Enabling a broadband society

1
Enabling a broadband society

• Pierre Danon
• Member of the BT Boardand CEO, BT Retail

2
The UK broadband market

• Low penetration to date, but growing
• UK's 1 millionth connection at broadband
  speed achieved last month
• Current UK penetration according to OFTEL DSL -
  39, Cable Modem - 61

• Current UK penetration - 4 of all
  households(source Broadband Stakeholders Group)

Italy
Germany
France
EU
OECD
United Kingdom
United States
Canada
Korea
Japan
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Source OECD
2nd Quarter Growth 2002, Net Broadband Additions
per 100 Inhabitants
3
BTs broadband strategy
The growth of broadband volumes
500000
400000
300000
200000
100000
0
Jul-02
Jan-02
Jun-02
Mar-02
Apr-02
Aug-02
Sep-02
Oct-02
Feb-02
May-02
Nov-02
No. of DSL installations

• Putting broadband at the heart of BT
• Ensuring the price is right
• Making broadband available
• Improving customer satisfaction from acceptable
  to exceptional
• Developing awareness through marketing
• Increasing the power of the channels
• Developing broadband services and content
• Building on initial success equipping small
  businesses

4
Our success with small businesses

• Market leader
• BT Openworld connects a UK business to broadband
  every 5 minutes
• Currently 80,000 business broadband customers
• Expected to rise to 150,000 by year end (March
  03)

Moving towards a 15customer penetration
rate On target to be in the leading league in
Europe
5
The challenges - availability

• DSL currently available to
• 66 of UK population
• 73 of internet users

Currently not enough demand to enable every
exchange
The vicious circle
Without enabling more exchanges demand does not
achieve critical mass
6
The challenges pricing
Broadband DSL Pricing Across Europe Incumbent
retail DSL pricing 512-768kbps, flat-rate
access, including email and portal,
installation or activation fees not included
100
80
60
Euros
40
20
0
UK
Italy
Spain
France
Average
Germany
Switzerland
Netherlands
(CSFB Research, June 02)

• Is the current retail price of around 30 the
  right price for DSL?
• This price does not vary significantly around the
  world
• According to Jupiter Media, the cost of DSL
  broadband access will stabilise at 30 in the
  world

7
The challenges - regulation

• Most high penetration broadband markets have
  government assistance either explicitly (Korea)
  or implicitly (Germany)
• UK markets regulated in a pro-competitive way
• Vibrant ISP market place in the UK
• BT Openworld has built a strong ADSL market share
• Regulation has constrained BT Retails active
  involvement in broadband

8
BT Wholesale - growing the whole market

• Stimulating the market and supporting all ISPs
  through marketing, channels, productivity,
  pricing and networks
• 2m marketing awards made across more than 50
  customers - Centrica, Easynet, Albion
• National and regional advertising promoting the
  registration scheme and service providers
• Literature and campaigns to encourage customers
  to choose broadband

9
The opportunity separating access and content
makes sense
10
The Internet model before BT Broadband

• 54 of customers change their homepage

CUSTOMERS
INTERNET
ISP

• Some Internet businesses held back due to control
  of the access relationship by service/content
  providers
• Difficult to deliver a one-stop customer
  service experience

11
After BT Broadband
Integrated customer experience
Why did you get broadband?
To keep the phone line free
64
CONTENT 1
The web was too slow with dial up
58
I wanted an always-on connection
49
CUSTOMER
INTERNET
CONTENT 2
To download games/music/videos
38
To work effectively from home
21
CONTENT 3
To give my children better internet access
16
3
My employer paid for it
(Forrester)
12
Creating a virtuous loop with BT Broadband

• BT wins
• Improved customer satisfaction
• Leader in broadband access
• Cost savings from online versus offline
  transactions

• Consumer wins
• Fast, constant, quality service
• The only product that can really be personalised
  and tailored

• Other telecom companies win
• Advertising helps everyone
• More exchanges enabled

• Content and service
• providers win
• Better business opportunities
• Helps smaller content providers reach a broader
  customer base
• Market presence facilitated by micro-payment

BT Group goal 5 million broadband customers by
2006
13
Creating consumer value improving the customer
experience
3 monthly rolling average results
10
Target under 10
9
9
8
8
Dissatisfied with BT Openworld Consumer
Broadband
7
7
7
7
7
6
0
Jul-02
Jan-02
Feb-02
Mar-02
Apr-02
Jun-02
Sep-02
Oct-02




May-02
Aug-02

• Call answering now consistently above target
• Outstanding faults tail reduced from c. 2500 to
  c. 800 - confident of achieving target of
  500
• Fault clearance times improved from 11 to 3-4
  days - still below acceptable but moving in
  right direction
• Consistently meeting customer call back commitment

14
Creating consumer value improving the customer
experience
0800 800 060 (IVR enquiry, sales, billing,
help, repair)
0800-2200 Sales service and billing (E-contact
24 x 7) 24 x 7 repair
Warm transfer of inbound calls
Newcastle NGCC
www.bt.com/btbroadband (enquiry, sales,
billing, help, repair, call me)
Dedicated broadband field engineering team in
customer services
Technical help desk 24 x 7
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Creating consumer value delivering compelling
content

• Quality content is driving take-up
• - Bandwidth-intensive applications - music,
  video, games
• Partnership required between access and content
  providers and media-owners
• - Drive new service delivery
• - Compelling consumer content and services
• UK Online a key content partner

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Creating consumer value digital photography

• Get your digital, glossy prints delivered to
  your door

• Professional quality, cheaper than digital
  printing
• 24p compared to c. 95p per print
• Print the pictures you like, store the rest in
  your digital album
• Uploading 12 prints
• Narrowband 15 minutes
• BT Broadband 1.5 minutes

17
Creating consumer value MSN 8

• MSN will soon launch MSN 8 Subscription Service
• - Including parental control, learning and
  communication
• - Bring your own access' service model
• A true example of synergy between BT and
  Microsoft
• Currently working with Microsoft to market BT
  Broadband

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Creating consumer value bringing the digital
home

• Home computing - just launched
• Hardware, installation plus software and
  complete support

Home networking - from early December

• Share internet connections between PCs and game
  consoles all around the home
• Store digital media for later viewing /
  listening
• Home security - from early December
• Comprehensive internet basedsecurity for the home

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Generating mass customer interest enthuse,
educate and inform

• Biggest ever UK advertising campaign
• Educates and excites about broadband
• Changes the BT brand forever
• broadband at the heart of BT,BT at the heart of
  broadband
• Demonstrates BT is serious about broadband

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The virtuous circle
100
90
80
70
1120 exchanges now enabled
60
Population Covered
50
ADSLToday
40
30
20
10
0
0
1120
2000
3000
Exchange Rank
Highest Revenue Density
Lowest Revenue Density
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Gathering momentum
Weekly customer registrations of interest
non-broadband areas (cumulative)
200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
0

• Customer registration scheme launched 1 July
• Cost-based demand levels set between 200 and 750
  registrations
• Todmorden in West Yorkshire already has customers
• Campaign in Irby led to 400 registrations in 11
  weeks to enable the exchange
• 17 currently in the process of being enabled
• One a day reaching trigger - 150 active by the
  end of March

08/07/2002
22/07/2002
05/08/2002
19/08/2002
02/09/2002
16/09/2002
30/09/2002
14/10/2002
28/10/2002
11/11/2002
No. of registrations
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Increasing access and availability broadband
partnerships

• Demand side initiatives -actnow
• BT helped to establish ICT strategy
• Targeting SMEs - raising competitiveness through
  actnow
• Galvanise businesses branding, marketing,
  Cornwall Portal
• Devon 10 Exchanges, 1,056 lines within first 12
  months
• Cornwall 9 Exchanges, 1,900 lines within the
  first six months

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Increasing access and availability regional
partnerships

• Regional initiatives in an additional 8 areas
• - Expected to enable 100 additional exchanges.
  Making broadband available to a further 48,000
  businesses
• Different regions have different challenges
  which are driving demand for broadband
• - Improving business competitiveness
• - Tackling social inclusion
• - Delivery of government services
• - Improving education and skills
• Launching partnership with Kent County Council
  for an on-line learning environment with
  compelling content for use in selected schools
  and home
• - 20,000 children engaged in a broadband
  learning environment
• - 3,000 SMEs being targeted

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Increasing access and availability new
technologies
BT is pioneering a number of new technologies in
parallel and driving broadband innovation and
development using visionary approaches such as MIT

• Satellite
• Broadband satellite available through whole of
  UK
• Some technology limitations
• Searching for cheaper consumer option
• Potential for 1 of population enablement

• Point to multipoint Wireless DSL
• Dependant on national availability of the right
  radio spectrum, conditions and price
• Reach
• Moving noise threshold from 55db to 60db will
  improve range at enabled exchanges
• Improving exchange reach within an enabled area
  from 94.5 to 97.5
• Potential for 3 population enablement

25
Increasing access and availability new
technologies

• Exchange activate
• Mini DSLAM targeted at extremely remote areas
• Bundled offer to service providers (16
  connections for 3 years) price published March
  2003
• Will need partnership funding
• Potential for 1 of population enablement

• Mesh radio
• UK could be first country in Europe with Mesh
  radio systems in operation
• Need for partnership agreements with a good
  strategic fit to fill gaps in the current
  broadband footprint
• Appropriate technology in development and trial
  -Spring 2003
• Potential for 2 of population enablement

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Enabling broadband to benefit UK citizens

• Example NHS Wales - a leader in telemedicine
• New broadband network - 1,000 connections linking
  550 GP practices, hospitals and home workers
• - Improved email and web service performance for
  clinicians
• - Easier/faster to share information and access
  new treatment and research information
• - Video-conferencing
• - Imaging applications
• Potential opportunity for Mesh radio

The new broadband network in Wales is a good
thing for patients and healthcare professionals
alike. At the end of the day it is a tool that
will help to deliver improved quality of care
and real benefits to patients. Ian
Millington, GP, Swansea,
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In order for BT to deliver we need

• Government makes wider use of broadband and
  ensures more government content is available
  e.g. - education
• - public services (i.e. health and small
  business support)
• Government takes practical action to solve
  digital rights management issues to make
  content available - our micro payment services
  will give value to small content providers
  and to service providers

• Government gives clear guidance and encourages
  the creation of regional partnerships
• Regulatory bodies ensure appropriate levels of
  regulation - avoiding regulatory frameworks that
  apply to mature markets in the immature
  e-Market and broadband markets
• A positive policy decision on allocating the
  appropriate wireless spectrum

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A strawman for increasing the broadband footprint
90
80
70
Population Covered
60
50
40
30
2000
0
1120
29
Increasing further access and availability new
128k BT midband product

• Always-on e-mail notification
• Working hard to achieve market price using
  current systems and components
• Drops back to 64k to allow voice call
• Pilot launch Spring 2003

Deliver fast internet access for non DSL areas
128k access to 97 of UK population
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Enabling a broadband society

• Putting broadband at the heart of BT has... -
  delivered momentum and results - enabled
  customers, content and service providers and
  other telecom suppliers to share in the growth

Making the strong weaker will not lead to
success. Success comes from encouraging the
strong to play strongly but fairly.
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Enabling a broadband society