The BT Story

November 2012

You can download the BT Story as a PDF document

Introduction

The BT Story provides a summary of some of the key strategic and policy issues affecting the company today both in the UK and across its growing global businesses.

The BT Story

BT is the major provider of telecommunications networks and services in the UK. But we are also a major global communications company, serving customers in more than 170 countries. We provide services to large corporate and public sector customers with operations across the world in a wide range of sectors such as banking and financial services, consumer packaged goods, logistics, pharmaceuticals and manufacturing. Information about our presence in the different regions around the world appears later in the BT Story.

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.

BT’s strategy is to drive broadband-based consumer services, become the ‘Brand for Business’ for UK SMEs, 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 and the 2012 Olympics  

BT was the official communications services partner of London 2012 and designed and delivered a flawless communications infrastructure with a capacity that dwarfed those of previous Games.

The company designed and delivered a single, integrated communications network (a first for a summer Games) spanning 94 locations with a critical Games-time service availability of 99.999 per cent. We provided services such as internet, email, fixed-line telephony and mobile services to LOCOG and the 27,500 accredited media.

A BT fibre-based network delivered TV coverage of the Games from the majority of venues to the International Broadcast Centre for transmission across the world. BT installed an extensive wi-fi infrastructure on the Olympic Park, including the largest, high-density public wi-fi installation in the world. During the Paralympics, BT saw a peak of one million users on its UK wi-fi network for the first time ever.

BT provided the athletes’ village with the most advanced fibre broadband in the UK allowing the athletes to get online at ultra-fast speeds for free. And by working with mobile operators, BT ensured there was greater mobile coverage and capacity than at any other previous Games.

The official London 2012 website, which BT hosted, had more than 450 million visits – four times as many as the Beijing Games website in 2008.

BT was a leading supporter of the Cultural Olympiad and events such as BT River of Music and BT London Live brought the excitement of the Games to a wider audience and attracted millions of fans. The company also played an active role in Get Set, LOCOG’s official education programme, helping to create a legacy for the London 2012 Games by developing children and young people’s communications skills. BT’s Coaching for Life, Big Voice and Communication Triathlon programmes reached 300,000 school children and college students across the UK.

BT was the first commercial sponsor to extend its partnership with the British Paralympic Association all the way to the next Games in Rio 2016, demonstrating our commitment to Paralympic sport.

Broadband – investing in faster speeds and spreading coverage

As well as providing services across the UK in a non-discriminatory way, we continually work to improve the speed of the broadband services we offer.

We have committed £2.5bn of our own funds to roll out fibre-optic cable required for superfast broadband. This will deliver superfast broadband at speeds of up to 80 Mbps to two-thirds of UK premises by spring 2014, more than 18 months ahead of our original schedule, with speeds of up to 300 Mbps available on demand.

We are bidding for public funds and working with local authorities to extend that roll-out into areas where the commercial case for investment is more challenging, the ‘final third’. If successful in most of these bids, we believe we can get superfast broadband to more than 90% of UK premises.

We are now rolling out fibre to more than one million premises a quarter. This is one of the largest fibre programmes in the world without central government support – and it’s available for all BT’s competitors to use.

More than 99% of UK homes already have access to broadband. This is the best in the G8. Almost 18 million UK homes have a fixed broadband connection, this is around 65% of households, the figure was 12% in 2003. Around 9 out of 10 UK homes have access to more than 2Mbps in practice (often substantially more), enough to stream standard quality television or video pictures.

We are also trialling one Gigabit fibre broadband speeds in the UK. This will deliversome of the fastest residential speeds over fibre broadband anywhere in the world today.

Broadband access in rural areas

We want to provide much wider coverage for superfast broadband and we can reach more areas through public funding. We are looking to secure some of the funds government will make available.

We welcome the Government’s plan to make £540m available in this parliament via (Broadband Delivery UK) BDUK to extend fibre to what are otherwise non-commercially viable areas.

We believe it is possible to make fibre broadband available to more than 90% of UK premises by working with local councils and devolved governments. BT is bidding for BDUK funds to make that happen. The creation of partnerships with local authorities and a shared vision is critical; and arrangements in Northern Ireland and Cornwall and the Isles of Scilly show this works.

In Cornwall a £132m partnership funded by the EU, BT and Cornwall Council, and managed by Cornwall Development Company, is bringing superfast broadband throughout Cornwall and the Isles of Scilly, making it one of the best connected places in the world by 2014. Over 10,000 businesses will be connected to superfast broadband and the investment programme will create 4,000 jobs, safeguard a further 2,000 and help attract new businesses to the area.

The final 10 per cent of the UK is going to be the hardest to reach with fixed line super-fast broadband and we are trialling other technologies. One of these is based on ‘white space’, the use of unused parts of the TV-signal spectrum to carry data, and the initial results are very encouraging and could offer an effective solution for ‘not spots’ and ‘slow spots’.

In Cornwall, we are also trialling a system designed to deliver enhanced broadband speeds over mobile telephone frequencies. This trial of the use of LTE wireless technology (so called 4th generation wireless) is in partnership with mobile business Everything Everywhere. The trial has successfully connected areas which were previously broadband ‘slow spots’. When trials are complete, we can compare the effectiveness of white space against LTE solutions.

We are also developing our existing satellite broadband services, primarily for rural business use, into a product suitable for residential customers. Satellite connections may well be an option for places where white space and LTE do not work. Using satellite is more expensive and unlikely to deliver the same speeds as white space or LTE, but could still be a solution to connect the most isolated parts of the UK.

Duct and pole sharing

BT made clear to Ofcom in December 2009 that we were willing to open our ducts to other companies.

The first companies to trial deployment of their own high-speed broadband infrastructure using BT’s duct and pole network will be Sky and Call Flow, who have completed a trial intended to test the processes and practicalities of deploying their own Next Generation Access (NGA) network through the Openreach duct and pole infrastructure.

Other communications providers (CPs) are expected to try the product. Currently Openreach, BT’s local network business, provides a managed next-generation access (NGA) product across its infrastructure on an open platform to all its CP customers, including Sky and all other UK providers.

Although duct and pole sharing will not be the silver bullet to get fibre to every premise in the UK, these new products represent a positive step, opening our infrastructure to supply industry with an even wider range of different mechanisms for delivering fibre broadband. We expect that some bidders for BDUK funding may choose to use Openreach’s duct and pole sharing product to help them deliver next-generation access in the previously commercially unviable ‘final third’. 

Net Neutrality

Net neutrality refers to the concept of non-discrimination by network operators in relation to traffic over their networks. Where there is strong competition between service providers, net neutrality should not be an issue since customers can choose to go elsewhere if they are unhappy that a service is being restricted.

BT has signed up to a Code of Practice, alongside other UK operators, which covers top level traffic management principles.

BT has made four key public commitments:

• BT broadband customers will be able to access any internet-based service or applications
• no legal service or application will be blocked on these products
• content and application providers will not be charged for basic internet conveyance
• we will provide wholly transparent information to customers on our traffic management practices in line with industry best practice . 

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 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

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 four million wi-fi hotspots in the UK and Ireland, plus 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 at many of the UK’s largest brands including Hilton, Network Rail and John Lewis & Game stores. We were also the only public wi-fi provider on the Olympic Park and at we’re now at 500k+ places across London.

BT – the global company

Globalisation has changed the economics of business. Networked IT services enable organisations to work seamlessly across time zones and borders. In order to help customers reach new markets, and improve productivity and operational efficiency, BT Global Services delivers the services they need to compete in a global market, in more than 170 countries.

BT operates globally and delivers locally to most of the world’s large multinational corporations, including most of the biggest banks, top stock exchanges, leading broker-dealers and top global corporations in industries such as pharmaceuticals, manufacturing, logistics and consumer packaged goods. Customers include many of the world’s most respected brands, such as Unilever, Thomson Reuters, Microsoft, Pepsico, Fiat, Novartis, AstraZeneca, BASF and Deutsche Post DHL.

BT also serves many of the UK’s largest corporations and is one of the largest suppliers of networked IT services to the UK government and is a trusted supplier to public sector organisations around the world, serving international organisations such as the EU, NATO, WHO and UN.

BT’s global assets include a global, all-IP 21CN network, data centres, solution design and integration professionals and IT security experts. This combination of network, IT and professional services allows BT to offer solutions that help our customers’ people to be more productive, their own customers to be better served and their organisations to operate more efficiently.

Asia Pacific

BT has been in Asia Pacific since 1985 and now offers coverage across 33 countries in the region, with 20 offices in India, China, Malaysia, Singapore, South Korea, Japan and Australia. BT operates five regional 24/7 service centres (Mumbai, Pune, Noida, Dalian & Sydney), five regional service desks and a global service centre in Gurgaon(Beijing, Singapore, Kuala Lumpur and Tokyo), two security operations centres, a research centre in Beijing and six new technology showcases.

BT in EMEA (Europe, Middle-East & Africa)BT operates substantial domestic businesses in key markets in Europe, the Middle East and Africa. We have more than 8,000 employees supporting our customers in the region.

Europe

Benelux (Belgium, Netherlands, Luxembourg) BT has operated in Belgium since 1988, in the Netherlands since 1989 and in Luxembourg since the late 90s. We operate domestic IP VPN and Ethernet Services, 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.

France In France, BT serves 400 clients. Ninety per cent of 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. In France, we operate three data centres, a network operations centre and a security operations centre.

Germany and Austria BT serves around 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.

The German customer base includes major brands like BASF, Commerzbank, Deutsche Post DHL, Heidelberg Cement, Media-Saturn, Munich Re and BMW.

BT has an extensive high-speed network with its own metropolitan area networks in four major cities and three major data centres in Germany, including a brand new, highly energy-efficient site in Frankfurt opened in June 2012.

Italy BT has been operating in Italy since the early 90s and is the main alternative to Telecom Italia. It also the only national player focused on business in Italy. We have a 16 per cent market share in business data transmission and operate a 14,000km fibre network covering the whole of the country. We serve 2,000 large companies here including ENI, Fiat Group, BNL, Mediaset, Sky Italia and the Justice and Agriculture ministries. We also serve more than 120,000 SMEs and operate five data centres in Italy.

Spain and Portugal BT provides services to 2,000 major Spanish and Portuguese enterprises, 28 of which are listed in Spain’s IBEX-35 index, and to over 30,000 small and medium enterprises.

We are the leading alternative in the Spanish enterprise data transmission market with more than 20 per cent market share.

The Spanish government agency responsible for transport and transport infrastructure, the Ministerio de Fomento, has recently selected BT to manage its entire estate of Microsoft products, licences and maintenance services for its server and desktop infrastructure in a new four-year deal.

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.

We offer extensive domestic voice, contact-centre and IP VPN services in the UK. We also have 1,277 core fibre Ethernet nodes and 721 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 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.

Other European countries

BT also has operations in Switzerland, the Nordics, Central & Eastern Europe and Russia.

Latin America

BT operates in 22 Latin American countries with integrated commercial and operational capabilities, offering a wide range of networked IT services including IP infrastructure, application services, outsourcing solutions and business transformation. BT has three datacentres located in Argentina, Brazil and Colombia and seven network operations centres in the region, providing monitoring and proactive diagnosis for customers. The Sao Paulo centre provides worldwide support with multilingual capabilities. BT serves around 2,000 multi-site organisations in Latin America across a wide variety of sectors. Customers include corporations such as Nestlé, Unilever, InBev, SAB Miller, Fiat, Bradesco, GRSA, Microlins and Pao de Açucar as well as public sector organisations such as Caixa Economica Federal (Brazil) and projects Meduca (Panama) and Compartel (Colombia).

Middle East and Africa

BT has been operating in the Middle-East and Africa (MEA) since the 1980s, with more than 200 employees. We operate out of three main regional hubs, in Istanbul, Dubai and Johannesburg. In February 2012, we announced a series of initiatives aimed at doubling our business across Turkey, the Middle East and Africa.

We have 21 network points of presence in MEA and new interconnection agreements further expanding our reach into Turkey and Sub-Saharan Africa. We have Ethernet services capabilities in 21 cities, including Istanbul, Dubai, Abu Dhabi, Riyadh, Casablanca, Manama, Doha, Cape Town, Johannesburg and Pretoria. We also operate a regional satellite centre in Istanbul and a network and customer support service centre in Durban. BT operates an innovation Centre in Abu Dhabi, in cooperation with Khalifa University and Etisalat.

USA and Canada

BT has had a presence in the US and Canada for over 20 years. Today we have offices in more than 25 key cities. BT owns and operates its own network infrastructure in North America, with nationwide reach to all major US cities. We 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 73 per cent of Fortune 500 and 48 per cent of Fortune 1,000 companies, including Tommy Hilfiger, NYSE, Fujitsu, 7BR, Rexam, Syngenta, AstraZeneca and HO.

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.

The European Union Policy Agenda

The European Union (EU) has a significant influence on the policy and regulatory environment in which BT operates, with EU legislation setting the framework for areas as diverse as fibre access, spectrum, net neutrality, and Green ICT. Our focus is on an open, competitive, level playing field across the EU and across different communications platforms – a true Digital Single Market.

In the connected, knowledge-based economy, the ICT sector makes a major contribution to Europe’s competitiveness. This is recognised by the European Commission’s “Digital Agenda” initiative which places ICT and Telecoms at the heart of Europe’s economic growth and recovery strategy. As well as promoting new high speed networks, EU policy–makers are showing increasing interest in online and consumer issues relating to cloud computing and new services. BT supports a balanced approach which does not impede development of new business models.

The “Digital Agenda” sets challenging goals for fast broadband deployment across the EU, and the European Commission is developing additional guidance on access to next generation fibre access networks which are important for the UK and the rest of Europe. BT supports a policy which encourages both investment and competition in innovative new networks and services and we are pleased the Commission has endorsed Ofcom’s regulatory approach in the UK, in favour of virtual unbundled access. Competition at service-level will be essential across the EU if the full benefits of innovation are to be enjoyed not just by consumers, but businesses as well..

BT - in figures

	Second Quarter to 30 September 2012	First Quarter to 30 June 2012	Full year to 31 March 2012	Full year to 31 March 2011
Revenue	£4.5 billion	£4.5 billion	£19.3 billion	£20.1 billion
Profit before tax	£0.6 billion	£0.6 billion	£2.4 billion	£1.7 billion
Capital Expenditure	£0.6 billion	£0.6 billion	£2.6 billion	£2.6 billion
EBITDA	£1.5 billion	£1.5 billion	£5.9 billion	£5.6 billion
Normalised Cash flow	£0.3 billion	£ (0.1 billion)	£2.3 billion	£2.0 billion

BT shares were at 223.8p at close on Tuesday 20 November 2012, valuing the company at GBP17.6 billion. The stock had risen 20.3% in the 12 months to 20 November, outperforming the FTSE 100 index, which has risen 7.2% over the same period. 

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.

BT Vision

BT Vision, our on-demand television service, offers a 500Gb hard-disk set-top box to deliver to the TV set pay-per-view and subscription video-on-demand services, digital terrestrial free-to-air and pay TV channels, the ability to pause live TV and record programming, communications and interactive services. It is easy to use, bringing the next generation of TV technology to a mass audience and putting the UK at the forefront of the development of digital TV delivery. Over 749,000 customers are now using BT Vision.

BT Vision offers over 10,000 programmes; including 750 films, from the latest blockbusters to family favourites, and 50 TV ‘box sets’. More information can be found at www.bt.com.

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 on July 4 2012.

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 Customers will get access to around 15,000 television programmes on-demand from YouView, including 1400 films and 2000 music videos.

Pay TV

Ofcom’s decision to require Sky to wholesale two of its premium sports channels was welcome, although the decision should have covered all Sky’s premium sports and movies channels. BT Vision is now offering Sky Sports 1 and 2, which is great news for customers and for bringing choice to the UK market. We are, however, disappointed that the wholesale price Sky must offer is higher than that on which Ofcom consulted, and that no wholesale price requirement has been set for HD channels and are hoping that the Competition Appeal Tribunal will tackle these issues.

Customers have been denied choice and have been paying too much for premium channels for too long. This decision is one step in the right direction.

We offer rival companies including Sky the right to rent space on 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.

In some countries, pay TV has driven demand for superfast broadband, as householders access pay TV services over fibre connections. This is an important issue in the UK where Sky’s monopoly over key content rights means that investors in fibre deployment in the UK, and retailers of superfast broadband, are denied a very important means of paying for their networks and driving take-up through pay TV services. Opening the market for pay TV is an important step in driving fibre investment and take up in the UK.

Premier League football rights

BT has been awarded live rights for the 2013/14 to 2015/16 Premier League seasons. This means that for the first time consumers have a real choice of provider when it comes to watching the best Premier League games. We have secured access to 38 live games, including the opening game of the season, which represents a quarter of the 154 matches to be shown each season.

We will launch a new football-focused channel to carry the games. It will offer new interactive features when supplied over BT’s fibre network and we will look to distribute it on other platforms. Full details and pricing will be published in due course.

BT recently announced that sports broadcaster Jake Humphrey is to be the anchor of BT’s Barclays Premier League football coverage 

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 welcome the proposed changes in legislation being formulated by the Government and will continue to work with other organisations to ensure that the legislation is enforced. 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. 

BT in healthcare

BT has been a key partner of the NHS for more than 60 years and is one of its largest suppliers of IT and communications services. Most recently, BT has been responsible for delivering significant infrastructure programmes that underpin the NHS. These have supported the delivery of 683 million electronic prescriptions and 30 million hospital appointments. N3, a secure national broadband network for the NHS, is one of the largest virtual private networks in Europe with more than 51,000 connections and is saving the NHS around £95m a year.

In London and the south of England, our clinical information systems are being used by hundreds of thousands of NHS staff to provide better, safer care at more than 80 NHS organisations.

To help meet the future needs of the NHS, BT is investing significantly to build a secure, dedicated health ‘cloud’ platform to deliver a range of innovative new health products and services. This investment is our commitment to help the NHS meet its cost efficiency targets and its localisation agenda, whilst enabling radical transformation in the way care is delivered to patients.

Using the experience it has gained in the UK, BT is also expanding internationally, with a particular focus on Asia Pacific. It has created an Asia Pacific Health Practice to co-ordinate all BT’s health activities in the region and has already won a range of health IT business, including complex and large infrastructure contracts for new build hospitals, clinical safety management consultancy and electronic health records work.

For more information please visit the BT Health website at http://www.bt.com/health/

BT as a corporate citizen

BT is proud of its record as an employer and its contribution to corporate and social responsibility projects around the world. We are committed to being a responsible business, minimising our impact on the environment and making a positive contribution to society by investing in communities.

We support the British Red Cross with funding for essential emergency satellite telephones, IT equipment and GPS systems for vehicles to help them deliver disaster relief worldwide. Our partnership with UNICEF brings education, technology and communications skills to children from poor socio-economic backgrounds in Brazil, South Africa and China.

In the UK, one of the charities we support is ChildLine, the emergency helpline for children and young people. Since 2002, we have donated services worth £5 million and helped the charity raise more than £6.5 million.

We invest at least one per cent of our corporate pre-tax profits in communities each year. In 2010/11, our investment amounted to £27.6 million – a combination of direct funding and in-kind support. Our employees donated an additional £2.5 million through Give As You Earn schemes.

We also fund and manage the UK's largest corporate Education programme in schools

BT and Climate Change

We use significant amounts of energy to power our network and to heat, cool and power our 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 61% since 1997, will reduce them by 80% in 2016 and the carbon intensity of our global business by 80% by 2020 (compared with 1997).

BT is the only major telco in Europe to have reduced energy consumption year-on-year for the last three years running.