BT 2006 Annual Report Download - page 13

Europe to offer its customers digital TV and radio content on a
mobile device using broadcast technology.
We have also developed a strategic relationship with
Microsoft to enable a secure and efficient environment for
delivering broadcast services on a mobile handset. Microsoft’s
Windows Media technologies will enable BT Movio to deliver
high-quality audio and video content over a DAB (digital audio
broadcast) network using minimal bandwidth. The BT Movio
service also incorporates Windows Media DRM (digital rights
management) technology to ensure secure delivery of premium
video and music content.
BT Movio is the first wholesale mobile broadcast TV offering
of its kind in Europe and we plan to make it available to all
mobile operators in the UK.
In June 2005, selected mobile phone users in Cardiff became
the first in the UK to benefit from our innovative new mobile
delivery system, Microconnect Distributed Antenna – part of our
growing portfolio of low-power, mobile coverage solutions for
mobile operators, designed to minimise the visual impact of
masts and cabinets in city centres and heritage sites. 3 became
the first mobile operator in the UK to take advantage of the
system that enables operators to share small antennas, and
in December 2005, Selfridges’ London store became the first in
the UK to use the Microconnect In-Building service.
MAXIMISE THE RETURN FROM OUR TRADITIONAL BUSINESS
We face continued challenges in our traditional markets as a
result of regulatory intervention, competition and a shift in our
customers’ buying patterns, as we provide them with higher-
specification, high-value, new wave products.
Total fixed-to-fixed voice call minutes in the UK market as a
whole declined by 3% in the 2006 financial year. This was
driven by customers making use of alternatives such as mobile
calls, e-mail, instant messaging, corporate IPVPNs (internet
protocol virtual private networks) and VoIP, continuing the
trends of recent years.
However, the call minutes measure is becoming less
important to BT as customers increasingly opt to sign up for
pricing packages and take other non-PSTN (public switched
telephone network) services.
Traditional services for consumers
We continued to develop the services we have traditionally
offered in order to make them more attractive to consumers.
Examples included:
sat 31 March 2006, more than two million customers had
signed up for BT Together Options 2 and 3 and 67% of
consumer call revenue was under contract
sat 31 March 2006, 3.7 million customers had signed up for
BT Privacy, a caller display service which enables customers
to preview incoming call numbers and filter out unwanted
calls. All BT Privacy customers are automatically added to
the Telephone Preference Service register which filters out
most unsolicited marketing calls
sbetween January and April 2006, actor Tom Baker was the
voice of BT Text, the text-to-speech service that enables
users to send and receive texts on their home landline
phones. BT Text volumes increased by 94% in the 2006
financial year. At 31 March 2006, 268,000 BT customers
were registered on the service and around 1.2 million text
messages were being sent to landlines every week
ssince autumn 2005, over one million customers have
registered to have their Friends & Family calling circle
automatically updated to ensure that the numbers they dial
most frequently attract maximum discounts
swe manage around 64,000 public payphones, including
more than 800 multimedia kiosks and more than 1,000
textphones throughout the UK. We remain committed to
ensuring that public payphones are available in communities
throughout the UK. Future growth opportunities will focus
on maximising returns from existing sites and capabilities,
including hosting Wi-Fi services and mobile antennas.
Traditional services for business and major corporate
customers
We continued to enhance BT Business Plan. From June 2005,
for example, we cut the cost of calls for business customers by
reducing the cap on landline-to-mobile calls lasting less than
one hour from 30 pence to 25 pence. At 31 March 2006, BT
Business Plan had over 513,000 locations, up 15% on the 2005
financial year.
Our BT Local Business initiative helped to secure BT’s
position as a key player in the SME market. At the end of the
2006 financial year, BT Local Business was active in 83
locations around the country, managing £1.2 billion of annual
billed revenue.
Traditional services for wholesale customers
We continued to sell a wide range of capacity and call-based
products and services including regulated interconnect services;
access products such as WLR and LLU; and new, non-regulated
products and services.
During the year, the sale of WLR services continued to grow,
reaching a total of 2.9 million lines by 31 March 2006. Rental
charges for consumer lines were reduced by 50 pence a month
from 1 August 2005 and a further 35 pence from 1 March 2006.
The monthly charge for business lines was reduced by 78.3
pence from 1 March 2006.
WLR and LLU products will be reported within Openreach for
the 2007 financial year.
Transforming our costs
We remain focused on financial discipline and on delivering
efficiency programmes that will generate sustainable cost
savings.
We continue to benchmark ourselves against the best in the
industry and aim to achieve savings of at least £400 million in
each of the next three years. In the 2006 financial year,
efficiency programmes delivered savings of over £400 million,
enabling us to invest in growing our new wave activities.
A key area of focus has been enhancing the ways in which
customers can deal with BT, simultaneously saving costs and
improving customer service. Programmes have targeted the
cost of failure by, for example, minimising the number of times
a customer call is transferred before resolution and reducing the
amount of call waiting time through better call routing.
The number of transactions via bt.com grew by 28% in the
2006 financial year, and we now have approximately 2.3 million
customers receiving e-bills – half a million of whom do not
receive a paper bill.
We have also been reducing the complexity of our systems
and processes and intend, for example, to transform our billing
function – rationalising more than 90 systems and at the same
time improving the end-to-end customer experience.
Other programmes relate to innovative procurement and
sourcing. Our IT team, for example, has moved to global
sourcing and 90-day delivery cycles, and implemented ‘hot
housing’ principles – bringing customers and suppliers together
in an intense design session at the beginning of a project,
reducing risks and driving up benefits.
Operating and financial review BT Group plc Annual Report and Form 20-F 2006 11