BTexact generates competitive advantage for BT through strategic evaluation and deployment of the technologies, infrastructure and applications that underpin platforms, innovative services, operational efficiency and effectiveness, and world-class customer service.

The majority of BTexact's revenues currently derive from the provision of professional services to other parts of BT, helping them serve their customers in sectors such as finance, utilities and government. These services include evaluation, security, the creation and optimisation of complex networks and applications, and operational support systems. During the 2002 financial year, for the first time, it provided these innovative services to selected external customers, primarily communications service providers and their suppliers.

Major areas of research include next-generation internet; advanced data services; information and network security; software systems to support the management and integrity of networks worldwide; and the future impact of advanced communications on lifestyles, education and healthcare.

BTexact is responsible for the exploitation, management and defence of over 14,000 BT patents, and has a policy of vigorous commercial exploitation of technology through:

• patent licensing (including a contract with ipValue to secure revenues from US and Canadian companies); and
• Brightstar, its in-house incubator which creates new technology companies.

The BTexact proposition is complemented by a wide range of partnerships with leading technology suppliers and universities throughout the world. Many of these have established a presence at BTexact's primary location, Adastral Park in Suffolk, which has become one of the UK's leading concentrations of hi-tech businesses.

In the 2002 financial year, we invested £362 million in research and development, primarily through BTexact, compared with £364 million and £345 million in the 2001 and 2000 financial years, respectively.