A few Home truths about Britain's Broadband.

Digital Communications is a UK success story

 The UK as a digital success story and how BT has played a major role in this success. It also outlines BT’s commitment to, and vision for, the UK’s digital future.

Today, broadband is central to the daily lives of Britons, with 39 million or 75 per cent of all adults now going online daily, 17 million more than in 2005.

We now spend more time using media and communications each day than we do sleeping, with UK internet usage per capita higher than in any other large EU member state.

In a short period of time, Britons have become a nation of social media sharers, internet shoppers, smartphone and tablet users, and entertainment-streamers. 

Thriving UK competition in broadband has driven large reductions in average spend, making the UK one of the most affordable markets in the world for broadband...

''Competing providers can now access BT’s network on equal terms, and this has contributed to one of the most competitive markets among major European economies with the average price of fixed residential broadband falling by 40% between 2004 and 2015 and the take-up of superfast broadband was double the average of the other four European nations.'' - Ofcom (July 2015)

BT has played a key role in this success

BT’s significant investment to commence the deployment of fibre broadband across the UK at the height of the recession, when other businesses were reining in their investment, is a primary driver for the improved coverage and speeds that the UK is enjoying today. Over the past seven years, BT has invested significantly more than Sky, TT and Virgin combined in helping to push the UK rapidly up the international rankings on fibre coverage. Today the UK leads comparable markets with over 90% of premises covered with fibre and expected to continue to improve passing 95% of premises by 2017.

•  Largest investor in the UK communications market (over ￡2bn p.a.)
  3rd largest investor in R&D (over ￡500m p.a.)
• ￡20bn of capital investment over the last 10 years in networks – ￡10.5bn in Openreach.
• Highest level of fibre broadband availability of any major EU economy.
• Highest level of superfast broadband take-up and use of any major EU economy.

''BT Openreach has pulled off an extraordinarily efficient network rollout in the UK and we want to learn as much as we can from them. In terms of deployment we want to learn how BT was able to maintain such an extremely high rate of FTTN deployment –often passing one million homes per quarter – and bring that to bear on the NBN.”  Bill Morrow, CEO, NBN co  (separated network provider in Australia)

 BT’s Vision for Britain’s Digital Future

 A world where:

• All customers can use communications networks to access the content and applications they need over the internet, however,whenever and wherever they want, seamlessly and at the speed they need.
• UK communications networks and services are very price competitive compared with other markets, owing to the continuation of the world’s most competitive market.
• Customers' ongoing exponential demand growth for date is comfortably satisfied by evolving network infrastructure that stays ahead of customer need.
• OTT players, media and other firms can provide their customers with a plethora of world leading innovative services leveraging the strength of the UK’s ICT infrastructure.

 How BT will support that vision

•  We want every household in the UK to be able to access broadband speeds that support all modern internet services BT stands ready to support 5Mbps and 10Mbps with the right commercial environment.

• We will work to deliver fibre broadband as far as possible beyond the 95% into the final 5%.

• We plan to provide ultrafast speeds of 300Mbps to 500Mbps to 10 million premises by the end of 2020, plus a service up to 1Gbps where there is demand.

• We will deliver a higher service quality to all of our customers – business and households. One that exceeds the service expectations of regulators – but more critically better meets the evolving service needs of our customers.

An economy boosted by connectivity

The transformation in connectivity has provided a profoundly positive boost to the UK economy today:

• UK ‘eGDP’ (that part of the economy driven by the internet) stands at ￡180bn or 10% of overall GDP, forming a greater proportion than in any other G20 country.
• eCommerce (￡ per head) is vastly higher than any other nation (70% more than US).
• The UK economy has been rated the most ‘digitally-ready’ among major EU nations.

So digital communications is a British success story – and one that is no accident. It has been driven by massive investment and the most competitive broadband market in the world, with hundreds of competing retail service providers, as well as competing infrastructure providers, working across large parts of the UK in both consumer and business markets.

This vibrantly competitive landscape, supported by appropriate regulatory safeguards, has stimulated innovation, low pricing and take-up of communications services.  

BT has played a vital role in this success by investing nearly ￡25bn in capital expenditure in the UK over the last ten years.

￡10.5 billion of that money has been spent through Openreach, the functionally separate business within BT Group which maintains and develops the network of copper and fibre that connects homes and businesses to local telephone exchanges.

At the end of 2005, only 41 per cent of UK homes had a broadband connection with typical speeds of 1Mbps. Now 90 per cent of UK homes have access to superfast broadband and average residential fixed line speeds are more than 22Mbps.

Ofcom  has an important role to play

1. Long-term commitments to provide certainty and clarity.

2.  Regulatory policies to encourage large scale investment.

3.  Support for consolidation where it benefits competition and enables new investment.

4. A better regulatory balance between service quality and price.

5. A level playing field, particularly with regard to Pay TV.

6. Simplification of current regulation with duplication removed where possible.

 5 Key trends

Value
Value for customers (price, performance, quality) can be substantially improved. Regulation should evolve to facilitate.

Investment
The investment required to meet customer needs should be embraced by the regulatory framework.

Fixed, mobile and Pay TV
Regulatory policy to adapt to accommodate ongoing convergence of fixed, mobile and Pay TV.

Competition
Competition is intense, such that there is substantial scope for deregulation.

Service
Service will be as important as price and needs to be fully embraced in the regulatory framework.

“The right regulatory environment that promotes a long-term view of investment and supports innovation, fair competition and stronger customer choice, regardless of product or provider.” Gavin Patterson, BT CEO

“It is BT’s consumer business that aids Openreach, not the other way around. By having the consumer business with Openreach as one entity, BT has the capacity to invest more in UK infrastructure than it otherwise would.”?Berenberg March 2015

Growth

Over the next decade, the enormous growth in demand for communications networks and services will continue. BT has seen around 40 per cent compound annual growth in data on its networks for many years Currently, we are seeing growth in demand for data per user, which has already doubled since 2012, rise by 62 per cent a year. We confidently forecast, as many industry analysts do, that this growth will continue. Our central expectation is that average data volume demand per user will continue to grow at a rate of about 50 per cent a year for the next decade.

This trend will accelerate as new data-hungry technologies and applications enter the mainstream over the next decade. There are already over 40 million devices is the ‘Internet of Things’ in the UK. This is forecast to grow resulting in more than a billion daily transactions by 2022. Network performance, coverage and reliability will be absolutely essential to the functioning of society and the economy.

Our Commitments

1. Deliver broadband speeds of 5Mbps to 10Mbps to everyone in the UK
2. Expand the reach of fibre broadband beyond 95%
3. Take the UK from Superfast to Ultrafast
4. Ensure better service aligned with evolving customer needs

We want to accelerate the country’s transformation into ‘Ultrafast Britain’ and?will do this by delivering ultrafast broadband with speeds of 300Mbps-500Mbps to?ten million premises by the end of 2020, and 1Gbps for those who want even?faster speeds.