Ofcom’s Strategic Review of Digital Communications Progress in making digital communications work for everyone Steve Unger, Strategy Group Director Jonathan Oxley, Competition Group Director 26 July 2016
Ofcom’s vision for the long term We set out plans in February to help make the UK a world-leading digital economy over the next ten years and beyond Under our long-term strategy: • Everyone in the UK will enjoy fast, reliable broadband • We will move to a fibre future : widespread, competing networks connected directly to homes and businesses, taking us from ‘superfast’ to ‘ultrafast’ • The latest mobile phone technologies will be rolled out across the UK • Competition will drive innovation and affordable prices • Vulnerable people will be protected through effective, targeted intervention • UK will be a world leader for quality and coverage of its telecoms services, ensuring consumers and businesses enjoy strong competition and fair prices for years to come 1
Updates today on three major areas OPENREACH REFORM A new governance structure, and greater independence from BT NETWORK CHOICE QUALITY OF SERVICE Major shift to promote new fibre A step-change in quality across networks, using BT’s the industry, and automatic infrastructure compensation 2
Our immediate and longer-term strategy Connected Nations Report: new tools (December) Mobile switching Openreach structure (consultation proposals; ducts and Review of GCs 700 MHz release March) completed (spring) poles update (today) (est. 2020) First annual 98% indoor 4G New USO for Business Wholesale Local Connectivity Access Review: QoS report coverage broadband (early 2017) Market Review ducts/poles, QoS and (statement April) Openreach standards (consultation) Pay-TV and bundles Automatic compensation: switching proposals and consultation (coming shortly) (call for input in June) Note: future dates to be confirmed 3
Openreach reform 4
OPENREACH REFORM Openreach today • Company is part of BT Group, but must treat all customers equally • Structure has delivered benefits since 2005, but we identified problems: ◦ Governance lacks sufficient independence ◦ BT Group control over strategic decision making ◦ Insufficient consultation on investment plans ◦ Limited capabilities in areas such as R&D 5
OPENREACH REFORM Openreach in the future – our proposed model • Distinct company – own ‘Articles of Association’, industry-wide interests • Openreach Board – with a majority of non-exec directors, including the Chair • Accountability – new Board appoints and holds executives to account • Greater consultation – obliged to consult, with confidential phase • Greater control – including own staff and assets • Strategy – developed by Openreach, in all customers’ interests • Budget – greater control, within a budget approved by BT Group • More capabilities – in areas such as research and development • Independent branding – no longer associated with BT 6
OPENREACH REFORM Openreach in future – our proposed model • Our solution should be effective and proportionate • Designed to ensure that Openreach acts more independently from BT Group, taking decisions for the good of the wider telecoms industry • If it cannot achieve this, BT and Openreach could be split into two separate companies, under different ownership • New model must respect BT corporate governance, shareholder rights and the contractual and pensions interests of staff • We are seeking views by 4 October 7
Network choice 8
NETWORK CHOICE A choice of how to receive broadband • February strategy to promote large-scale ultrafast networks. Major operators have stressed importance of fibre; this gives them the tools • Reducing the country’s reliance on Openreach , and providing greater choice of technology and provider • Openreach must open up its tunnels and poles , and provide comprehensive data on its network – a ‘digital map’ of the UK • Competition will incentivise Openreach to improve its network • Protecting investment incentives – setting prices that encourage network investment by all, for example through pricing flexibility for risky new investments 9
NETWORK CHOICE How duct and pole access works 10
NETWORK CHOICE Progress since February • BT required to draw ‘ digital map ’ of its duct and pole network. Demonstrated last week to competing providers. • Openreach now trialling new sharing process , working with five telecoms companies. They can inspect ducts and poles, clear blockages and install fibre immediately, at lower cost • Communications (Access to Infrastructure) Regulations come into force on Sunday – for easier sharing of infrastructure • Several companies laying ultrafast fibre : Virgin Media, CityFibre, Sky, TalkTalk, KCom, Hyperoptic and Gigaclear • Further detail on ducts and poles from Ofcom in autumn 11
Quality of service 12
QUALITY OF SERVICE Progress on quality of service Work to improve quality of service across the industry is well underway, including: Automatic compensation (June) Published call for input on requiring telecoms companies to provide automatic compensation when service falls short Improving business lines (April) Confirmed new rules requiring BT to provide ‘dark fibre’ access to its leased-line network, to boost innovation and competition Measures coming up include: Tough performance rules on Openreach (later this year) We will set out stricter minimum requirements for Openreach to repair faults and install lines more quickly Performance tables (early 2017) We will publish first report on providers’ quality of service, showing best and worst performers so customers can shop around 13
QUALITY OF SERVICE Progress on empowering consumers Other recent work to improve telecoms services: Easier mobile switching (March) Published detailed proposals for making it simpler and speedier for mobile customers to switch network Advanced coverage checkers (March) Launched enhanced mobile and broadband coverage maps in maps, incentivising operators to improve Text to opt out of nuisance calls (May) Ofcom and the Telephone Preference Service launched a simple ‘text-to-register’ service for mobile users Measures coming up include: Simpler switching for pay TV and bundles (shortly) We will announce plans to make it easier to switch landline, broadband and pay-TV services. Coverage checkers by address We plan to produce updated maps with even more comprehensive information on mobile and broadband coverage by individual address 14
Better coverage 15
BETTER COVERAGE Better broadband BDUK aiming for superfast to reach 95% by 2017 Government committed to min. 10 Mbit/s broadband for all by 2020. We consulted in April on the USO’s design; outlined need for minimum speed to increase over time Better mobile Ofcom rules mean 98% of homes and offices must get indoor 4G mobile next year Mobile operators must reach 90% voice coverage of UK geography next year 16
Our immediate and longer-term strategy Connected Nations Report: new tools (December) Mobile switching Openreach structure (consultation proposals; ducts and Review of GCs 700 MHz release March) completed (spring) poles update (today) (est. 2020) First annual 98% indoor 4G New USO for Business Wholesale Local Connectivity Access Review: QoS report coverage broadband (early 2017) Market Review ducts/poles, QoS and (statement April) Openreach standards (consultation) Pay-TV and bundles Automatic compensation: switching proposals and consultation (coming shortly) (call for input in June) Note: future dates to be confirmed 17
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