1. 16 November 1999Copyright BT 1999 Version 1.1 BT supports the Internet BT strongly supports UK Internet growth –Responsibility to all its customers Basic needs for internet access –Telephone line, Computer, Modem - Affordability? BT introduced support for less advantaged –Schools Internet Caller, Public Institutions, Payphones UK internet market is already vibrant –Significant growth, many different business models, high stock valuations,

2. 16 November 1999Copyright BT 1999 Version 1.1 Just reduce the price BT ! UK Internet access focused on 0x45 –ISP benefits : simple numbering, PoP concentration, funding NTS offers challenges to BT retail call pricing freedom –PPM rate = industry model –PPM rate = continuous cost through outpayment NTS formula defines BT retention & payments –BT retains originating costs & return + retail uplift

3. 16 November 1999Copyright BT 1999 Version 1.1 ( )BT residential customer daytime call, pence per minute, maximum discount with Premierline & Bestfriend CUSTOMERSCUSTOMERS BTOLO ISP 2.96p (2.18p) 1.89p (1.97p) ? 1.07p ?? (0.21p) How “Free Internet” Works

4. 16 November 1999Copyright BT 1999 Version 1.1 OECD View

5. 16 November 1999Copyright BT 1999 Version 1.1 Current Retail Call options Customer packages Discount options to reduce the cost –F&F, Best Friend, PremierLine, Call & Save, BT Together, email calls –Bus Advantage, Bus Choices, Community Caller, BT Commitment Call Allowances To provide an inclusive element within rental –Res & Bus PSTN, BT Together, BT Highway, Leased lines

6. 16 November 1999Copyright BT 1999 Version 1.1 Future options Unmetered calls on PSTN –Inappropriate technology - Voice network designed for c. 3min calls –UK network model for Internet different to that in USA –Important for BT to ensure voice access for all is always available –New network technology provides constant access, different costs & thus allows new pricing paradigms –BT will continue to develop options on PST price & prepaid minutes to Internet.

7. 16 November 1999Copyright BT 1999 Version 1.1 Policy Enablers Recognition of Internet access as a distinct market for which separate pricing is permissible Allocation of number range for Internet access Abolition of the subsidy to terminating operators in the NTS regime Abolition of extended notice period for new services Recognition that bundling and cross-subsidy has merit where it increases take-up of e-commerce and above all a permissive, light touch approach