1. Making Communications Work for Everyone: Ofcom’s Strategic Review of Digital Communications Jonathan Oxley, Group Director – Competition Group 10 May 2016

2. 2 DCR findings: Good progress, but much more to do Speeds have risen. Fastest broadband up from 10Mbit/s in 2005, to 200Mbit/s Prices have fallen. Cost of typical broadband down from £17.99 in 2005, to £7.50 today Superfast broadband has reached 83%, and 36% of connections are superfast. Both measures are highest in the EU5 Two thirds of adults have a smartphone, and more than half own a tablet. Half of homes (48%) are now served by all four 4G networks Next challenge. Achieving widespread, ultrafast speeds of 300Mbit/s and above – only 2% FTTP Line rental concern. All major landline providers have imposed rises far above inflation over last five years Coverage gaps. 2.4m homes (8%) still lack good broadband above 10Mbit/s, including 1.5m in rural area Mobile not-spots. Coverage by all four operators in 99% of urban areas, but only 72% in rural areas QoS. Hasn’t been good enough

3. Key announcements 3 Fundamental changes to the UK’s communications market Designed to make the UK 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 Our strategy covers six areas … OPENREACH REFORM A new governance structure, and greater independence from BT NETWORK CHOICE Major shift to promote new fibre networks, using BT’s infrastructure CONSUMER EMPOWERMENT Better information, service league tables and easier switching BETTER COVERAGE Helping Govt. deliver universal fast broadband, and boosting mobile QUALITY OF SERVICE A step-change in quality across the industry, and automatic compensation CAREFUL DEREGULATION Easing burden of regulation where no longer required or competition is strong

4. 4 Bettercoverage

5. The fixed broadband picture in Scotland (June 2015) 5 BETTER COVERAGE Premises covered by broadband faster than10Mbit/s Premises covered by superfast broadband Premises covered by broadband faster than10Mbit/s – rural and urban Premises covered by superfast broadband – rural and urban

6. The mobile picture in Scotland (June 2015) 6 BETTER COVERAGE 31% Premises covered by voice services – indoor and outdoor (all operators) Premises covered by data services – indoor and outdoor (all operators) Geographic voice coverage (all operators) Geographic data coverage (all operators)

7. BETTER COVERAGE Key measures to improve coverage Better broadband The UK Government has committed to min. 10 Mbit/s broadband for all by 2020. Ofcom is working to help make that happen 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 We will assess how we can impose new obligations on operators bidding in the future for spectrum as a way of increasing coverage.

8. 8 Network choice

9. Major shift to promote new fibre networks 9 Easier for competing providers to build their own fibre networks, by providing access to Openreach's network of underground ducts and poles Access to BT’s network priced in ways that encourage providers to build their own networks while protecting consumers from excessive pricing Deregulation where network based competition is effective Continued competition based on other forms of access Online database, accessible to all wholesale customers Efficient operational processes Where used to deploy mass market broadband at scale consider removing current larger business use restrictions NETWORK CHOICE

10. 10 Openreach reform

11. Strengthening Openreach’s independence 11 BT Group control of budget & strategic decisions Insufficient consultation on investment Lack of independent governance Separate Openreach Board Responsibility to serve all customers equally Autonomy over investments and decision-making Ability to raise funds Statutory accounts Enhancing operational capability (systems, product development, external supply management) OPENREACH REFORM

12. 12 Quality of service

13. Improving quality of service 13 Drive improvements to service quality by making more information accessible to consumers and businesses Publish an annual Service Quality Report showing how telecoms companies compare Automatic compensation to ensure consumers and businesses receive money for loss of or reduction in service. Openreach Wider industry More demanding minimum standards, extending them to new areas as necessary (e.g. tails, faults) Charge controls that strengthen Openreach’s incentives to make long term investments in service quality QUALITY OF SERVICE

14. 14 Empowering consumers and businesses

15. 15 EMPOWERING CONSUMERS AND BUSINESSES New technologies and bundles make services more complex. Consumers need clear, accurate information to shop around. Ofcom will bring about: Better buyer information. We will improve this working with parties such as price- comparison websites. Advanced tools. Enhanced Ofcom services such as coverage maps and speeds reports. Easier comparison. We will develop a standard cost comparison measure (e.g. contract lifetime cost). Clearer advertising. We will monitor broadband advertising to ensure it complies with new Advertising Standards Authority rules. Fairer rules. We are working to make it easier to cancel contracts and switch mobile provider, following our recent work on landline and broadband switching. Competition relies on empowered customers

16. 16 Carefulderegulation

17. 17 CAREFUL DEREGULATION Ofcom intervenes only where necessary, regulating where the market does not serve consumers and businesses well enough. Opportunities for deregulation: Traditional voice telephony. Boundaries blurring between landline, mobile and internet voice and text services. Protection still required for vulnerable landline users. Next steps in the Narrowband Market Review. The ‘General Conditions’. Review of the rules governing all communications providers to make them clear and relevant, and reduce cost of compliance. Ultrafast networks. May require flexible rules on pricing, and ultimately complete deregulation where competition is effective. Simplifying and removing regulation

18. 18 Next steps and implementation June Review of general Conditions Automatic Compensation :Call For Inputs Civil Infrastructure Directive draft guidance New USO for broadband 98% indoor 4G coverage 700 MHz release (est. 2020) Note: precise dates to be confirmed July Openreach model consultation Triple play switching consultation Duct and pole access: strategy document 10 October Wholesale Local Access review consultation Wholesale Broadband Access review consultation December Automatic Compensation consultation Openreach proposal to the European Commission Mobile switching statement 2017 European Commission process on Openreach Narrowband market review statement First quality of service annual report NEXT STEPS

19. 19 Questions