%
10%
8%
13%
7%
France Germany
6%
Italy
Spain
4%
UK
Source: Informa
UK DSL Retail Market
1,367k
adjusted for maturity of the respective markets
12%
34%
2%
Broadband Net Additions
0%
Q1
374k
Q2
Q3
France
36%
52%
Q4
Q5
Q6
Germany
Q7
Q8
Italy
Q9
Q10
Spain
Q11
Q12
UK
Source: Informa
64%
48%
“BT now has over 100
Q3 03
BT Retail
Other SPs
supplying broadband over phone lines and has around
Q3 03
DSL
service providers
Cable
Source: Informa
half of the UK's broadband market”
– BBC, Monday 9 June 2003
UK broadband coverage is strong
100%
UK coverage levels today comparable
to France with goals set to achieve
100% coverage by 2005
80%
60%
40%
20%
0%
France Germany
Italy
Spain
Today we have 1,708 active exchanges covering 80%
 466 further exchanges are currently in build
 Another 199 should reach trigger levels by
end of March 2004
 Pushing the boundary towards 85%
Trigger levels for a further 2,300
exchanges were announced
this week covering an additional
two million homes
UK
BT creating positives with broadband
UK Plc Wins
BT wins
 Innovative supply & demand
 Improved customer satisfaction
growth models
 EU best practice and positioning
 Demand led approach to
sustainable supply current non
commercial areas
Community wins
 Access to latest technology
Local stakeholders win
 Fast, constant, quality
service
 Tailored services
 Market growth for
local companies
Creating a
broadband society





Sustainable investment
New services
Increased profile for Region
Partnership body for other activity
Innovation
 Community ICT literate
Content and service providers win
Other telecom companies win
 Better business opportunities
 Advertising helps everyone
 Helps smaller content providers
reach a broader customer base
 More exchanges enabled
Next phase of broadband adoption
Current broadband pricing…



does not vary significantly across
Europe
suits the ‘net-savvy’, early adopters
who subscribe to a 2nd phone line and
dial-up access for circa £27/month
however needs to be value-for-money
for all including the less netcentric and
the 45% non-PCs households
Broadband DSL pricing across Europe
Average price of key broadband ISPs €/month
44.5
29.9
France
43.1
35.9
Germany
33.8
Italy
Spain
UK
Source: BT analysis & Forrester Research , Aug 03
Future pricing options...
Either, lower the price - but current economics will not support this or, increase the consumer value of broadband by delivering a compelling set of
value-added services around the Home of Possibilities
Creating a home eco-system…
Enabling compelling
content
and applications
Content
Music, Video, Gaming, Education,
Sports
Business Information
Communications
Email, Instant Messenger,
Click2Call, VoIP, Call Management,
SMS
Platforms
Payment Engine, Content
Distribution/Management, Rights
Management, Security,
Authentication, Storage, QOS
Enabling the
networked
home/office
Broadband
access
Computing
Broadband enabled PCs
Networking
Intelligent Hubs, WiFi,
Mobile to Fixed
Monitoring
Alarm Monitoring
Digital Entertainment
Streamed Music, Video,
Pictures, Games Consoles
Complete service assurance
Technology is enabling change…
Wireless
 ‘No wire’ solutions emerging
capable of distributing video
Flexible bandwidth
 Technology becoming available to
flex broadband to higher bandwidths
Online micro-payments and
digital rights management
 New payment and rights management solutions
encouraging content owners to publish more
Connectable devices
Compression software
 New codecs require much less
bandwidth to distribute music/video
 Broadband-enables home devices
are becoming ‘plug and play’
BT is leveraging this technology…
“As broadband penetration increases
future potential will depend on services
for consumers of content, Internet,
video, gaming and other services”
Software & Media
Content Providers
Communities
Yankee Group Jan 2003
Entertainment
Digitisation
Business
Encoding
BT Digital
Content Platform
Security
Monetisation
Distribution
Asset
Management
Content
Users
…while working with partners...
Marketing
Service
Products
...and through multiple channels
BT Direct - multi-channel direct retail

Selling BT and third party products
and services

Specialising in catalogue, kiosk and
on-line channels
BT Highstreet

Partnering with the premiere high street specialist retailers
Customers want… Communications
BT Communicator

A new service developed in partnership with
Yahoo! that will manage all home
communications from the PC

v0.1 live incorporating Instant Messenger,
Video Chat

v1.0 April launch incorporating VoIP,
Click2Call, Call Management, SMS, Central
Personal Address Book
BT Videotelephony

Major trials underway to extend BT’s
video telephony

Strong videocam promotions in place
for Xmas

Four-way video chat capability,
telephone transfer to TV video calling,
QOS guarantee and mobile integration
all under development
BT Broadband Traveller

A combination outdoor / indoor WiFi
access offering which uses BT’s
innovative Openzone access
solution with BT’s Home Networking
hub
Customers want… Entertainment (gaming)
Broadband is revolutionising gaming,
enabling console gamers to play opponents
anywhere in the world in real time

In game speech

Down load new games and updates

Discussion forums
BT has partnered with ‘XBox Live’ and
Playstation Network Gaming

Router enables sharing of the broadband connection between
PC and console - simultaneous surfing and gaming

Broadband element is £99 for combined router/modem with
£29.99 rental and £30 cash back (till end March ‘04)
Customers want… Entertainment (music)
BT - Philips - House of Frazer

Launch of a major digital music bundle of
home networking and the Philips Streamium
HiFi powered by BT Broadband
BT Digital Media Player

Stream music from broadband
enabled PC to any room in the
house

Winner Best of Innovations
award at the Consumer
Electronics Show in Las Vegas
BT Yahoo! Launchcast Radio

Learns what you like and plays
you the music you like to listen to
Customers want… Education
The BT Learning Centre

A unique online learning service using the
best educational content suppliers and making
available in one place - Channel 4, Granada
Learning, Research Machines

Includes age specific interactive learning
activities, revision tools and research from
nursery to adult, covering the UK national
curriculum
Successful marketing through UK schools

Over 3500 schools are actively promoting BTLC through their schools

Includes age specific interactive learning activities, revision tools and
research from nursery to adult, covering the UK national curriculum
Customers want… Information and Choice
BT Broadband Landing Page
 An exemplar site for Broadband content
 Partnership model which:

highlights the best of broadband
content

stimulates third-party broadband sales
In excess of 3.4m hits in October reviewing over 110 partner sites:

Microsoft MSN 8, Yahoo Plus, BBC, MasterCard, Channel4, Real One, Lastminute,
Fox Kids, Sky, Blockbuster, FT.com, Virgin
Customers want… Personalisation
BT Yahoo! - partnering the leading portal
supplier

The best of two powerful brands

A service that focuses on what each company
does best

A highly integrated customer experience

Great value for money - a cheaper offering
than buying access and Yahoo! Plus
independently
A highly personalised experience

Up to 10 members of the family can easily choose their favourite content to
appear on their homepage

Customisable browser toolbar allows each individual to customise their browser
to best suit their needs
Customers want… Security
BT’s 24 hour Home Monitoring
and Reporting System

Wire free, self-install internet
based monitoring and alerts via
text message, e-mail and phone
BT NetBackup

Automated PC backup, two service
levels, simple monthly pricing
BT NetProtect

Anti-Virus, intrusion software,
constantly updated
Future broadband market challenges?
Value for money

Current tariffs do not reflect each customer’s true
cost of supply and therefore the entry price is kept
artificially high
Higher speeds

Broadband offers a 512kb fixed bandwidth and
therefore is not capable of delivering good quality
video content
Broadcast content

The economics of broadcasted content over broadband
is substantially worst than analogue, digital terrestrial
and digital satellite distribution
Future broadband solutions?
Tiered pricing

Establish a tiered ‘pay-as-you-use’ pricing model
which fairly charges each customer for the bandwidth
used (Telenor model)
Flexible bandwidth

Flex upwards the bandwidth to the home for the
period of time that high bandwidth content is being
delivered
Complement broadcast

Enhance existing broadcasted channels with
interactive and personalised content integrated
in to existing programming
Broadband at the Heart of the Home
BT has the vision, the resource and
the commitment to revolutionise the
home through broadband
BT leads the market in
taking broadband
beyond just access
The Home of Possibilities
is at the heart of BT’s
future
New developments in technology
are beginning to sign-post the extent
of this opportunity
The next three years will see
the opportunity become a
reality