1. Winning and Losing in the Multi-play Market Report sponsored by BT Wholesale Directed by Gareth Deere of Ipsos MORI November 2006

4. Current average spend on multi-play services from any supplier Base: all (635) £76 £57 Cable customers – broadband, landline or TV; NTL, Telewest or Blueyonder £93 £72 Sky TV Customers £77 £57 Orange/Wanadoo customer – mobile or broadband £75 £56 Overall average monthly spend £77 £58 BT Landline customers Current monthly spend on TV, broadband, landline and mobile Current monthly spend on TV, broadband and landline

6. Broadband a must have although speed not so important No brand seems to own multi-play Base: all (635) Low 100 anytime minutes, 50 texts 500 anytime minutes, 250 texts None Free evening and weekend calls Free anytime and 25% off mobile calls None Free digital channels only All digital channels but no sports or movies All digital channels, sports and movies None 2Mbps 8Mbps 16Mbps None Vodafone Tesco Sky Orange BT NTL High Price 48% Broadband 22% more preferable less preferable more important less important TV 12% Landline 10% Provider 6% Mobile 2%

8. Not all about price, upgrade in service levels can drive value Base: all (635) 53% 47% Full package at £84 per month 16 Mbps for broadband, all digital channels, with sports and movies, free anytime and 25% off mobile calls, mobile phone 500 inclusive anytime minutes, 250 texts, 30% discount 83% 17% Base Package at £13.50 per month 2 Mbps of broadband, free digital channels only, free evening and weekend calls, no mobile phone, no discount % who would stick with a la carte arrangements % who would switch to multi-play offer from one supplier

9. The impact of different elements… Base: all (635) 80% +3% 20% Mobile Tariff – 500 inclusive call minutes and 250 texts per month at £49.50 83% 0% 17% Landline – Free anytime inclusive minutes and 25% off calls to mobile at £22.50 79% +4% 21% Broadband – upgrade to 16Mbps at £27 77% +6% 23% TV – upgrade to all digital channels + sports and movies at £49.50 73% +10% 27% Price – 30% discount on base package at £10.50 % who would stick with current arrangements % difference compared to base package % who would switch Different elements added into base package (2 Mbps of broadband, free digital channels only, free evening and weekend calls, no mobile phone, no discount)

10. Taking out broadband significantly reduces attractiveness of proposition Base: all (635) 81% (-28%) 19% No broadband but all digital channels including sports and movies, free anytime landline calls and 25% off calls to mobiles, 500 inclusive mobile phone call minutes and 250 text messages, 30% discount – cost £70 per month % who would stick with current arrangements % difference compared to full package % who would switch Full package but no broadband

11. Around a half would take out bundle offer in preference to a la carte arrangements Full offer - £84 per month

12. Sky customers most likely to single source multi-play services, also most likely to stay with Sky Full offer - £84 per month

15. The Loyalty Index & Loyalty/Value Segments Loyalty Index Value Loyalty Index and Value: key indicators for customer relationship strategies Value measures the total expenditure in the sector, for the considered brand Median spend is used to determine high and low value Our Loyalty Index is a composite indicator mixing past behaviour and attitudes Core Customers Low Value Contented Customers Low Value Vulnerable Customers High Value Vulnerable Customers Segment size : 20% Segment size : 35% Segment size : 15% Segment size : 30%

16. Overall UK Broadband market Loyalty Score = 51 Loyalty Index Value Core Customers Low Value Contented Customers Low Value Vulnerable Customers High Value Vulnerable Customers Segment size : 20 % Segment size : 19 % Segment size : 29 % Segment size : 33 % Two thirds of the UK broadband market are relatively low value, suggesting strong price competition Loyalty segments – UK broadband market

17. Three quarters of UK landline customers are high value, reflecting legacy of BT Overall UK Landline market Loyalty Score = 52 Loyalty Index Value Core Customers Low Value Contented Customers Low Value Vulnerable Customers High Value Vulnerable Customers Segment size : 36 % Segment size : 39 % Segment size : 13 % Segment size : 12 % Loyalty segments – UK Landline market

18. Digital TV customers most loyal, reflecting lack of choice Overall UK TV market Loyalty Score = 57 Loyalty Index Value Core Customers Low Value Contented Customers Low Value Vulnerable Customers High Value Vulnerable Customers Segment size : 24 % Segment size : 27 % Segment size : 24 % Segment size : 25 % Loyalty segments – UK Digital TV market

19. Roughly a quarter each segment for mobile phone, reflecting healthy competition Overall UK Mobile market Loyalty Score = 51 Loyalty Index Value Core Customers Low Value Contented Customers Low Value Vulnerable Customers High Value Vulnerable Customers Segment size : 27 % Segment size : 23 % Segment size : 25 % Segment size : 25 % Loyalty segments – UK Mobile phone market

22. Building blocks of loyalty “ Relationship” most important building block for mobile and landline, experience for “Broadband” and Digital TV

23. Satisfaction with the service and perceptions of quality are drivers of loyalty whilst trust and affinity are barriers to loyalty Familiarity Popularity Differentiation Relevance Satisfaction Quality Trust Affinity Willingness to pay Comparison Overall contribution of building block Total UK Broadband market summary The importance of each Building Block and Mega Driver in explaining Loyalty Brand =14% Offer =16% Experience =31% Relationship =29% Price =10%

24. Lack of trust, affinity and differentiation are barriers, perceived quality a main driver Familiarity Popularity Differentiation Relevance Satisfaction Quality Trust Affinity Willingness to pay Comparison Overall contribution of building block Total UK Mobile Phone market summary The importance of each Building Block and Mega Driver in explaining Loyalty Brand =16% Offer =21% Experience =23% Relationship =30% Price =10%

25. Relevance and familiarity drive loyalty (likely to be a result of BT) whilst trust and affinity are barriers to loyalty Familiarity Popularity Differentiation Relevance Satisfaction Quality Trust Affinity Willingness to pay Comparison Overall contribution of building block Total Landline market summary The importance of each Building Block and Mega Driver in explaining Loyalty Brand =20% Offer =20% Experience =23% Relationship =31% Price =6%

26. Relevance is a key driver of loyalty – this is likely to relate to relevant channel packages Familiarity Popularity Differentiation Relevance Satisfaction Quality Trust Affinity Willingness to pay Comparison Overall contribution of building block Total UK Digital TV market summary The importance of each Building Block and Mega Driver in explaining Loyalty Brand =12% Offer =27% Experience =32% Relationship =25% Price =4%

28. Thank you For further information contact gareth.deere@ipsos-mori.com 020 7347 3000 [email_address] 07850 760106