1. 1 DLE to NGS Migration: Contracts Clinic 24 th February 2006 The information in this presentation relates to plans currently under development and subject to consultation, and may be subject to change. Detailed implementation depends upon a number of factors including the capabilities of suppliers and the final 21CN network design.

2. 2 DLE to NGS Migration: Contracts Clinic Aims & Objectives 1.To achieve a consensus position on BT’s proposed contracting plan As far as this is possible to do so Identify the steps required in order to enact it 2.To improve understanding of the VIC product and the Implementation process for early tranches of DLE to NGS interconnect migration to facilitate development and agreement of contractual terms  Develop and manage an issues list  Develop and manage contractual documentation  To agree an action plan & next steps

3. 3 BT’s Contracting Plan Phase 1 – DLE to NGS Migration Phase 2 – End Customer Migration Phase 3 – NGN Phase 1 is relatively well understood Building a good understanding of engineering costs VIC “Clinics” starting to flesh out non-engineering costs Phase 2 impacts across the obligatory products not just interconnect Product discussions still ongoing Complex undertaking and impacts not fully understood to enable detailed commercial discussions to take place Communication Provider contracts feedback indicated that smaller “bites” would be better received.

4. 4 Phase 1 Contracts Documentation VIC Supplemental  Normal approach to introduce a new schedule to the SIA  No Change to Annexes A, B or D proposed by BT Schedule 131  Deals with the introduction of VIC SAN side letter  Can apply generically to Tranches 1-4 or individually to each tranche  The choice is open to each individual CP

5. 5 Cost Recovery – where are we in the process? Most Communication Providers have provided BT with a view of likely engineering costs  Includes engineering project management costs as appropriate  Required to put a number in the SAN side letter Greater understanding required of VIC solution design required to size non-engineering costs  Top level view (from CP’s @ VIC clinic 8/2/06) is costs may arise from: Entering VIC information in billing systems Reconciliation of circuit bills Management of the supplementary bill for overflow  Question – How do we solve this one for tranche 1 contractually?

6. 6 Phase 1 Contract Timetable VIC product Contract T1 contracts signed 17/03/06 T2 contracts signed 31/03/06 VIC Solution Design Workshops: Provision Experts & Billing 01& 02/03/06 08/02/06 VIC Clinic to identify & discuss issues 13/02/06 Contracts Clinic (1) Contracting Plan/SIA Supp/Sch 13/SAN letter shared 06/02/06 Contracts Clinic (2) 24/02/06

7. 7 Agenda for today: 1.VIC Storyboard What’s closed, what new concerns arise? 2.What are the concerns with BT’s proposed phased contracts approach? 3.Detailed Contractual Arrangements for Phase 1 Thoughts and comments 4.Next Steps:  What actions do we need in place to resolve the key issues we have identified? Product description update VIC Migration guidance document update  When/should we meet again?