BT and Microsoft Announce Partnership to Deliver Powerful, First-of-its-Kind Entertainment Experience to Consumers Through Xbox 360

LAS VEGAS — Jan. 6, 2008 — Microsoft Corp. and telecommunications leader BT announced they are bringing together the next-generation TV service BT Vision with Microsoft’s Xbox 360 games and entertainment system. All BT broadband customers will have the unique opportunity to receive the best in high-definition gaming, television and movies through an Xbox 360 console, in a powerful, all-in-one entertainment experience. BT Vision, which is powered by the Microsoft Mediaroom Internet Protocol TV (IPTV) platform, plans to make this first-of-its-kind device and service offering available to customers in the middle of 2008. The announcement was made during the keynote address by Microsoft Chairman Bill Gates and Microsoft President Robbie Bach of the Entertainment & Devices Division at 2008 International CES on Jan. 6.

The groundbreaking partnership will enable any BT Broadband customer to use an Xbox 360 console to access the BT Vision service and its extensive library of on-demand content, giving instant access to hundreds of movies and thousands of hours of sporting events, television programming, music videos and other digital content, such as BT Vision Sport’s 242 “near-live” FA Premier League football matches.

BT Vision customers with an Xbox 360 console will gain the option of accessing BT Vision from either the Xbox 360 console or a set-top-box. The service will be available to existing and future Xbox 360 console owners.

BT Vision on Xbox will combine the richness of the Microsoft Mediaroom-enabled TV service with the benefits of next-generation gaming, as well as unique new capabilities that the integrated solution brings. Xbox LIVE, the largest online social network in the living room, will be seamlessly integrated into the experience, providing consumers with a wide range of community-based features, such as voice chat, sending and receiving text and voice messages, and accessing Xbox LIVE Marketplace, all while watching TV. For example, while a TV viewer is enjoying his favorite football game, he can receive a message from a friend inviting him to join a voice chat, or they could play a game of their own with EA SPORTS™ “FIFA Soccer.”

“We are pleased to partner with Microsoft to deliver a truly compelling connected entertainment experience to our customers,” said Dan Marks, CEO of BT Vision. “For the first time consumers in the U.K. will be able to experience the advantages of an advanced TV service together with the benefits of next-generation gaming. Our aim is to provide BT Vision on multiple platforms — giving customers greater convenience, control and flexibility over what they watch, when they watch and how they watch TV. It also means that we are able to potentially expand our BT Vision customer base by tapping into the popularity of Xbox 360.”

“This is an exciting moment in home entertainment,” said Enrique Rodriguez, corporate vice president of the Connected Television Division at Microsoft. “Last year at CES, we announced Xbox 360 on Microsoft Mediaroom as a powerful platform capable of enabling new entertainment experiences for consumers, and we are pleased to team with BT to bring this service to market. Together we are enabling BT Vision customers to be the first in the world to enjoy this next-generation TV and gaming entertainment experience.”

About BT

BT is one of the world’s leading providers of communications solutions and services operating in 170 countries. Its principal activities include networked IT services; local, national and international telecommunications services; higher-value broadband and internet products and services and converged fixed/mobile products and services. BT consists principally of four lines of business: BT Global Services, Openreach, BT Retail and BT Wholesale. In the year ended 31 March 2007, BT Group plc’s revenue was £20,223 million with profit before taxation of £2,484 million.

British Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group and encompasses virtually all businesses and assets of the BT Group. BT Group plc is listed on stock exchanges in London and New York.

For more information, visit http://www.bt.com.

About BT Vision

BT Vision is available to anyone with a BT Broadband connection with suitable minimum line speed and a BT Home Hub. It offers a free HD-ready set-top box, known as the V-Box, which includes all the 60 or so Freeview TV and radio channels, an inclusive digital video recorder (DVR) of up to 80 hours which allows viewers to pause and rewind live TV, and offers instant viewing of thousands of hours of great entertainment, including blockbuster and classic movies, cartoons, music and TV programmes. For more details please go to www.bt.com/btvision.

The V-box is free for new broadband customers or existing customers re-contracting for 12 months (18 months with Option 1) – otherwise £199. A connection fee of £30 and engineer installation of £60 applies, or Vision can be self-installed for just the connection fee of £30.

Services including live Setanta Sports action require a decoder card.

About Xbox 360

Xbox 360 is a superior video game and entertainment system delivering the best games, unique entertainment features and a unified online gaming network that revolve around gamers. Xbox 360 will have a portfolio of more than 300 games and will be available in nearly 40 countries by the end of 2007. More information can be found online at http://www.xbox.com/xbox360.

About Microsoft Mediaroom

The award-winning Microsoft Mediaroom Internet Protocol Television (IPTV) and multimedia software platform is driving the future of television by enabling broadband service providers to deliver new connected TV and entertainment experiences to consumers worldwide. Microsoft Mediaroom provides new ways for consumers to experience TV as part of their connected, digital lifestyle, while also creating new business opportunities for broadband service providers, hardware manufacturers, content creators, advertisers and application developers. Over 20 of the world’s leading service providers across four continents have selected the Microsoft Mediaroom platform to drive their digital TV services. More information on Microsoft Mediaroom and the opportunity to deliver the best in TV plus all your media in one place is available at http://www.microsoft.com/TV and http://www.microsoftmediaroom.com.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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