Business review
Highlights of the year
  • Following the introduction of per second pricing in June last year - BT is the first national operator in the world to provide this facility on all direct dialled calls - there was an immediate price reduction. This and other price cuts have encouraged customers to make more and longer calls.

  • Over 90 per cent of our customers can now take advantage of advanced network services such as Caller Display, Call Return and a whole range of billing options. A new service, Call Minder, was launched in May last year.

  • At the end of March 1996, Cellnet - the company jointly owned by BT and Securicor - had almost 2.4 million customers (up 655,000 in the year) and the number grew by about three per cent a month.

    Mobile customers are also benefiting from substantial price cuts of up to 30 per cent which became effective in March. Prices of digital calls were reduced, off peak time was increased and per second billing was launched.


  • An initiative that has generated a good deal of public interest is the consumer test marketing of interactive services, which began in East Anglia last year. In the trial, customers use a special set-top box linked to the telephone line to watch films and TV programmes on demand, buy goods and services, shop, download games and carry out banking transactions - all from the comfort of their armchairs.

  • Concert - the joint venture between BT and MCI - is growing rapidly, with more than $1 billion of committed revenue and a further billion in the pipeline. Concert covers 60 countries and now has around 2,500 customers.

  • Another new service launched during the year was CampusWorld - one of the worldís largest on-line networks providing a dedicated service for education. By accessing the Internet through CampusWorld, educationalists can find what they need quickly and easily. About 2,000 primary and secondary schools had subscribed by March 1996.

  • BT and VIAG, who have already formed a joint venture company known as Viag Interkom, moved towards forming a triple alliance with German industrial group RWE to offer telecommunications services in Germany, the largest telecommunications market in Europe.

  • BT Internet went live in February. A mass market, dial-up service aimed at residential customers, it offers worldwide electronic mail and access to vast quantities of information through the World Wide Web.

  • Overall customer satisfaction with BT remains high. Latest figures show that 86 per cent of residential customers and 79 per cent of business customers are satisfied with the companyís services.

  • In the year, we significantly increased our marketing efforts. The "Itís good to talk" campaign was complemented by the "Work smarter, not just harder" campaign aimed at businesses, and a series of pricing campaigns aimed at dispelling some of the myths about BT prices.

  • BT won some notable contracts, including a £70 million deal over five years with theLloydsTSB Group for new data links and a £40 million link-up over seven years with the Inland Revenue for a new data network.
The network
At the core of all BTís operations is its network - one of the most advanced and sophisticated in the world.

Keeping pace with technology is a continual challenge, and BT spent more than £2 billion in the year on modernising and expanding its networks and supporting systems. This investment enables BT to reduce operating costs, while atthe same time offering new and innovative services to our customers.

Digital technology and optical fibres enable the network to carry a range of services simultaneously, including high-speed data, images and text, and the growing volume of Internet traffic. 100,000 business customers across the UK are already within reach of direct fibre links. These "broadband" networks are the foundation of the Information Society of the future.

BTís investment in the integrated services digital network (ISDN) is enabling customers to change the way they work. Examples include an insurance company using ISDN to add video images to accident claims, and a hospital that has started taking remote, freeze-frame shots during the filming of operations. Other services such as videoconferencing bring the concept of the "virtual office" a step nearer.

New technology has also improved the quality and reliability of our traditional phone services and a landmark was achieved in June 1995 when we completed the process of connecting all our customers to digital or modern electronic exchanges. We have modernised our computer systems to provide our sales and support people with all the information they need to serve customers.

Working with our partners worldwide, we have also invested in technology to deliver innovative business solutions to customers with global operations.

Pricing
The downward trend in BTís prices has been maintained.

Since privatisation in 1984, BTís main call prices have fallen on average by nearly 53 per cent in real terms. And, since November 1993, average call bills have fallen in real terms by around 24 per cent for BTís business customers and 27 per cent for residential customers. This has represented total annual savings for BT customers of around £1 billion.

An independent report from the OECD shows that the UKís telephone prices are now among the lowest in the world.

Nevertheless, the impression remains that BT is expensive.When asked to estimate the costs of certain types of calls, customers tend to overestimate the charge, sometimes by as much as 600 per cent. BT regards the closing of this gap between perception and reality as an urgent priority and has commissioned pricing advertising aimed at both residential and business customers.

The number of customers taking advantage of BTís residential discount packages - now offering savings of up to 25 per cent on calls - continues to rise. Membership of PremierLine doubled in the year, and the number of customers who have opted for Friends & Family trebled.

Mobile communications
One of the major success stories of the year for BT was the continuing rise in demand for mobile telephony services - not only in the business sector but among residential customers, too.

Cellnetís current project to create the worldís most advanced mobile phone network brings its total investment in cellular telephony to more than £1 billion. Cellnetís introduction of digital technology, which conforms to the Global System for Mobile Communications (GSM) standard, began at the end of 1993 and is now complete across the UK.

Customers can also use their digital phones internationally in more than 35 different countries and across more than 50 networks, including most of Europe and Australia as well as parts of Africa and the Far East, without needing to contact the local operator.

Outside the UK
It is several years since BT made its first moves into the global marketplace and the group is now well established as one of the leading global operators.

Its highly-focused strategy remains the provision of network-based services to multinational customers and their extended enterprises in Europe, North America and the Asia-Pacific region.

BT has had a 20 per cent stake in MCI, North Americaís second-largest long-distance carrier, since 1994. The two companies established a joint venture company - Concert - to address the global telecommunications needs of large multinationals.

The rapid roll-out of the Concert network continues: last year, capacity for voice and data services grew several fold. Concert now has the most extensive packet switching and international frame relay networks anywhere in the world, and the largest non-correspondent, intelligent voice network.

At the end of 1995, we were able to launch the second generation of Concert voice and data products, before our competitors had brought a first generation to market.

In Europe, BT now has partners in most of the major markets: Germany, Italy, Spain and Scandinavia.

In the Asia-Pacific region, BT has an agreement with Nippon Information and Communication to distribute Concert products to its customers in Japan, where BT also has a joint investment with Marubeni Corporation in the value-added services company, NIS. A joint venture has also been established with Wipro - a market leader in information technology in India - to provide telecommunications services for business customers and, in March 1996, BT took a 25 per cent stake in Clear Communications, New Zealandís second largest telecommunications company.

Quality of service
One of the cornerstones of BTís continuing success is its fierce determination to improve constantly the quality of all its services for customers.

In the past 12 months we have put in place a number of initiatives aimed at boosting the effectiveness of the companyís field engineering force. There has been particular emphasis on achieving quality workmanship in repair operations, while other measures have focused on improving productivity and reducing costs.

To ensure that our customers are receiving the service they require, we have a comprehensive programme of customer opinion research. Our customer satisfaction measures are based on about 30,000 interviews every month with our residential customers and 13,000 a month with our business customers.

For the six months to March 1996, more than 98 per cent of business and residential orders were completed by a date confirmed with the customer. Nearly 90 per cent of faults experienced by business customers were cleared within five working hours or by successful appointment. More than 82 per cent of repairs to faults experienced by residential customers were cleared within the target time.

Operator Services, including Directory Assistance, and the public payphone service also worked to high standards of performance and produced good customer satisfaction levels.

Reports comparing the performance of major telecommunications operators in the UK against key quality measures are now issued regularly by Oftel. These show that BT compares very favourably with its competitors in almost every area and validate the data BT has gathered and published in the past few years, showing the high and improving level of BTís quality of service.

Competition
Competition, of course, remains a constant spur to BT. The UK telecommunications market is now the most open in the world, with more than 150 licensed operators. BT is determined to defend its position and help to grow the market overall by continuing to provide top quality innovative products and services.

BT has continued to make its presence felt through its Local Partnership campaigns. Following the success of earlier events in Bristol, Birmingham, Leeds and Bradford, attention was turned last year to Cardiff and the Solent area. Once more, valuable extra revenue was generated as teams of BT volunteers took to the streets with members of the permanent sales force to spread the BT message among the community. Even so, the overall number of residential lines declined slightly for the first time.

BT has also been successful in regaining the business of customers who had moved to the competition.

BT people
For BT people, it was another eventful 12 months. The company-wide voluntary redundancy programme was operated for the last time during the year. By the end of March 1996, around 130,000 people were employed by BT, compared with 227,000 five years ago.

For those who have stayed with the company, there were major development and training opportunities - averaging over three days per person at formal events and a similar amount of time spent on "in job training" and other activities to help equip our people for the BT of the future.

BT continues to promote the health, safety and welfare of all its employees.

The company remains committed to providing equal opportunities for all its people and actively encourages the employment, training and career development of disabled people. BT has emphasised its commitment to equal opportunities by registering under the Governmentís Two Ticks disability scheme for organisations which can demonstrate a positive approach towards people with disabilities.

Employeesí opinions are actively sought and an annual company-wide attitude survey gives people full scope to air their views.

As well as providing a range of publications and briefings, BT operates a formal team meeting system, broadcast news services and a business TV channel.

BT continues to consult and negotiate with recognised trade unions. Building on our platform of good employee relations in the UK, we have established, with the support of the UK unions, the BT European Consultative Council. The inaugural meeting is planned for the end of June 1996.

Corporate citizenship
BTís programme of community involvement is one of the largest of its kind in the UK.

During the year, BT made contributions to the community in cash and kind worth £15 million, with total donations to charity exceeding £2.7 million. No contributions were made to any political party.

The company is focusing its community involvement increasingly on areas which relate to its business and the particular contribution its technology can make.

BTís work with community organisations often provides the leverage to obtain funds from other sources. For example, the Gatehouse Centre, an enterprise, training and community development complex in Bristol, received £100,000 from BT. This, in turn, released a total of £1 million from the Department of the Environment and Bristol City Council.

Participative fund-raising projects, such as the BT Swimathon, demonstrate that BT money helps generate further funding for good causes. The main beneficiary of this yearís BT Swimathon was ChildLine, which received £1.2 million.

In education, the companyís major commitment is to promote telecommunications and information technology to equip young people for modern industrial society.

BT offers a Light User discount scheme for those who need the phone as a lifeline but who make few calls. Approximately one in five of BTís customers is eligible for this discount.

In the past year, BTís commitment to meeting the needs of customers with disabilities has been recognised by two prestigious awards - the 1995 Communicator of the Year award from the Royal National Institute for Deaf People, and the See it Right award from the Royal National Institute for the Blind.

Customer consultation
Liaison panels, established throughout the UK, are at the heart of the companyís consumer consultation programme and ensure that the needs of individual customers are reflected in BTís policy making and product and service developments.

The environment
BT sets new targets for environmental improvement each year and progress is documented in an annual Environmental Performance Report. For a copy, call (0171) 356 5636.

Total energy consumption over the last four years has been reduced by over 13 per cent.

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