The VPN Services Combined eligible spend on IPClear, CellStream and FrameStream (VPN Services) is used to calculate the appropriate discount rate provided all products are within the same single contract.

Combined spend and term discounts will be available as Uncommitted (1 year), or Committed (3, 4 or 5 years).

In order to qualify for discounts for terms of 3, 4 or 5 years, Customers must commit to a minimum level of expenditure known as the `Committed Spend'.

Discounts applicable to a 1 year term are known as `Uncommitted Spend' discounts.

Customers may choose to continue with the Uncommitted Spend rate for a period longer than one year and will have the option at any time to transfer to the Committed Spend rate.

Customers' actual annual spend (`Annual Spend') will be assessed against Committed Spend once a year, on each anniversary, in accordance with the Customer's billing cycle. At that point, their actual spend is permitted to be up to 10% less than their Committed Spend. The `Contract Floor' is 90% of the Customer's Committed Spend.

If the Customer's Annual Spend is below the Contract Floor, then BT will recover the discount overpaid and charge the Customer an amount of 20% of the overpaid discount. Such sum will be subtracted from the discount and will be raised on the next appropriate bill.

For example:

Where the Customer commits to a spend band of £400000 to £799999 for a 5 year term which attracts a discount of 18%, the Contract Floor is £400000 x 90% = £360000.

The Customer's actual spend in the period is £340000.

Discount received: £340000 x 18% = £61200.

Discount due: £340000 x 16% = £54400. (16% being the discount attributable to a Committed Spend of £200000 to £400000 for a 5 year term).

BT would recover the discount overpaid: £61200 - £54400 = £6800. In addition BT would charge the Customer 20% x £6800 = £1360.

Total to be subtracted from next bill £8160.

Low Start Option

Customers who commit to a 5 year term and £2Million spend band are entitled to a `low start' option. This provides the Customer with the ability to achieve the spend band level over a 2 year period. As such, if the Customer fails to achieve the Contract Floor in the first year (Year 1), the Customer will not be subject to any claw back or charges relating to the overpaid discount. However, the Customer must achieve the Contract Floor (90% of £2Million) by the end of the second year (Year 2). In the event that the Customer fails to achieve the Contract Floor in Year 2 then BT shall be entitled to recover all overpaid discount and appropriate charges for both Year 1 and Year 2.

If the Customer's Annual Spend is more than their Committed Spend and qualifies the Customer for a higher discount tier, the Customer may either:

-remain on their current tier, or

-commit in writing to a higher Committed Spend qualifying them for a higher discount tier from the date BT receives that notice.

Customers may increase, but not decrease, their Committed Spend and the term throughout the Contract period. BT will take into account prevailing prices when calculating the Committed Spend Contract Floor.

The standard terms and conditions for the relevant service continue to apply. For example the 12 month Minimum Period for IPClear, FrameStream and CellStream Accesses Connections applies.

The Committed Spend for existing customers transferring to this new scheme will be based on their eligible spend DEFINED TERM in the previous 12 months. FrameStream customers will be allowed to aggregate their existing contracts into the new scheme provided that the overall term and value is equal to or exceeds those existing contracts.

Eligible spend includes: all Access and PVC Rental spend, CellStream Express Recovery plans (previously known as Fast Restore and Disaster Recovery) on CellStream and all Access and PVC Rental spend on FrameStream and all Rental spend on IPClear. Connection Charges are not included in the Eligible Spend.

Uncommitted Spend customers will receive the appropriate discount calculated annually in arrears, based on actual Eligible Spend calculated that year.

For Committed Spend Customers, the discount level appropriate for their contractual commitment will be applied to each quarterly or monthly bill in accordance with their billing cycle. There will be an annual review at which time any spend over the Committed Spend level will receive a discount on the difference between the Committed Spend level and the actual end of year spend level Annual Spend, paid at the Uncommitted Spend rate and this will be paid on the next applicable bill.

The Committed Spend rate will be calculated from the anniversary of the Customer joining the scheme. In calculating the Contract Floor measure, BT will allow a 10% per annum reduction in the Committed Spend rate i.e. £2M in Year 1 becomes £1.80m in year 2, £1.62m in year 3 etc. to allow for price reductions throughout the Contract term.

Discounts are as set out in the table below:

Please note discounts for IP Clear Ethernet services can be viewed in Part 2, subpart titled `Ethernet Services - Distance Based Charging Pricing'.

On expiry of the contract term, charges will revert to the standard charges applicable on expiry of the contract term unless the Customer signs a new contract.

The Contract for the scheme is a combined service contract and as such customers will be able to increase and decrease their networks in accordance with the relevant service terms and conditions and subject to the applicable Committed Spend rate where it applies.

Customers will be able to include new and cease existing FrameStream, CellStream and IPClear Access Connections (subject to the Minimum Period for each service) provided the annual expenditure does not fall below the Committed Spend.

Customers will be able to include new and cease existing FrameStream and CellStream PVCs (subject to the minimum term commitment of 30 days for each PVC) provided that the Annual Spend does not fall below the Committed Spend.

Where a Customer upgrades a FrameStream Access Connection to a CellStream Access Connection, the minimum term accrued under the FrameStream Access Connection will be included within the minimum term commitment for the CellStream Access Connection.

Ethernet UDS Table

Spend on IP Clear 10M/100M and 100M1000M Distance Based Ethernet Services will be subject to the discounts shown below, however, the spend on these services will be counted towards overall UDS spend; i.e. revenue from both standard and Ethernet connections is contributory to the total commitment, but the discounts they receive will be different.

For example; a customer spending £1200000.00 (Exc. VAT) on a five year term on normal fixed accesses, and another £1200000.00 (Exc. VAT) on a five year term on Ethernet accesses, they can commit to (say) a £2.0m (Exc. VAT) total spend and get a 30% discount off the standard accesses and 25% discount off the Ethernet accesses.

21 CN Ethernet and EFM UDS Table

The attached tables provide the Discount matrix that should be applied to 21 CN delivered Ethernet products (10M/100M/1000M Standard/Secure/Secure+ and EFM) that are having the new decoupled pricing.

IP Clear Discount (Zonal Access)

This scheme applies to the following access types:

21CN delivered Ethernet 10M10/100M/1000M Flex/Flex Local Standard/Secure/Secure+ and EFM (sites on decoupled pricing).

Access Rental and Access Distance Based Rental are eligible for this discount.

IP Clear Discount (Zonal Port)

This scheme applies to the following access types:

21CN delivered Ethernet 10M10/100M/1000M Flex/Flex Local Standard/Secure/Secure+ and EFM (sites on decoupled pricing).

Port Rental and CoS are eligible for this discount.