The BT Story

November 2014

Introduction

The BT Story provides a summary of some of the key issues affecting the company today in the UK and across our global businesses.

The BT Story

BT is the major provider of telecommunications networks and services in the UK. But we are also a global communications company, serving customers in more than 170 countries. We provide services to corporate and public-sector customers with operations across the world in a wide range of sectors such as banking and financial services, consumer goods, logistics, pharmaceuticals and manufacturing.

We have embraced fierce competition in our home markets and become an innovative and dynamic company competing in the converged markets of computing, IT and communications.

Our purpose is to use the power of communications to make a better world. Our strategy is commitment to growing a successful business by being valuable to customers and society, and to delivering value to our shareholders.

BT’s strategy is to drive broadband-based consumer services, become the ‘Brand for Business’ for UK SMEs, be the wholesaler of choice and the best network provider. We aim to be a global leader through BT Global Services. And all this whilst being a responsible and sustainable business leader.

BT contributes around £3bn annually to the UK Exchequer.

BT Sport

Our BT Sport channels launched in August 2013. We are making Barclays Premier League football more accessible by offering it for free; this fits our vision of ‘bringing sport back to the people’ and getting sports TV into more people’s homes.

The market for communications is increasingly about ‘triple play’, phone, broadband, TV in one package. People want to buy these three things together for convenience and for better value. We now have around 3m direct BT Sport customers and, including our wholesale deals, the service is in around 5m homes. There have been more than 1m downloads of the BT Sport app. BT Sport is also available in more than 19,000 commercial premises.

During the 2013/14 season we showed 1275 hours over 850 football matches and around 170 hours of live rugby over 127 matches. Our average audience for Barclays Premier League games was 795k, 33% higher than ESPN during the 2012/13 season. Our top performing game to date was Manchester City v Liverpool on Boxing Day with a 1.3 million average audience and peak of viewing at 1.9 million viewers. Premiership Rugby has been a fantastic success story with audience figures which are 34% larger than Sky and ESPN combined last year. Average audience across the season stands now at 121k and average peak at 172k.

BT Sport will also be the new UK home of UEFA Champions League and UEFA Europa League football after we won the exclusive live broadcast rights to all 350 matches from both tournaments. The rights run for three seasons from 2015/16. We will show both finals for free on BT Sport. Every British team will be shown free on BT Sport at least once.

We want BT Sport to be more inclusive and to offer entertainment as well as live sport. As well as deliberately targeting more women’s sport than other broadcasters, we’re broadcasting a host of entertainment shows about sport.

We’ve built our own 80,000 square-foot production hub at the Queen Elizabeth Olympic Park in Stratford. It’s built around two main studios, from which we broadcast our three channels: BT Sport 1, BT Sport 2 and ESPN. They are the biggest sports studios in Europe. And we’re building a third studio to increase our capacity even further.

Broadband availability and speeds in the UK

BT provides services across the UK in a non-discriminatory way; our fibre network can be used by any communications provider (CP), BT’s competitors, to sell services to their customers.

BT has invested £2.5bn in our continuing commercial roll out of fibre broadband, at speeds of up to 80 Mbps, to two-thirds of UK premises. This has been achieved some 21 months ahead of our original target. This is one of the biggest fibre programmes in the world without central government support.

We have extended that roll-out into areas where the commercial case for investment is more challenging: the ‘final third’. We have bid competitively for public funds to do this through Broadband Delivery UK (BDUK) and are now working with local authorities on 46 BDUK schemes.

We believe, when other networks are taken into account, the current phase of BDUK contracts will get superfast broadband to more than 90% of UK premises; so far with combined commercial and BDUK roll-outs we have passed 21m UK premises. All of this fibre network, commercial and BDUK can be used by any communications provider (CP).

The government has also announced plans to extend its BDUK programme with the next phase of funding targeted at getting the UK to 95% coverage. BT is bidding for these Superfast Extension Project (SEP) funds to complement our existing projects.

Summary of key fibre-coverage statistics

  • There are c29m premises (domestic & business) in the UK.
  • Our investment in fibre of over £3bn (approximate value of BT funds used in BDUK and commercial roll-outs combined to date) has so far covered over two-thirds of premises (21m), and we are going further.
  • We believe current BDUK projects will help achieve over 90% coverage of the UK.
  • The phase 2 projects have the potential to take this to over 95% of the UK.
  • BT will invest a further £50m, as part of its commercial programme, to benefit more than 30 cities, helping to make fibre available to more than 400k additional urban premises.
  • A new fibre customer is connected through the roll out of our network every 22 seconds, 24 hours a day.

Rural

  • All 44 of the phase one BDUK projects now have live street cabinets, though state-aid approval was only given in November 2012. BT has recently signed contracts to deliver in two additional areas, Black Country and South Yorkshire.
  • BDUK projects are currently passing up to 40,000 premises a week.
  • BT has already committed some £700m of investment and will likely commit up to £1bn to BDUK.
  • More than 30 local authorities have specified fibre to more than 90% of premises as part of phase 1. We will go beyond 90% in other areas too.
  • Two local authorities, North Yorks and Suffolk, have signed deals under the next phase of BDUK funding to provide coverage outside of the original roll-out.
  • The government has announced that more than one million premises now have access to superfast fibre broadband under the BDUK programme.

Further information

  • Ofcom’s Communications Market Report 2014 states that:
    • superfast fibre broadband (defined as 30Mbps) networks are already available to 78% of UK premises, up from 65% in 2012.
    • there is significant growth in take-up; 26.7% of connections are superfast compared to 10% in 2012
  • BT’s fibre network typically delivers speeds of up to 80 megabits per second (Mbps) downstream and up to 20 Mbps upstream (this is with ‘Fibre to the Cabinet’ technology – often referred to as ‘FTTC’). These speeds are roughly double those available when the roll-out started, thanks to technical innovations.
  • Many people and businesses in neighbourhoods where FTTC is available will be able to gain access to even higher speeds, of up to 330Mbps. Over time, Openreach will make Fibre to the Premise (FTTP) connections available on demand across its FTTC footprint, offering the higher speeds to those who want it.
  • BT’s fibre roll-out is predominantly for homes and SMEs and is separate to the provision of high-capacity broadband for larger businesses and some SMEs who may wish to have their own private broadband circuits (leased lines) through products such as ‘Ethernet’.
  • Recent trials in our laboratories show that we can get 'ultrafast' speeds of up to one Gigabit per second (1000 Mbps) over a mix of fibre and copper. BT is now looking at how this technology can be deployed in the future to further improve speeds for all customers.

Rural areas

  • The many projects under way include:
    • more than 140k North Yorkshire homes and businesses are now able to access high-speed fibre broadband as a direct result of BDUK. 90% of the county will be reached by the end the current programme, with further coverage planned by 2017.
    • Suffolk has also signed a contract under the next phase of funding expected to take coverage further, to 95% of homes.
    • By the end of 2014 Digital Rutland will become the first BDUK project to complete its phase one roll-out, providing the vast majority of premises in the county with fibre connectivity.
    • more than 275k premises in Wales alone had been passed by November 2014.
    • within a month of the town of Spaldwick, Cambridgeshire, going live with fibre, 40% of the 300 premises had ordered new fibre services.
    • half ofNorthlew, a Devon village, has signed up to superfast broadband through a four kilometre microwave radio link, a technology trial which enables challenging, remote areas to access broadband, where extensive excavations to lay fibre-optic cables are not viable. The trial will include a number of other areas, including Gloucestershire.

International comparisons (all figures from Ofcom)

  • Availability of superfast broadband has increased in the UK from around 60% at the end of 2011 to 78% in June 2014. The UK is ahead of its major competitors in the ‘EU5’ (France, Germany, Italy, Spain and the UK).
  • Among the EU5, using the most recent comparable data, the UK has the:
    • highest broadband take-up (all types, by household), at 83%
    • highest proportion of people to have bought goods online over a year (77%)
    • highest weekly usage of the internet (87%)

lowest proportion of people who have never used the internet (8%).

Other superfast broadband projects

  • Superfast Cornwall, a partnership between BT, the European Union and Cornwall Council, has seen more than 194,000 premises passed by fibre and aims to achieve 95% fibre coverage for Cornwall and the Isles of Scilly by the end of 2014.
  • Northern Ireland has over 90% coverage of fibre. Over 70% of the fibre cabinets are in rural locations and over 3,000km of fibre has been installed predominantly in rural areas.

BT - in figures

 

 

Full year
to 31 Mar 2014

Full year
to 31 Mar 2013

Full year
to 31 Mar 2012

Revenue1

£18,287m

£18,339m

£19,397m

EBITDA1

£6,116m

£6,143m

£6,034m

Profit before tax1

£2,827m

£2,656m

£2,391m

Capital expenditure

£2,346m

£2,438m

£2,594m

Normalised free cash flow2

£2,450m

£2,300m

£2,307m

Earnings per share1

28.2p

26.3p

23.4p

1 before specific items
2 before specific items, purchases of telecommunications licences, pension deficit payments and the cash tax benefit of pension deficit payments

At 31 March 2014 BT shares closed at 379.5p, valuing the company at GBP30 billion. Over the previous 12 months, BT shares rose 37%, outperforming the FTSE100 which rose 3%. 

BT TV

BT TV gives viewers access to over 100 channels including Freeview, BT Sports channels, the top pay TV channels, HD and Kids channels, catch up TV and the UK’s largest library of on-demand content.

BT TV is delivered on two main types of set top box: BT’s YouView box and the Vision+ box. All new customers now receive BT’s YouView box, except for those customers wanting Sky Sports. YouView is a state-of-the-art set top box featuring pause and rewind live TV, full recording capability, and the backwards guide which seamlessly blends live TV with catch up. YouView also offers a single search and browse experience across all content, including a growing range of third party providers such as Dave from UKTV and Now TV from Sky.

BT TV now has approximately 1million subscribers. BT Sport, which is also available on the Sky TV platform, has more than 2m direct customers and in addition is available to Virgin Media customers. Furthermore BT Sport has had more than 1m downloads of its app, giving availability via IOS and Android devices and PCs.

Youview

YouView is the joint venture between BT, the UK public service broadcasters, TalkTalk Group and Arqiva to develop and promote a new open standard for TV, combining broadcast and broadband television delivery. YouView was launched in July 2012.

We believe that YouView will transform the UK TV market, combining broadcast digital channels with catch-up, archive and on-demand content and interactive TV over broadband, free from public service broadcasters and from pay TV providers like BT Vision. It will give a far greater range of content providers access to the living room, creating unprecedented consumer choice. YouView will maximise choice for consumers, sustain the long-term future of free-to-air broadcasting and promote broadband take-up.

BT – the global company

BT Global Services (BTGS) is a global leader in managed networked IT services, operating globally and delivering locally to help our customers thrive in a changing world.

BTGS employs around 19,800 people globally, with one of the largest professional services capabilities in our industry. We bring together a broad portfolio of services and have a track record of delivering for customers in more than 170 countries.

Over the last three years we have invested to improve our network, portfolio and services capabilities in the high growth economies of Asia, Latin America, the Middle East and Africa. We have also accelerated our industry focus for customers in strategic sectors such as global banking and financial markets, government, health, consumer packaged goods, manufacturing & pharmaceuticals, global logistics, global mining, oil & gas and global systems integrators.

In too many countries we are still denied use of the incumbent’s access network under non-discriminatory terms and conditions. We are fighting for fair markets as we expand our business outside the UK.

BT Global Services in Europe

BT operates substantial domestic businesses in key markets in Europe. We have more than 13,000 employees supporting our customers in the region.

UK

BT Global Services is one of the UK’s leading suppliers of networked IT services for public, finance and corporate sector customers. Many of our customers are based in the UK or have operations in the country. Around 6,000 people work for Global Services in the UK.

We offer extensive domestic voice, contact centre and IP VPN services in the UK. We also have 1,182 core fibre Ethernet nodes and 730 Ethernet over Copper access nodes. Global Services customers will also be able to take advantage of the superfast broadband network (VDSL & GPON), which will be available to around two-thirds of the UK’s homes and businesses by the end of 2014. We also have three security operations centres.

BT Global Services has around 1,800 UK customers connecting businesses and organisations in almost every sector of the British economy. In retail alone, our networks serve over 27,500 sites nationwide on behalf of 46 major chains. BT’s networks connect all the major retail banks and play a vital role in the supply chain of some of Britain’s largest manufacturers and logistics companies. Our network serves not only our customers’ British operations but also provides global connectivity to their sites in over 170 countries worldwide.

BT provides vital connectivity and IT expertise that is at the heart of public services delivered nationwide by central, local and devolved government, including health and defence.

Benelux (Belgium, Netherlands, Luxembourg)

BT has operated in Belgium since 1988, in the Netherlands since 1989 and in Luxembourg since the late 90s. Around 1,200 people support BT from offices in Amsterdam, Brussels and Luxembourg. We operate domestic IP VPN and Ethernet services through BT’s global network and local assets including more than 5,700 km of fibre network in the Netherlands and a 1,100 km fibre backbone in Belgium.

We have dual-data centre capability in the Netherlands and data-centre capacity in Belgium, as well as a network operations centre in Amsterdam.

Germany and Austria

BT has had local operations in Germany since 1995 and is one of the leading suppliers of global networked IT services to corporate customers there. According to Current Analysis, BT is ‘number 2’ in the market for global IP and data services behind T-Systems, owned by Deutsche Telekom.

BT employs around 1,300 people and serves about 1,000 customers in Germany and Austria, including two thirds of the top German (DAX30) companies, some of the largest banks, insurance companies, chemical companies and technology groups.

BT has an extensive high-speed network with voice, IP and Ethernet capabilities in Germany, own metropolitan area networks in four major cities and three data centres , including a brand new, highly energy-efficient site in Frankfurt opened in June 2012. The German customer base includes big brands like BASF, Commerzbank, Deutsche Post DHL, HeidelbergCement, Media-Saturn, Munich Re and BMW.

France

In France, BT employs more around 2,000 people and serves 400 clients. Ninety per cent of the France’s CAC40 companies are BT clients, including major French banks, utilities and industrial companies. We have a strong expertise in security in France, with 350 security specialists, and provide a wide range of managed security services. We operate three data centres, a network operations centre and a security operations centre. A BT City Fibre Network (BT CFN) was launched in October 2013, covering Paris and its suburbs.

Italy

BT has been operating in Italy since the early 90s and employs around 1,000 people. BT is the only national player focused on business and is the main alternative to Telecom Italia. We have a 16 per cent market share in business data transmission and operate a fibre network with 15,000 km covering the whole of Italy.

We serve 2,000 large companies in Italy including ENI, Fiat Group, BNL, Mediaset, Mapei, NTV as well as the justice and agriculture ministries. We also serve more than 80,000 SMEs. Our Italian business continuity control centre works 24/7 and we operate five data centres in the country.

Spain & Portugal

BT employs around 900 people providing services to 2,000 major Spanish and Portuguese enterprises, 29 of which are listed in Spain’s IBEX-35 index. It also serves over 30,000 small and medium size enterprises.

We are the leading alternative provider in the Spanish enterprise data-transmission market with a 22.6 per cent market share. SEPE (Servicio Público de Empleo Estatal), our largest Spanish government customer in the country for the last 12 years, operates more than 800 branches in Spain providing unemployment services all around the country through our BT VPN network (data and voice) and contact centre services. We have renewed the contract with the customer for the third time for the next 72 months to provide a new BT VPN infrastructure and service, including cloud ToIP services, business voice and contact centre. BT provides ACCIONA, the Spanish energy business, with domestic WAN, LAN and IP telephony services for 500 sites. We are also providing BT Connect and BT One services, data services, voice and maintenance, to the Secretary of State for Public Administrations in Spain to connect more than 250 sites across the country.

Other European countries

BT also has operations in Switzerland, the Nordics, central & eastern Europe and Russia, where we support local operations of global multinationals as well as locally based multinationals, such as Credit Suisse, Nestle, Novartis, Syngenta, Tetra Pak, Volvo, Ericsson and Arla Foods, amongst others.

Latin America

BT operates in 22 Latin American countries and employs more than 1,000 people across the region, offering a wide range of networked IT services including IP infrastructure, application services, outsourcing solutions and business transformation.

In 2011 we announced a series of investments aimed at doubling our business in key Latin American countries. MPLS points of presence are increasing by 20 per cent, we are launching over 30 new products and services, expanding our Ethernet coverage to 26 cities and hiring around 250 new professionals.

In Latin America, BT has one of the largest satellite broadband coverage operations, with more than 24.000 sites, seven network operations centres providing monitoring and proactive diagnosis 24x7, a security operations centre in São Paulo, four data centres (Brazil, Argentina, Venezuela and Colombia), 190 points of presence and more than 40,000 customer connections.

BT serves more than 1,300 customers from public and private sectors and from different industry verticals including multinational companies such as Anglo American, Unilever, SAB Miller, Latin American companies such as Ecopetrol, Pão de Açúcar or Rede Energia and public sector organisations such as Correios (Brazilian Post Office), Caixa Econômica Federal (Brazil) and Vive Digital (Colombia).

Asia, the Middle East and Africa

Asia Pacific

BT has had direct sales operations in Asia Pacific since 1985. Today the region is headquartered in Hong Kong with more than 3,500 employees supporting customers across 33 countries. On top of sales offices in Hong Kong, India, China, Malaysia, Singapore, Indonesia, South Korea, Japan and Australia, BT operates five regional 24/7 service centres (Mumbai, Pune, Noida, Dalian and Sydney), and a global service centre providing support in Gurgaon, security operations centres in Gurgaon and Sydney, a research centre in Beijing and eight new technology showcases.

In November 2013 BT launched a series of initiatives aimed at further accelerating growth in key markets across Asia, the Middle East and Africa. These include more than 400 new people focused on regional business growth, further investment into infrastructure, portfolio capabilities, new sector solutions, field services operations in eight countries and a new strategic service assurance centre in Malaysia. This new phase of investments builds on the success of earlier programmes announced in 2010 for the Asia Pacific region, in 2011 for Latin America and in 2012 for Turkey, the Middle East and Africa.

For the fourth year running in 2013, BT was awarded the Best Managed Service Provider at the Telecom Asia Awards. Communications regulatory frameworks in the Asia Pacific Region range from fully liberalised to closed monopolies. BT is working to encourage effective regulatory frameworks which foster competition and enable market access to all players.

Middle-East and Africa

BT has had direct sales operations in the Middle-East and Africa (MEA) since the 1980s. Today more than 300 employees support customers from three regional hubs in Istanbul, Dubai and Johannesburg.

In November 2013 BT launched a series of initiatives aimed at further accelerating growth in key markets across Asia, the Middle East and Africa. These include more than 400 new people focused on regional business growth, further investment into infrastructure, portfolio capabilities, new sector solutions, field services operations in eight countries and a new strategic service assurance centre in Malaysia. This new phase of investments builds on the success of earlier programmes announced in 2010 for the Asia Pacific region, in 2011 for Latin America and in 2012 for Turkey, the Middle East and Africa.

BT has 17 network points of presence in MEA and a number of interconnection agreements further expanding network reach into Turkey and Sub-Saharan Africa. Ethernet services capabilities have been rolled out across 21 cities, including Istanbul, Dubai, Abu Dhabi, Riyadh, Casablanca, Manama, Doha, Cape Town, Johannesburg and Pretoria.

BT operates a regional satellite centre of excellence in Istanbul and a 24x7 network and customer support service centre in Durban, supporting customers across the region. BT operates EBTIC, an innovation centre in Abu Dhabi, in co-operation with Etisalat and Khalifa University.

BT in the US and Canada

BT has had a presence in the US and Canada for over 20 years. Today we have around 2,600 employees in the region and offices in more than 25 cities. BT owns and operates its own network infrastructure in North America. We also have 25 MPLS nodes across the US, making up one of the larger MPLS networks of any carrier in the region. This expanded footprint enables us to reach over 80 per cent of key customer sites within a 200-mile radius, as well as extending coverage beyond the US with MPLS points of presence in Toronto and Mexico City.

We serve more than 1,000 customers in the US and Canada, including 82 per cent of the Fortune Global 500 and 71 per cent of Fortune 1,000 companies, including, NYSE, Euronext, Cameron International, Chubb, Fujitsu and AstraZeneca.

Approximately 50 per cent of our top 2,000 customers have headquarters or major operations in the Americas including Credit Suisse, Pepsico, P&G, Unilever, Thomson Reuters, Schlumberger and Bristol-Myers Squibb.

Ineffective regulation of business access continues to be BT’s biggest regulatory issue in the US. BT is reliant directly or indirectly in 90% of the cases on the incumbent operators to provide last mile access. The incumbents enjoy rates of return of anywhere between 60% and 170%, and the overearnings are used to subsidise wins and global expansion. In late 2013, the US Federal Communications Commission took another important step in its efforts to collect data on the state of competition in the business broadband market. We believe the data collected by the FCC will demonstrate that business access is a failed market in the US, with overpriced and uncompetitive services. BT appreciates the FCC’s focus on this issue and we look forward to seeing the proceeding move along as expeditiously as possible.

BT as a corporate citizen: Better Future

Being a responsible and sustainable business leader is one of BT’s six strategic priorities to grow the value of our business. Our Better Future programme is our commitment to use the power of communication to improve lives and ways of doing business, without it costing the earth.

BT has set itself three goals to achieve by 2020 which will help it to grow sustainably, especially in new emerging markets. The goals focus on connecting people digitally (‘Connected Society’), using our skills and technology to help society support good causes (‘Improving Lives’) and ensuring BT makes a net positive contribution to the environment (‘Net Good’). They are rooted in what BT does best: bringing together our networks and technology with the expertise of our people to make a better world.

  • We invested £27.1m in society in 2012/13, 1.12% of adjusted pre-tax profits, in addition to the £3bn or so that we pay to the Exchequer each year.
  • BT people provided 43,600 days of volunteering activity in the community in 2012/13 at an estimated value of £13m.
  • We are committed to reducing the carbon intensity of our global business by 80% against 1997 levels  

BT and climate change

BT uses significant amounts of energy to power its network and to heat, cool and power buildings. We aim to reduce our energy costs and consumption as much as possible by improving energy efficiency. We also buy ‘green electricity’ and are installing onsite renewable technologies to help reduce our climate change impacts.

We have reduced carbon emissions in the UK by 81% since 1997, well ahead of our target to achieve an 80% reduction in 2016. We will also reduce the carbon intensity of our global business by 80% by 2020 (compared with 1997).

BT has signed an agreement to purchase 100% renewable energy from npower. As part of this deal it has issued one of the world’s first electricity carbon labels. A-G colour coded labels provide consumers with visibility of the carbon content in their electricity. The BT electricity carbon label provides an excellent proof of concept for the scheme. If more consumers had visibility of the environmental impact of their electricity they would select cleaner energy and incentivise generators to invest in clean energy infrastructure. Such a system has worked successfully in driving low-carbon purchasing decisions in other markets such as white goods and vehicles.

BT in health

BT is a global player in the healthcare IT market, helping customers deliver better, safer and more efficient care for their patients and the wider population. In the UK it has been a key partner of the National Health Service (NHS) for more than 65 years and is one of its largest suppliers of IT and communications services. Its breadth and depth of healthcare transformation knowledge and experience means it can connect healthcare globally.

BT continues to make good progress in its healthcare work in the UK and internationally. In the UK, we have helped the NHS to put in place the infrastructure that underpins the service today but is also ready to support a more connected future

BT has successfully delivered the secure national broadband network, N3, one of the largest Virtual Private Networks in Europe with more than 51,000 connections. N3 is Public Services Network (PSN) certified for its Direct Network Service Provider (DNSP) connectivity service. This means that N3 can provide secure, resilient access to the core of the PSN, the first step to enabling the 1.3 million users of the network to collaborate and share information with other organisations such as local authorities and social care providers.

The Spine, built and managed by BT, gives more than 900,000 healthcare professionals secure access to a patient’s clinical and demographic information. Every day it supports 39,000 hospital appointments to be booked electronically and 675,000 electronic prescriptions to be sent. In London and the south of England, our clinical information systems are being used by 230,000 NHS staff to provide better, safer care at more than 80 NHS organisations.

We’ve worked with healthcare providers to develop a range of health-specific products and services, including telehealth and telecare, interoperability, analytics and mobility, which transform the way healthcare services are delivered.

Using the experience gained in the UK, BT is expanding internationally, with a particular focus on Asia Pacific where we have created a health practice to co-ordinate all our health activities in the region. We recently won our first healthcare IT contract in China with General Hospital of Ningxia Medical University. We are making good progress with Serco Australia to install and manage the communications infrastructure and run a range of IT services for the new Fiona Stanley Hospital in Perth, one of the most technologically advanced medical and environmentally friendly facilities in the world. BT is also the IT partner for Connexion, Singapore’s first integrated healthcare and hospitality complex and a leading facility in the region.

Child online safety

BT takes its responsibilities for child protection online very seriously and supports the parental engagement approach advocated by the Government's Bailey Review. We are an active member of the UK Council for Child Internet Safety (UKCCIS) and are engaging at a UK and European level on commitments to keep children safe online.

The Bailey review in 2011 and the 2012 Government’s response to the DfE consultation both concluded that default on was not the right approach but rather active/unavoidable choice was better suited to engaging parents and driving awareness of the need to protect children online.

With this in mind, we have:

  • launched active choice device-based controls for devices in the home in 2013
  • pledged to provide all new and existing customers with an unavoidable choice to install network based parental controls
  • launched a pornography filtering solution for our Wi-fi site partners and written to all customers to encourage they use it while applying by default blocking to all site partners where unsupervised children are reasonably expected to be present
  • launched the use of a ‘splash page’ in place of an error 404 message when users intentionally or accidently access child abuse material that has been flagged by the internet Watch Foundation (IWF)
  • supported the development of industry-wide marketing campaign to drive awareness and education around online safety for children for launch in 2014

2014 sees the launch two major initiatives that demonstrate our commitment to making the internet a safer place for children:

  • Working in partnership with Unicef UK we have embarked upon a three year education programme, The Right Click: Internet Safety Matters, which aims to help children to protect themselves online and help parents to keep their children safe on the internet. The partnership will see both organisations work with teachers, parents and children across the UK, delivering ‘train the teachers’ sessions, which will be followed by workshops for parents and children on practical ideas and tools to empower them to be safe online. The partnership will also enable UNICEF UK to expand its UK based Rights Respecting Schools programme to disadvantaged areas. We will reach 600 schools and 21,000 parents and children during the course of the partnership.
  • In partnership with Sky, TalkTalk and Virgin Media, BT has created Internet Matters. This is a standalone, not-for-profit, organisation that helps parents keep their children safe online. We have committed to co-fund and support Internet Matters for three years and during this time will be encouraging new partners to join. Internet Matters’ remit is to empower parents to keep their children safe online by encouraging them to learn about online safety, talk to their children about it and deal with issues that arise.

BT has offered free parental controls to its customers for years, but the protection focused on desktop computers and laptops. In Dec 2013 we launched our network-based parental controls. The new controls cover any internet-enabled device using home broadband, from PCs, laptops and games consoles to tablets and smartphones. The filter will still be free to all customers.

New customers will have to make a choice on whether or not to activate the parental controls when setting up their internet connection for the first time. We will be contacting all existing consumer customers during 2014 so that they have to make a decision on whether or not to set up the controls.

There will be three set filter levels: strict, moderate and light, which can be customised to suit each individual family’s needs. Additional websites can be added to the list to be allowed or block.

We have for years instituted a different regime for illegal images of child sexual abuse, using the Internet Watch Foundation’s list to automatically block such material.

There is no substitute for parental engagement and diligence in monitoring children’s use of the internet. Our child-protection package helps parents to exercise such diligence.

The European Union Policy Agenda

The European Union (EU) has a significant influence on the policy and regulatory environment in which BT operates, both in the UK and across the rest of Europe, with EU legislation setting the framework for areas as diverse as fibre access, spectrum, security, on-line child protection, and privacy. Our focus is on an open, competitive, level playing field across the EU and across different communications platforms: a true Telecoms Single Market.

The EU “Digital Agenda” recognises the contribution ICT makes to Europe’s competitiveness and growth, and sets challenging goals for fast broadband deployment - BT is making rapid progress towards these in our superfast broadband roll-out. We share the European Commission’s policy of encouraging both investment and competition in innovative new next generation access networks.

The European Commission is also addressing how to improve the functioning of the Telecoms Single Market, proposing new rules on access regulation, consumer protection, net neutrality, spectrum and roaming. BT supports a balanced approach which does not impede development of new business models and is encouraging them to drive for a true level playing field between countries, between the converging telecoms and media sectors, and for pan-EU business service provision. As part of this, competition at service-level will be essential if the full benefits of innovation are to be enjoyed by both consumers and businesses.

The EU also has a key global impact through international trade policy, and BT strongly supports the European Commission’s push for more open trade agreements with the US, Japan and other markets.

Cyber security

BT has a reputation for high levels of trust and security, and is committed to providing security for both its own and its customers’ networks, systems and data to protect against cyber-attack and exploitation.

BT's key network services and products are converging onto a single architecture that enshrines comprehensive and cost-effective cyber-defence capabilities, allowing prevention, detection, disruption and response. The security we offer to customers builds on the best security practices already adopted by BT. We help governments across the world deliver their cyber strategies as they work towards legislation, regulation and contractual arrangements to facilitate and enable cyber-defence.

BT's network has always been underpinned by robust security controls and built-in resilience. We continue to work closely with all our suppliers, and governments where appropriate, to ensure that the security of the BT network is not compromised. We take into account cyber risks not arising from network and system electronic attack, but also from the supply-chain, physical access, and through personnel.

Mobility and convergence - allowing communications wherever you are

BT is fundamental to mobile telephony, not least because mobile calls are usually carried across our fixed network. The development of new bandwidth-hungry devices like smartphones means increasing demand for BT’s landline and wi-fi networks.

Computing and all forms of communication are ‘going wireless’ and will increasingly be available on the basis of what you want, where and when you want it. BT's wireless broadband footprint, BT Wi-fi, is the world’s largest public wi-fi network.We are the only broadband company in the UK to provide unlimited access at millions of BT Wi-fi hotspots as part of broadband packages.

We have over five million wi-fi hotspots in the UK and Ireland, plus more than three million international hotspots through our partner Fon We have the largest Wi-Fi network in the UK and believe this to be a critical asset in the infrastructure race of the future.

BT Wi-fi is available on and off the high street in homes, small businesses and many of the UK’s largest brands including Hilton, Network Rail and John Lewis and Game stores. We were the only public wi-fi provider on the Olympic Park and have 500k+ hotspots across London.

Net neutrality

‘Net Neutrality’ (NN) means different things to different people, but essentially refers to the idea that the internet should be a level playing field, with all data carried over it treated in a non-discriminatory (‘neutral’) way by network operators, regardless of its source. In the UK and the rest of the EU, the emergence of fiercely competitive broadband markets has tended to support the absence of explicit regulation to enforce neutrality. Some member states, notably the Netherlands and Slovenia, have chosen to impose certain NN rules, but the European Commission is anxious to harmonise the approach to NN and so has proposed NN measures in a Regulation which, if approved by the European Parliament and the Council of Ministers in 2014-15, will establish some basic principles across Europe. Ofcom continues to believe that there is no need for additional regulation, based on the findings of its regular market research and the existence of its own regulatory powers coupled with Industry self-regulation (see below).

  • BT is committed to an open internet providing full consumer choice while allowing continued commercial innovation that has helped make the internet such a success. 
  • As the leading internet service provider (ISP), BT operates according to net neutrality principles, treating all traffic consistently, regardless of its source, and being fully transparent about any types of traffic we may manage in order to minimise network congestion.
  • None of BT’s broadband packages are now subject to any traffic management at all.
  • With strong competition between service providers, net neutrality is irrelevant since customers can choose to go elsewhere if they are unhappy that a service is being restricted.
  • In the UK, major ISPs such as BT, operate under a number of Codes of Practice which, together with Ofcom’s existing powers, safeguard the neutrality of the internet.
  • Network operators should be free to offer additional capabilities and differentiated service levels provided it is done on fair and reasonable terms.
  • Net neutrality may have a role to play in countries where competition is less well-developed, but it would be an unnecessary and potentially stifling form of new regulation in the UK and the rest of Europe.
  • Traffic management is a necessary tool for ISPs to manage the quality of the service they provide to customers in order to deliver and maintain the quality of the internet service, and all UK ISPs are fully open about what traffic is managed and when.

Codes of practice

  • The Broadband Speeds CoP commits ISPs to accuracy of speed information at point-of-sale and on the web, together with quality management of customer satisfaction issues.
  • The Traffic Management Transparency CoP commits ISPs to provide information that’s understandable, appropriate, accessible, current, comparable and verifiable, and to publish a common Key Facts Indicator (KFI), summarising the traffic management practices for each broadband product.
  • The Open Internet CoP commits ISPs to providing full internet access products as the norm and not to deploy traffic management in a manner that targets and degrades the content or applications of specific providers.

Regulation and Openreach

Control of the access network in the UK is with Openreach, BT’s local network business, specifically set up to provide access network services and products on an equal basis to all the UK communications industry. Openreach installs, supports and maintains the wiring, fibre and connections which link tens of millions of homes and businesses in Britain to their communications providers' networks.

Openreach is also responsible for delivering the roll-out of BT’s fibre broadband network.

Pay TV

Ofcom’s decision in March 2010 to require Sky to wholesale its Sky Sports 1 and 2 channels was welcome, but it was disappointing that Sky Sports 3 and 4 were not included, the regulated price was too high, movie channels were excluded and that no wholesale price requirement was set for HD channels.

On sports content, we appealed to the Competition Appeal Tribunal (CAT) against the Ofcom decision as we believed that the wholesale (rate card) price set by Ofcom was too high and that Sky Sports 3 and 4 should have been included. In August 2012, the CAT ruled against us. However, we were pleased that in April 2013 the Court of Appeal granted BT permission to appeal the CAT’s Pay TV Sports judgment. On February 17 2014, the Court of Appeal found in favour of BT and the CAT is going to review again the rate card issue.

In April 2014 Ofcom announced it would review the ‘wholesale must offer’ obligation placed on BskyB in relation to Sky Sports 1 and 2. The review will take account of any changes in the market since2010.

On access to premium movies, Ofcom referred the issue to the Competition Commission (CC). In August 2012 it published its final decision. It said that competition in retail pay TV was not effective but on the specific issue of movies it said that first run movies on subscription and Sky Movies in particular, were not significant for our ability to attract new consumers. This was very disappointing. Since then we have completed a commercial deal with Sky to supply the Sky movies channels on YouView and BT TV. This deal was hard fought and unattractive from a commercial viewpoint.

We have also submitted a competition act complaint to Ofcom about our inability to get wholesale supply of Sky Sports 1 and 2 on YouView.

By way of comparison, note that we offer rival companies, including Sky, the right to rent BT lines at wholesale prices, so they can offer phone services to their customers. We want equivalent rights with regard to Sky – the opportunity to buy their content at a fair wholesale price and sell it to our customers. Sky is one of our biggest customers – we want to be one of its.

Metal Theft

Metal theft (copper, lead, etc) affects many industries (eg, power, transportation, water and communications), costing the UK economy millions of pounds. The safety and social impacts of gas pipes being ripped from houses, lead from churches and schools, roadway drain and manhole covers being taken, etc are immeasurable. There has been a significant increase in attacks on BT’s network across the UK, directly impacting us, our customers, and customers of other communications providers.

We support the British Transport Police, working on behalf of the Association of Chief Police Officers, and their aims to make cable/metal increasingly difficult to steal, increase the risk to offenders (though tougher sentencing/better chance of being caught), reduce the value of the commodity to offenders and reduce the attractiveness of stolen metal to scrap metal dealers.

We welcome the introduction of the Scrap Metal Dealers Act 2013 as the old act was no longer fit for purpose. We will continue to work with police forces around the UK as well as other responsible authorities to ensure a rapid and smooth implementation.

Nuisance calls

BT takes the issue of nuisance calls very seriously and constantly looks for ways to help customers manage this problem. We are also working with regulators, industry and consumer groups to tackle this issue. Of particular concern at the moment are payment protection insurance (PPI) claim sales, other ‘cold’ marketing calls and silent calls, which may result from the use of call centre autodialling equipment. Many, though by no means all, of these calls are made from international and withheld numbers.

Nuisance calls are an increasing problem. Many organisations do not adhere to the various regulations (from the Information Commissioners Office, Ofcom and Phonepay Plus) around marketing by phone, and also call customers who have signed up to the Telephone Preference Service (TPS), which registers customers who have opted out of sales and marketing calls.

We believe that the prime focus needs to be on companies that ignore and deliberately flout the current rules, eg, companies that deliberately mask their identities by not displaying a CLI, or displaying an invalid CLI, leaving no message to say who has called, etc.

We agree with the Department of Culture, Media and Sport’s action plan (30 March 2014) that enforcement and rising customer awareness is the key to reducing these calls.

Services and products for customers

  • BT provides information to customers experiencing nuisance calls via our Nuisance Calls Bureau and Nuisance Calls Advice Line (NCAL, 0800 661 441) and our unwanted calls website www.bt.com/unwantedcalls.
  • To help raise customer awareness bt.com/unwantedcalls links to the Ofcom nuisance-call guides and the Which? ‘calling time on nuisance calls’ portal. Our NCAL team will also offer vulnerable customers (those without internet access) to report their nuisance call complaint for them.
  • BT has introduced a new phone, the BT8500 Advanced Call Blocker, which enables people to block up to 100 per cent of unwanted incoming calls, such as cold marketing calls and silent calls from withheld and international numbers. This phone is available from BT and a number of major online and high street retailers. A ‘big button’ version has also been launched.
  • BT Privacy with free Caller Display for 12 months, a free service to all customers with a 12-month line rental contract that offers registration with the Telephone Preference Service plus free Caller Display, so customers can see the number calling them and decide whether or not to pick up.
  • International CLI From December 2013 BT began rolling out technology that enables telephone numbers of calls from abroad to be displayed alongside the word ‘international’, to help customers see international calls they do want. This roll-out is now complete.
  • As alternatives to our nuisance-call blocking phones customers can sign up to:
    • Choose to Refuse: this allows customers to block calls from up to 10 numbers they choose and costs £3.55 a month.
    • Anonymous Call Rejection: gives customers the power to block incoming calls where the number is identified in the network as “withheld” and costs £4.30 a month.