Annual Report and Accounts, 2017/18 (Interactive Version)

Home , Mary Ann Sieghart

The Office of Communications Annual Report & Accounts For the period 1 April 2017 to 31 March 2018 HC 1206 The Office of Communications Annual Report & Accounts

For the period 1 April 2017 to 31 March 2018

Presented to Parliament pursuant to Paragraphs 11 and 12 of Schedule 1 of the Office of Communications Act 2002

The text of this document (this excludes, where present, the Royal Arms and all departmental or agency logos) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not in a misleading context.

The material must be acknowledged as Ofcom copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder must be sought.

Any enquiries related to this publication should be sent to us at: [email protected]

This publication is available at: www.gov.uk/government/publications

ISBN 978-1-5286-0283-9

CCS0318319686 07/18

Printed on paper containing 75% recycled fibre content minimum.

Printed in the UK by the APS Group on behalf of the Controller of Her Majesty’s Stationery Office. Contents

Performance Report

2 Our powers and duties

5 Chairman’s message

7 Chief Executive’s report

11 Progress on delivering against our Annual Plan priorities

33 Principal risks and uncertainties

35 Work in the nations and our international engagement

39 Who we work with and how we work

45 Financial review

51 Corporate responsibility

53 Sustainability report

Accountability Report Financial Statements Annex

58 Directors’ report 88 Statement of comprehensive income 120 Ofcom Boards, Panels and Committees 59 The Ofcom Board 89 Statement of financial position 123 Regulatory statements 61 Governance statement 90 Statement of changes in equity 128 Investigations programme 74 Our employees 91 Statement of cash flows 129 Broadcasting complaints, 79 Remuneration report 92 Notes to the accounts cases and sanctions 86 Certificate and report of the 133 Spectrum engineering and Comptroller and Auditor General to the enforcement Houses of Parliament 134 Spectrum licensing

139 Sustainability

143 700 MHz clearance

145 Glossary

ofcom.org.uk 1 Contents

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme Performance 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing Report 139 Sustainability 143 700 MHz clearance 145 Glossary

OfcomOfcom Annual Annual Report Report & & Accounts Accounts 2017/18 2017/18 2 Contents Our powers and duties Performance Report 2 Our powers and duties 5 Chairman’s message We regulate broadband and mobile telecoms, 7 Chief Executive’s report TV, radio, video-on-demand services, post, 11 Progress on delivering against our Annual Plan priorities and the airwaves used by wireless devices 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility 53 Sustainability report

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament What we do Our principal duty is In postal services, we must carry to further citizen and out our functions in a way that we Financial Statements We regulate broadband and consider will secure provision of 88 Statement of comprehensive income mobile telecoms, TV, radio, video- consumer interests a universal postal service in the on-demand services, post, and 89 Statement of financial position Ofcom was established under UK. We implement and enforce the airwaves used by wireless the Office of Communications communications, competition and 90 Statement of changes in equity devices. We help UK businesses Act 2002 and operates under a consumer protection laws. 91 Statement of cash flows and individuals get the best from number of Acts of Parliament1. The 92 Notes to the accounts communications services, and Communications Act 2003 states protect them from sharp practices. that our principal duty is ‘to further Where appropriate, we support the interests of citizens in relation Annex competition as the basis for to communications matters, and to 120 Ofcom Boards, Panels and Committees delivering good consumer outcomes. further the interests of consumers in 123 Regulatory statements We are an independent public relevant markets, where appropriate 128 Investigations programme authority and accountable by promoting competition’. to Parliament. 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement

1 These include the Communications Act 2003, the 134 Spectrum licensing Wireless Telegraphy Act 2006, the Broadcasting Acts 1990 and 1996, the Digital Economy Acts 139 Sustainability 2010 and 2017 and the Postal Services Act 2011. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 3 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our international engagement Our legal duties guide the Our new regulatory We have consulted on, and 39 Who we work with and how we work published, new frameworks and direction of our work responsibilities for the BBC 45 Financial review procedures relating to our role in Our main legal duties Under the new Royal Charter overseeing the BBC’s broadcasting 51 Corporate responsibility are to ensure that: and accompanying Agreement, standards and the BBC’s impact on 53 Sustainability report regulation of the BBC passed from competition in the wider market. • the UK has a wide range of the BBC Trust to Ofcom on 3 April electronic communications services; In October 2017, we published a new 2017. These documents set out the Accountability Report operating licence1 for the BBC. The • radio spectrum is used in reform of the BBC’s governance and 58 Directors’ report licence requires the BBC to broadcast the most effective way; regulation, including the creation of more original UK programmes, and 59 The Ofcom Board a new unitary Board to run the BBC. • a wide range of high quality also requires more BBC content to 61 Governance statement television and radio programmes One of Ofcom’s central be made across the UK and in the 74 Our employees responsibilities under the new nations. The rules are designed to are provided by a range of 79 Remuneration report different organisations, appealing Charter is to hold the BBC to ensure the broadcaster offers high- 86 Certificate and report of the to a range of tastes and interests; account for fulfilling its mission and quality, distinctive programmes for promoting its public purposes. its entire audience, and they set new Comptroller and Auditor General to • people are protected from harmful quotas in areas including arts, music, the Houses of Parliament or offensive material, unfair As part of our new responsibilities, comedy and children’s programmes. treatment and invasion of privacy we are required to publish an on television and radio; and Operating Framework containing Financial Statements provisions to secure effective 88 Statement of comprehensive income • the universal service obligation on regulation of the BBC. In relation to 89 Statement of financial position postal services is secured in the UK. the BBC’s performance, we must 90 Statement of changes in equity Ofcom can enforce consumer law on set an operating licence for the 91 Statement of cash flows behalf of consumers but does not BBC, and we may set measures to have the power to resolve individual assess the BBC’s performance. The 92 Notes to the accounts consumer complaints about licence must set out the enforceable telecoms or postal services. Where regulatory conditions that we appropriate, we provide advice to consider appropriate for the BBC Annex complainants and refer them to the to fulfil its mission and promote its 120 Ofcom Boards, Panels and Committees alternative dispute resolution (ADR) public purposes. 123 Regulatory statements schemes that we have approved. By 128 Investigations programme contrast, we do consider individual 129 Broadcasting complaints, complaints about TV and radio. cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing

1 https://www.ofcom.org.uk/__data/assets/pdf_ 139 Sustainability file/0017/107072/bbc-operating-licence.pdf. 143 700 MHz clearance 145 Glossary

Performance Report

Overview Ofcom Annual Report & Accounts 2017/18 4 Contents

Accountability Report Ofcom’s competition 58 Directors’ report law powers 59 The Ofcom Board 61 Governance statement In addition to our regulatory responsibilities set out earlier, 74 Our employees we have powers in relation to 79 Remuneration report 2 communications matters to: 86 Certificate and report of the • enforce the prohibitions on anti- Comptroller and Auditor General to competitive agreements and the Houses of Parliament abuse of a dominant position, set out in the Competition Act Financial Statements 1998, and the corresponding provisions under the Treaty on 88 Statement of comprehensive income the Functioning of the European 89 Statement of financial position Union; and 90 Statement of changes in equity • investigate markets and make 91 Statement of cash flows references under the Enterprise 92 Notes to the accounts Act 2002 to the Competition and Markets Authority (CMA). Annex Ofcom considers whether it is more 120 Ofcom Boards, Panels and Committees appropriate to exercise Competition Act or sectoral powers in any 123 Regulatory statements given case, subject to the specific 128 Investigations programme legislative requirements. 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement

2 The term ‘communications matters’ covers various 134 Spectrum licensing aspects of electronic communications, as well as broadcasting and the provision of postal services. We 139 Sustainability exercise these powers concurrently with the CMA. 143 700 MHz clearance 145 Glossary

Overview ofcom.org.uk 5 Contents Chairman’s message Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report Lord Burns, GCB 11 Progress on delivering against our Annual Plan priorities The UK’s communications industries are among the fastest 33 Principal risks and uncertainties growing and most important in the UK’s economy 35 Work in the nations and our international engagement 39 Who we work with and how we work We retained our sharp focus on 45 Financial review improving broadband, phone and mobile services for consumers 51 Corporate responsibility during the year. 53 Sustainability report

By creating the conditions for competition to thrive, we saw a Accountability Report number of commitments from 58 Directors’ report telecoms companies to build new 59 The Ofcom Board state-of-the-art fibre networks, which will mean faster and more 61 Governance statement reliable broadband. 74 Our employees Over the next few years, the number 79 Remuneration report of homes and businesses able to 86 Certificate and report of the benefit from full fibre broadband is Comptroller and Auditor General to set to rise from one to six million, the Houses of Parliament which is an encouraging start. But it is crucial that all people can Financial Statements access decent broadband, especially 88 Statement of comprehensive income those in rural areas. Following new legislation from the UK Government 89 Statement of financial position We rely on communications services We proposed that winning bidders in March 2018, we started work 90 Statement of changes in equity every day of our lives, from the of some of the spectrum would to implement a ‘universal service’ internet and mobile phones to have to roll out improved 4G mobile 91 Statement of cash flows for broadband. This means that by television, radio and post. coverage in rural areas and in each 92 Notes to the accounts 2020, everyone in the UK will have a of the UK’s nations. Competition and effective regulation legal right to request an affordable underpin the success of these broadband connection of10Mbit/s. Ofcom will also step in to help the Annex industries for consumers and public when things aren’t working. The four national mobile networks 120 Ofcom Boards, Panels and Committees citizens across the UK. We pressed ahead with our plans met their obligations by the end 123 Regulatory statements for broadband and home phone As Ofcom Chairman, my focus is on of 2017 to extend coverage. We customers to get automatic 128 Investigations programme helping to ensure the public benefit auctioned spectrum for mobile compensation when they are let down 129 Broadcasting complaints, from reliable and high-quality phones – for 4G and future 5G by their provider. And we stepped in to cases and sanctions communications services. We do services – and started planning for help some of the most vulnerable in this by promoting competition our next auction. 133 Spectrum engineering and enforcement society by reaching an agreement for between different companies, while 134 Spectrum licensing BT to drastically cut line rental for its stepping in to protect people and landline-only customers. 139 Sustainability businesses if things aren’t working. 143 700 MHz clearance 145 Glossary

Performance Report

Chairman’s message Ofcom Annual Report & Accounts 2017/18 6 Contents

We also completed our first year Nick Pollard, Board member and Chair with the UK Government and Scottish of regulating the BBC. In October of the Content Board, left the Board in Government and Parliament, for 2017, we set the BBC conditions it May 2018 after his term ended. appointments to the Ofcom Board. Performance Report must meet to help ensure audiences Steve Unger, Executive Board member Once similar agreements are made 2 Our powers and duties receive the programmes they and Director of Ofcom’s Strategy, with administrations in Wales and most value. We will publish our 5 Chairman’s message International, Technology and Chief Northern Ireland, we will appoint first assessments of how the BBC 7 Chief Executive’s report Economist Group, decided to leave Board members for these nations. is performing and meeting the Ofcom in June 2018 this year. 11 Progress on delivering against our requirements of its Royal Charter in In September 2017, Tim Suter was Annual Plan priorities the autumn. They have all made significant appointed to the Board on a four-year 33 Principal risks and uncertainties contributions to Ofcom’s work over term. Tim is familiar with Ofcom’s There were changes to the Ofcom 35 Work in the nations and our the years and the organisation is work, having joined the organisation board in the year as the terms of international engagement extremely grateful. at its inception in 2003 to oversee non-executives concluded. broadcasting regulation. 39 Who we work with and how we work At the time of writing, the Ofcom said farewell to Chairman 45 Financial review Department for Digital Culture, Tim and Bob are already bringing Patricia Hodgson, who stepped Media & Sport was recruiting for their broad experience and 51 Corporate responsibility down at the end of 2017. Dame replacement Board members. judgement to the Board, which is 53 Sustainability report Patricia has been a dedicated and greatly benefiting Ofcom. wise leader to Ofcom since joining Ofcom understands the importance the Board in 2011. of reflecting the full breadth of Until the new Board members Accountability Report the nations and regions we serve; are in place, Bob will serve as Sheila Noakes, Ofcom’s Deputy 58 Directors’ report our new offices in Warrington and interim Chairman of the Risk and Chairman and Chairman of the Risk Edinburgh are now well established. Audit Committee; Tim will be 59 The Ofcom Board and Audit committee, left the Board interim Chairman of the Content 61 Governance statement in May 2018 after her term ended. We welcomed Bob Downes to the Board; and Ben Verwaayen 74 Our employees Baroness Noakes brought valuable Board in February 2018, who brings will be interim Chairman of the Boardroom experience and skilled a range of experience including 79 Remuneration report Remuneration Committee. financial stewardship since joining telecoms. Bob’s appointment followed 86 Certificate and report of the the Board in 2014. a Memorandum of Understanding Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 7 Contents Chief Executive’s report Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report Sharon White, Chief Executive 11 Progress on delivering against our Annual Plan priorities Telegraph poles and underground cable ducts might not 33 Principal risks and uncertainties sound like the starting place for the next digital revolution 35 Work in the nations and our international engagement 39 Who we work with and how we work But they are playing a crucial role 45 Financial review in unlocking investment in new ultrafast networks, which will 51 Corporate responsibility support better broadband and mobile 53 Sustainability report services for people and businesses. Full-fibre provides customers with Accountability Report broadband that is many times faster 58 Directors’ report and around five times more reliable 59 The Ofcom Board than today’s superfast services. But it is available to just 4% of UK homes 61 Governance statement and offices. 74 Our employees Among our most important decisions 79 Remuneration report in the year was making it easier for 86 Certificate and report of the companies to access the poles and Comptroller and Auditor General to tunnels owned by Openreach, the the Houses of Parliament network company of BT. As a result, it is now quicker and cheaper for rival companies to build their own Financial Statements full-fibre networks directly to homes 88 Statement of comprehensive income around the UK to offer customers 89 Statement of financial position more choice. 90 Statement of changes in equity This measure fundamentally changes 91 Statement of cash flows the business case for building new 92 Notes to the accounts networks. It could cut the upfront costs of laying fibre cables from Opening up Openreach’s network At the same time, we protected £500 per home, to £250. It also formed part of a package of consumers against high prices, Annex reduces the need to dig up roads. measures to increase investment in particularly in rural areas. We did 120 Ofcom Boards, Panels and Committees broadband, which ultimately means this by cutting the wholesale price In recent months, we’ve seen a 123 Regulatory statements better broadband for customers. that Openreach can charge telecoms range of commitments to invest in companies for its basic superfast 128 Investigations programme better broadband from Virgin Media, We decided not to regulate the prices broadband service. 129 Broadcasting complaints, Vodafone, CityFibre, BT and TalkTalk of Openreach’s fastest wholesale cases and sanctions among others. This could see up to superfast broadband products, six million homes and businesses including its new full-fibre services, 133 Spectrum engineering and enforcement benefit by full fibre by 2020. This is which supports the incentives for 134 Spectrum licensing a promising start, but there is much operators to build new networks. 139 Sustainability more to do. 143 700 MHz clearance 145 Glossary

Performance Report

Chief Executive’s report Ofcom Annual Report & Accounts 2017/18 8 Contents

Improving broadband and From early 2019, landline phone mobile phone services and broadband customers are set to receive £142m a year in pay-outs Performance Report Ofcom has a relentless focus on from their provider, without having 2 Our powers and duties ensuring that people in the UK get the to ask, to compensate for slow best possible broadband and mobile repairs, missed appointments or 5 Chairman’s message phone services, and that these are delayed installations. That is around 7 Chief Executive’s report available as widely as possible. nine times the current level. 11 Progress on delivering against our This includes providing strong As well as service quality, the speed Annual Plan priorities incentives to companies to improve of broadband is also a frustration to 33 Principal risks and uncertainties service quality for customers. many people. At the end of March 35 Work in the nations and our We confirmed our plans to require 2018, the UK Government laid international engagement legislation for a ‘universal service landline and broadband providers 39 Who we work with and how we work to pay automatic compensation – obligation’ for broadband, which 45 Financial review either a cash payment, or a credit came into force in April 2018, and Corporate responsibility on a bill – to customers who suffer which Ofcom will implement. This 51 from slow repairs, missed deadlines means that by 2020 everyone in 53 Sustainability report or appointments. the UK would have a legal right to request a broadband connection of Following our intervention, BT, 10Mbit/s. Accountability Report Sky, TalkTalk, Virgin Media and Zen 58 Directors’ report Internet – who together serve around Placing coverage obligations 59 The Ofcom Board 90% of landline and broadband on mobile companies plays an customers in the UK – agreed to important part in ensuring more 61 Governance statement introduce automatic compensation people and businesses can receive 74 Our employees good coverage. when things go wrong. 79 Remuneration report 86 Certificate and report of the After successfully defending our Comptroller and Auditor General to decisions against litigation from the Houses of Parliament mobile companies, we held an important auction of 4G and 5G ‘spectrum’, the airwaves that Financial Statements fuel internet access on mobile 88 Statement of comprehensive income phones and tablets. In early April 89 Statement of financial position 2018 we announced that all four 90 Statement of changes in equity mobile network operators acquired 91 Statement of cash flows spectrum. This will mean improved services for customers, now and in 92 Notes to the accounts the future, as we prepare for 5G, the next generation of mobile. Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 9 Contents

Protect consumers from harm

Protecting consumers – both people and businesses – is at the heart Performance Report of Ofcom’s work. So, when things 2 Our powers and duties aren’t working, we look to step in. 5 Chairman’s message In October 2017, we were pleased 7 Chief Executive’s report that BT agreed to our requirements 11 Progress on delivering against our to cut bills for its customers who Annual Plan priorities buy only a landline telephone. From 33 Principal risks and uncertainties April 2018, line rental bills were cut 35 Work in the nations and our by £7 a month to £11.99, saving international engagement up to 900,000 mostly elderly or vulnerable customers £84 a year. 39 Who we work with and how we work 45 Financial review We were encouraged that the Post Office, which serves the second 51 Corporate responsibility largest share of the landline-only 53 Sustainability report market after BT, offered a new price of £11.50 a month. Accountability Report In December 2017, we announced 58 Directors’ report In 2014, all four mobile network Our plans would also require major improvements for mobile 59 The Ofcom Board operators agreed with the UK some companies to provide better customers who want to change Government to ensure mobile phone coverage in each of the UK’s nations. their provider. From early next year, 61 Governance statement calls could be made in 90% of the mobile customers will be able to 74 Our employees Getting more airwaves into the country’s landmass by the end of switch network by simply sending a 79 Remuneration report hands of mobile companies is vital: 2017, using coverage measures free text message. UK consumers are using 40% more 86 Certificate and report of the in place at the time. Separately, in internet data on their mobile devices Customers will no longer have to Comptroller and Auditor General to 2013 we required O2 to provide every year. speak to their current provider – one the Houses of Parliament 4G mobile data coverage to 98% of of the major causes of difficulties for premises across the UK by the end We also continued to provide tools mobile switchers. Our new rules also of 2017. This year we confirmed and data to help inform consumers mean mobile companies are banned Financial Statements that the mobile companies had met about the broadband speeds and from charging for notice periods 88 Statement of comprehensive income these coverage obligations. mobile coverage they are likely to running after the switch date. 89 Statement of financial position experience. We recorded over 3.7 But we want coverage to go much million page views of our coverage 90 Statement of changes in equity further. So, in March 2018 we checker website in 2017/18. 91 Statement of cash flows consulted on new mobile coverage obligations for when we release 92 Notes to the accounts spectrum in the 700 MHz band, which we expect to auction in late 2019. Annex We proposed that companies 120 Ofcom Boards, Panels and Committees who win certain amounts of the 123 Regulatory statements spectrum must roll out improved mobile coverage in rural areas – UK consumers are using 40% 128 Investigations programme including for properties that are more internet data on their 129 Broadcasting complaints, currently unable to access good cases and sanctions coverage from any operator. mobile devices every year. 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview Ofcom Annual Report & Accounts 2017/18 10 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement Supporting broadcasting for There are new quotas in areas like arts, Ofcom has an important role, 74 Our employees viewers and listeners music, comedy and children’s, which established by Parliament, to 79 Remuneration report will help serve the BBC’s purpose to be maintain and strengthen public 86 Certificate and report of the 2017/18 marked Ofcom’s first year distinctive, creative and relevant to the service broadcasting. Television is Comptroller and Auditor General to regulating the BBC, the national UK’s diverse communities. The BBC changing fast, and we recognise that the Houses of Parliament broadcaster that occupies a must also spend broadly the same on our traditional broadcasters must special place in the UK’s society programmes, per head, in every nation. adapt to meet the challenges of and creative economy. This global competition, new technology We have a duty to promote equality Financial Statements important role comprises three key and a more diverse society. responsibilities: securing editorial of opportunity in broadcasting. 88 Statement of comprehensive income standards, monitoring performance Ensuring that broadcasters reflect This year we set out some of those 89 Statement of financial position audiences across the UK’s nations changes and explained how we will and ensuring the BBC competes 90 Statement of changes in equity fairly with the commercial market. was a major focus in the year. support public service broadcasters 91 Statement of cash flows The interests of audiences are at the as they respond to them. We began In September 2017, we published heart of our regulation. work on a review of how they appear 92 Notes to the accounts our first Diversity in Broadcasting in television programme guides, report,1 which revealed how well Among the most significant duties and reiterated our commitment to broadcasters are promoting equality in the year was to establish an maintaining airwaves for Freeview, Annex of opportunity, diversity and ‘operating licence’ for the BBC, which is used by 19 million homes, 120 Ofcom Boards, Panels and Committees which helps ensure it provides inclusion in employment. It showed for at least ten years. 123 Regulatory statements programmes and services that TV that all broadcasters have more to 128 Investigations programme and radio audiences value. do on monitoring and improving the diversity of their workforces. We 129 Broadcasting complaints, Audiences told us that programmes also published new guidance for cases and sanctions made in the UK are important to broadcasters on how to promote 133 Spectrum engineering and enforcement them. So, we required the BBC equal opportunities. to broadcast more original UK 134 Spectrum licensing programmes that reflect the lives and 139 Sustainability 1 https://www.ofcom.org.uk/__data/assets/ interests of its entire audience. pdf_file/0017/106343/diversity-television- 143 700 MHz clearance report-2017.pdf 145 Glossary

Performance Report

Overview ofcom.org.uk 11 Contents Progress on delivering against Performance Report our Annual Plan priorities 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities Ofcom’s objective is to make communications work for 33 Principal risks and uncertainties everyone. To achieve this, we have set out three long-term 35 Work in the nations and our goals, and each carries a set of aims to bring it about international engagement 39 Who we work with and how we work Our three goals are to: 45 Financial review

• secure standards and 51 Corporate responsibility improve quality; 53 Sustainability report

• promote competition and ensure that markets work Accountability Report effectively for consumers; and 58 Directors’ report • protect consumers from harm. 59 The Ofcom Board We look at each goal in detail below, 61 Governance statement explaining our aims, what action we 74 Our employees have taken, and the outcomes so far. 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament Secure standards and improve quality Financial Statements Ofcom works to create a market 88 Statement of comprehensive income where good-quality communication 89 Statement of financial position services are accessible and affordable for everyone. 90 Statement of changes in equity 91 Statement of cash flows Although healthy competition drives higher quality and lower prices, 92 Notes to the accounts sometimes markets do not serve everybody equally well. Where this Annex happens, we need to make targeted Ofcom Boards, Panels and Committees interventions to protect consumers 120 or improve service quality. 123 Regulatory statements 128 Investigations programme We also secure standards in television, radio and video-on- 129 Broadcasting complaints, demand, holding broadcasters to cases and sanctions account for their output. 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 12 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message Nearly seven in ten premises can now 7 Chief Executive’s report 11 Progress on delivering against our receive an indoor 4G mobile signal from Annual Plan priorities all four networks 33 Principal risks and uncertainties 35 Work in the nations and our Total geographic 4G coverage, where We examined factors such as speed, Our objective international engagement Improving the coverage of fixed and reception is available from all four eligibility, affordability and funding, as 39 Who we work with and how we work mobile communications services to mobile operators, is available across well as the potential costs. meet the needs of consumers and just 57% of the UK’s landmass. For 45 Financial review The Government considered the businesses across the UK calls and text messaging, 24% of the 51 Corporate responsibility options, and rejected a voluntary UK’s geography does not receive a proposal from BT. In March 2018, 53 Sustainability report While the coverage of fixed and signal from all four operators. mobile networks continues to the Government laid out the detailed We aim to improve the coverage of specification of the USO within improve, there remain many areas of Accountability Report the UK where fast broadband services fixed and mobile communications secondary legislation. This would do not exist, and where mobile services to meet the needs of people give everyone in the UK the right 58 Directors’ report coverage is poor – particularly in rural and businesses across the UK, to request a decent broadband 59 The Ofcom Board areas of the nations and regions. including in rural and remote areas connection – defined as a download 61 Governance statement where commercial approaches have speed of at least 10 Mbit/s, and an 74 Our employees For example, around 0.9 million often failed to deliver on expectations. upload speed of at least 1 Mbit/s. homes and small businesses, or 3% 79 Remuneration report It is now Ofcom’s job to implement of premises, are still unable to receive 86 Certificate and report of the What we have done this, for example by designating broadband speeds of 10 Mbit/s. Comptroller and Auditor General to The number of properties without universal service providers. That Broadband speeds and access the Houses of Parliament access to decent broadband has work is under way. remain worse in rural areas, where fallen from 2.4 million to 0.9 million properties are often situated a long At the same time, our work to in the past two years. However, way from the telephone exchange or promote investment and competition Financial Statements providing decent broadband in local street cabinet. Around 16% of in fixed line networks (see page 88 Statement of comprehensive income hard-to-reach areas remains rural premises are not getting decent 20) should help boost superfast 89 Statement of financial position commercially challenging. broadband services, compared to and ultrafast broadband coverage, 90 Statement of changes in equity just 1% in urban areas. In November 2015, the UK meeting the increasing bandwidth 91 Statement of cash flows Government set out its intention needs of people and businesses. And while people can now make to introduce a broadband universal 92 Notes to the accounts telephone calls on all four mobile The availability of mobile services service obligation (USO) by 2020. networks inside 92% of UK premises, is increasingly important to people this falls to 75% on A and B roads To support this this aim, in and businesses, and improving it is a Annex and 66% in rural areas. Around December 2016 we published our priority for Ofcom. 120 Ofcom Boards, Panels and Committees three-quarters of the UK landmass is advice to the Government on how We recognise mobile coverage needs 123 Regulatory statements covered by all four operators, but 7% to achieve a decent broadband to improve, and providers must 128 Investigations programme of it is not covered by any operator. connection for everyone. prioritise offering better coverage. 129 Broadcasting complaints, We’re taking our own direct action, Close to seven in ten premises can cases and sanctions now receive an indoor 4G mobile including a six-point plan to help 133 Spectrum engineering and enforcement signal from all four networks, but too boost mobile coverage across the UK. many people in the UK still struggle 134 Spectrum licensing to get good reception – particularly in 139 Sustainability rural areas and on roads and railways. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 13 Contents

Performance Report 2 Our powers and duties 1. Setting new requirements in 3. Increasing network capacity 5 Chairman’s message operators’ licences In April 2018, we successfully 4. Helping to improve coverage We have consulted on plans to awarded 190MHz of spectrum on trains 7 Chief Executive’s report improve coverage in rural areas, across the 2.3 GHz and 3.4 GHz We have installed equipment on 11 Progress on delivering against our by setting coverage obligations on bands (see page 20-22) and would Network Rail’s engineering train, Annual Plan priorities to help build a picture of mobile mobile airwaves being released have done this earlier had it not 33 Principal risks and uncertainties in future. We plan to write these been for litigation. These new reception across the UK’s rail 35 Work in the nations and our requirements into licences of airwaves will help improve current network. This will help inform our international engagement operators who are awarded these mobile capacity and make spectrum work with Government to help frequencies in the 700 MHz band, available for future 5G services. We improve coverage. 39 Who we work with and how we work which are suitable for providing also started work on an auction for 45 Financial review strong coverage over very wide the 700 MHz band. Ahead of this 51 Corporate responsibility areas, are planned to be in use by award, we continue to clear digital 53 Sustainability report mid-2020. terrestrial television (DTT) and programme-making and special- events (PMSE) services from this 5. Supporting planning reforms Accountability Report band, so we can release it for mobile We are also helping to implement 58 Directors’ report data. We reported on the risk of, new planning laws that will make and potential mitigations against, 59 The Ofcom Board it cheaper and easier for mobile interference to new mobile services 61 Governance statement operators to improve coverage by 2. Enforcing existing obligations from the existing users of the band. 74 Our employees sharing and installing equipment, Mobile operators were required to We also worked on the formulation such as mobile masts on private and 79 Remuneration report provide voice and text coverage to and administration of Government public land. 90% of the UK landmass by the end grant schemes to help manage 86 Certificate and report of the of 2017, while O2 was also required the transition of these important Comptroller and Auditor General to to provide an indoor 4G signal to services to new frequency bands. the Houses of Parliament at least 98% of premises by the same time. We reported on mobile Financial Statements companies’ successful compliance with these obligations, and will 88 Statement of comprehensive income 6. Extending use of signal boosters ensure they are maintained. 89 Statement of financial position In October 2017 we decided to allow controlled, unlicensed use of mobile 90 Statement of changes in equity phone ‘repeaters’, which amplify 91 Statement of cash flows signals between a mobile phone 92 Notes to the accounts and the operator’s transmitter. The changes, which came into effect in April 2018, will help people to improve Annex their mobile coverage where the 120 Ofcom Boards, Panels and Committees signal is weak. 123 Regulatory statements 128 Investigations programme While our research shows an 129 Broadcasting complaints, improvement in the availability and cases and sanctions coverage of fixed and mobile services 133 Spectrum engineering and enforcement across the UK, there is more to be 134 Spectrum licensing done, particularly across the nations and rural areas of England. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 14 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility 53 Sustainability report Our objective What we have done An important company in the area Improving quality of service in fixed of service quality is Openreach, Providng good information to Accountability Report and mobile telecommunications the part of BT Group that runs and consumers which compares different 58 Directors’ report services for consumers and businesses maintains the UK’s main telecoms companies can increase competition network on behalf of multiple phone 59 The Ofcom Board Competition, innovation and and improve quality of service. In April and broadband companies. 61 Governance statement investment in telecommunications 2017, we published our first annual 74 Our employees over the past decade have benefited report on service quality across the Openreach has been reducing the customers through lower prices and telecoms industry, naming the best amount of time it takes to fix faults 79 Remuneration report better services. But while consumers and worst performers. and install new lines, but we want to 86 Certificate and report of the have generally taken advantage of see its performance improve further. Comptroller and Auditor General to At the same time, we launched an lower prices, too often quality of So as part of our Wholesale Local the Houses of Parliament online tool, offering the detail of service has not been good enough. Access Market Review (see page the report in a simple visual format. 20), we established more stringent People and businesses need This service, and the accompanying requirements on Openreach for Financial Statements high-quality, reliable telecoms report, allow phone and broadband repairs to, and installations of, 88 Statement of comprehensive income services. Although most tell us customers to compare how different standard phone and broadband 89 Statement of financial position they are satisfied with their phone providers rate for answering lines, to ensure its performance 90 Statement of changes in equity or broadband, some have suffered customer calls, handling complaints, remains at an acceptable standard. from poor service quality, such as and reliability of their services. 91 Statement of cash flows unacceptable delays to installations The new requirements came into Our annual report on service 92 Notes to the accounts or repairs. effect in April 2018, and they will quality provides a benchmark for step up annually over the next three Ofcom is working to deliver a improvement. It gives consumers the years. We will continue to monitor Annex step change in quality of service information they need to identify the Openreach’s performance closely and 120 Ofcom Boards, Panels and Committees across the industry, and to ensure best and worst performers, and to respond if standards are not met. customers are appropriately shop around for something better. 123 Regulatory statements The whole sector – not just compensated when things go wrong. The publication of this detailed 128 Investigations programme information also places a clear Openreach – has a role to play in 129 Broadcasting complaints, incentive on providers to improve in delivering better quality of service. cases and sanctions areas where they are falling short of And when customers do not get the customers’ expectations. standard they expect, we believe 133 Spectrum engineering and enforcement they should receive adequate 134 Spectrum licensing compensation automatically 139 Sustainability without having to ask for it. 143 700 MHz clearance 145 Glossary

Overview ofcom.org.uk 15 Contents

Our objective Increasing the capacity of mobile networks by ensuring sufficient Performance Report spectrum is available 2 Our powers and duties Spectrum is a finite and valuable 5 Chairman’s message resource that underpins wireless 7 Chief Executive’s report services, ranging from TV to radio 11 Progress on delivering against our communications and broadband. Annual Plan priorities One of Ofcom’s core roles is to 33 Principal risks and uncertainties manage carefully the supply of 35 Work in the nations and our spectrum and balance users’ needs international engagement by ensuring they have access to an appropriate amount. Ensuring the 39 Who we work with and how we work In March 2017, we put forward Alongside this, we introduced best and most efficient use of the 45 Financial review proposals to require landline new rules to ensure all small and airwaves is important in meeting 51 Corporate responsibility and broadband providers to pay medium-sized businesses are given mobile phone users’ needs, and in 53 Sustainability report automatic compensation – either a clearer, more detailed information supporting the UK’s wider economy. cash payment, or a credit on a bill – upfront about the quality of The amount of data flowing to customers who suffer from slow service they can expect. This through our mobile devices has Accountability Report repairs, or missed deadlines includes whether they can claim grown ten-fold in five years. 58 Directors’ report or appointments. compensation when problems occur. Mobile providers need more 59 The Ofcom Board Following our intervention, BT, Following an implementation period, airwaves to support this growing 61 Governance statement Sky, TalkTalk, Virgin Media and from February 2019 all landline and demand for internet services 74 Our employees Zen Internet – which together broadband customers suffering on the move, which is driven by serve around 90% of landline and slow repairs, delayed installations smartphones and tablet devices. 79 Remuneration report broadband customers in the UK – or missed engineer appointments 86 Certificate and report of the The Ofcom Mobile Data Strategy agreed to introduce an automatic will receive adequate compensation Comptroller and Auditor General to statement, first published in compensation scheme which easily, quickly and automatically. At the Houses of Parliament May 2014 and updated in June reflects the harm people suffer present, compensation is paid out in 2016, explained how, over the when things go wrong. just one in seven cases. The changes next two decades, we plan to could mean up to a total of £142m Financial Statements Under the scheme, a landline or facilitate continued long-term in pay-outs, around nine times the 88 Statement of comprehensive income broadband customer will be entitled growth in consumer and citizen current level. to automatic compensation if: benefits from the increasing 89 Statement of financial position The new scheme provides a financial use of mobile data services over 90 Statement of changes in equity • their service has stopped working and reputational incentive for the coming two decades. and is not fully fixed after two full 91 Statement of cash flows providers to improve their overall working days. They will receive £8 5G is the next generation of mobile 92 Notes to the accounts levels of service quality. We will for every day that the service is technology. It follows previous closely monitor and review it one not repaired; generations of mobile technology year after implementation, to such as 3G and 4G. It is expected Annex • an engineer does not turn up for ensure it is working well. to deliver faster and better mobile 120 Ofcom Boards, Panels and Committees a scheduled appointment, or it is While some progress has been broadband, and to enable more 123 Regulatory statements cancelled with less than 24 hours’ made, we want to see service revolutionary uses in sectors notice. They will receive £25 for 128 Investigations programme standards raised further. Ofcom is such as manufacturing, transport every missed appointment; or 129 Broadcasting complaints, determined to help bring about a and healthcare. This may create cases and sanctions • their provider promises to start a service revolution in the telecoms benefits for people and businesses new service on a particular date sector, where consistency and and expand the role of wireless 133 Spectrum engineering and enforcement but fails to do so. They will receive excellence becomes the norm, and connectivity within the economy 134 Spectrum licensing customers always come first. and society. £5 for each day of the delay, 139 Sustainability including the missed start date. 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 16 Contents

We want the UK to be a world-leader increase data capacity, enabling Following decisions in Ofcom’s in 5G, which will benefit our people, their customers to enjoy more favour by the High Court and Court businesses and the wider economy. reliable internet browsing. of Appeal, we were able to confirm Performance Report We aim to ensure that spectrum is the rules as originally imposed for The bands were formerly used 2 Our powers and duties not an inhibitor of early 5G roll-out. the award. Subsequently, we invited by the Ministry of Defence and We will release different types of applications for the auction, and 5 Chairman’s message were identified as part of the spectrum bands for 5G as soon thereafter announced a list of the 7 Chief Executive’s report Government’s plan to release 750 as practicable to ensure users can six qualified bidders on 27 February MHz of public-sector spectrum 11 Progress on delivering against our access the spectrum they need. 2018. Bidding in the principal stage in bands under 10 GHz by 2022. Annual Plan priorities of the auction began on 20 March In March 2018, we published Of this, two-thirds will be made 33 Principal risks and uncertainties 2018, concluding on 4 April 2018. a discussion document on the available by 2020. Ofcom granted licences to use the 35 Work in the nations and our enablers, including spectrum, of 5G. international engagement Spectrum in the 2.3 GHz band is spectrum to the winning bidders on We identified different bands, at compatible with existing phones 13 April 2018. 39 Who we work with and how we work different frequency ranges, to meet made by companies such as Apple the requirements of the future 5G Telefónica won all 40 MHz of the 2.3 45 Financial review and Samsung and is usable from the users and uses: GHz spectrum and started releasing 51 Corporate responsibility time of release after auction, helping it for use by its customers on the 53 Sustainability report • low frequency spectrum: to to increase mobile broadband same day we granted the licence. support improved coverage and capacity for today’s mobile users. In the 3.4 GHz band, Vodafone user experience; 3.4 GHz spectrum is earmarked for won 50 MHz, while Telefónica and Accountability Report • mid frequency spectrum: to meet future 5G services, and is expected EE each won 40 MHz. Hutchison 58 Directors’ report the increasing capacity demand for to become usable in 2019 for such 3G won 20 MHz adjacent to a 59 The Ofcom Board mobile services including 5G; and services. It will be vital for the block of 20 MHz for which its 61 Governance statement future, supporting the rollout of 5G wholly-owned subsidiary, UK • high frequency spectrum in the UK. Broadband, already holds a licence. 74 Our employees (mmWave): which, to date, has 79 Remuneration report not been used to deliver mobile We designed the auction of these Overall, the auction has resulted Certificate and report of the services, but is likely to be used bands to ensure that mobile in an immediate increase in mobile 86 to support new 5G applications, users will continue to benefit broadband capacity for Telefónica’s Comptroller and Auditor General to in particular those that require from strong competition. customers, a more even distribution the Houses of Parliament high capacity and very low latency of spectrum overall between the The auction rules placed two caps both by mobile network operators four-competing national mobile on the spectrum any one operator Financial Statements (MNOs) and other players. network operators, and a good can hold, to protect competition starting platform for all four to 88 Statement of comprehensive income in the market. The first meant develop 5G services in future. 89 Statement of financial position What we have done that EE, which held the most 90 Statement of changes in equity The UK benefits from four national spectrum, was not able to bid for In designing the auction, our duty Statement of cash flows network mobile operators, as well any spectrum in the 2.3 GHz band. was to ensure spectrum was 91 as a number of ‘virtual’ operators The second was an overall cap used efficiently, not to maximise 92 Notes to the accounts which offer services by piggy- on how much a single operator revenue. We estimate that these backing on the infrastructure could hold after the auction. airwaves will deliver benefits to UK consumers of £10bn over the next Annex of the national operators. This Both BT/EE and Three challenged competition helps ensure high- decade. The award raised £1.37bn 120 Ofcom Boards, Panels and Committees these rules in the courts, delaying for HM Treasury. quality services, competitive an award originally earmarked for 123 Regulatory statements prices, choice and innovation. October 2017. BT/EE wanted the We are currently preparing 128 Investigations programme In March 2018 we began the auction restrictions removed, and Hutchison to auction the 700 MHz and 129 Broadcasting complaints, of 190 MHz of radio spectrum 3G asked for tougher limits on the 3.6-3.8 GHz bands in the cases and sanctions amount of spectrum any one bidder second half of 2019. across the 2.3 GHz (40 MHz) and 133 Spectrum engineering and enforcement 3.4 GHz (150 MHz) bands, to allow could have. 134 Spectrum licensing mobile network operators to 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 17 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board Our objective This includes how much these Over the year, we consulted on and Securing quality in public broadcasters are spending on published our first operating licence 61 Governance statement service broadcasting programmes, and the different types for the BBC. This set a wide range of 74 Our employees of programmes they show. enforceable conditions designed to: Remuneration report Public service broadcasting describes 79 TV programmes that are broadcast • hold the BBC to account for 86 Certificate and report of the What we have done for the public benefit, rather than for delivering its new mission and Comptroller and Auditor General to purely commercial purposes, under a We published new analysis setting out public purposes; the Houses of Parliament defined remit. the challenges facing the UK’s PSBs • secure the provision of distinctive in the face of greater online media Public service broadcasting brings content across the BBC; and consumption and global competition. Financial Statements a number of significant cultural • ensure the BBC’s output reflects, 88 Statement of comprehensive income benefits. It ensures diversity in This explained what we can do to represents and serves diverse 89 Statement of financial position media and plurality in news. It support the system in the next communities across the United also encourages the production decade and beyond, which will 90 Statement of changes in equity Kingdom’s nations and regions. of programmes that reflect and form a work programme for the 91 Statement of cash flows examine wider society. And it coming year. We also encouraged We decided to set a licence 92 Notes to the accounts plays an important economic role, broadcasters to collaborate to ensure covering all the BBC’s UK public supporting the creative industries that they remain globally competitive services, rather than separate and the independent production and relevant to UK audiences. service licences, as the different Annex sector in particular. requirements are variously aimed 120 Ofcom Boards, Panels and Committees Viewers have told Ofcom that at one, some or all BBC services. We Ofcom seeks to ensure the quality of programmes made in the UK are 123 Regulatory statements also published individual documents public service broadcasting through important to them. The BBC is for each of the UK nations, 128 Investigations programme a regular review of the provision of the cornerstone of public service drawing together all the regulatory 129 Broadcasting complaints, television services by the designated broadcasting in the UK. Original conditions that apply to the BBC in cases and sanctions public service broadcasters (PSBs). content can also help the BBC that nation. 133 Spectrum engineering and enforcement meet its duties under its new Charter, which include being 134 Spectrum licensing distinctive, creative and reflecting 139 Sustainability the UK’s diverse communities. 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 18 Contents

The new licence requires at Alongside the new licence, we In July 2017 we published our least three-quarters (75%) of all announced our first in-depth seventh response. Before this, we programme hours on the BBC’s review of how different groups are had carried out audience research Performance Report most popular TV channels to be represented and portrayed by the to find out whether viewers felt 2 Our powers and duties original productions, commissioned BBC, based on what these audiences that Channel 4 was delivering on by the BBC for UK audiences. expect. We expect to publish our its remit. We also took an in- 5 Chairman’s message findings alongside the annual depth look at Channel 4’s financial 7 Chief Executive’s report There are new requirements on compliance report in the autumn. sustainability, to determine the Radio 1 and Radio 2 to play a broader 11 Progress on delivering against our company’s ability to continue range of music than commercial In addition, we set out how we will Annual Plan priorities delivering its remit. stations, and more music from measure the BBC’s performance 33 Principal risks and uncertainties new and emerging UK artists. more broadly, to give audiences a Overall, we found that Channel 4 35 Work in the nations and our The children’s channels CBBC and detailed and comprehensive picture had performed strongly in 2016, international engagement CBeebies must respectively show of how it delivers the mission and particularly on diversity, online 39 Who we work with and how we work at least 400 and 100 hours of brand public purposes across all of its consumption, news and current new, UK-commissioned programmes services. We plan to use a broad affairs. We also found that, based 45 Financial review each year. range of data sources to do this, on likely trends in TV advertising 51 Corporate responsibility including a new BBC tracker which spending and viewing, Channel 4 53 Sustainability report In most areas, we have placed will collect the views of a range of could remain financially sustainable stronger requirements on the BBC audiences about the BBC. in its current form throughout than existed before. We will set its licence period, although we Accountability Report out our assessment of the BBC’s Channel 4’s public service recognise it faces some risks. 58 Directors’ report compliance in the autumn. broadcasting remit places a particular emphasis on cultural We raised some concerns about 59 The Ofcom Board diversity, including an objective Channel 4’s declining investment 61 Governance statement to reflect the lives and concerns in educational content for 14- 74 Our employees of different communities, cultural to 19-year-olds, and asked it 79 Remuneration report interests and traditions within the to consider how it could better UK, and locally in different parts of represent different cultures and 86 Certificate and report of the the country. Each year we respond communities within its programmes. Comptroller and Auditor General to to Channel 4’s annual Statement of We will continue to monitor the the Houses of Parliament Media Content Policy, setting out company’s performance. our assessment of how well the The UK has the most vibrant, Financial Statements broadcaster delivered its duties in creative and innovative TV and the previous year. 88 Statement of comprehensive income radio industries in the world, and 89 Statement of financial position public service broadcasting plays a major part in that success. Our 90 Statement of changes in equity work should help ensure that PSBs 91 Statement of cash flows meet audiences’ expectations, 92 Notes to the accounts and retain standards across broadcasting and content. Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements The UK has the most vibrant, 128 Investigations programme 129 Broadcasting complaints, creative and innovative TV and cases and sanctions radio industries in the world, and 133 Spectrum engineering and enforcement public service broadcasting plays 134 Spectrum licensing 139 Sustainability a major part in that success 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 19 Contents

Our objective We looked at the make-up of We have also begun work on our Ensuring that broadcasting employees across different roles, first Diversity and Equal Opportunities represents and accurately portrays the steps that are being taken to in Radio report, engaging with Performance Report UK society promote equal opportunities and radio stakeholders. This report 2 Our powers and duties some of the strategies aimed at will give a clear understanding Audiences expect programmes to improving diversity. of how the UK’s radio industry 5 Chairman’s message reflect modern life across all the is performing on diversity 7 Chief Executive’s report nations and regions of the UK. But We developed new guidance overall, and how it is promoting 11 Progress on delivering against our Ofcom’s research has found that based on the report’s findings inclusion within its workforce. Annual Plan priorities many people do not feel broadcasters to help broadcasters to promote are making programmes that equal opportunities within their Ofcom wants to play a leading 33 Principal risks and uncertainties authentically portray their real lives organisations. The report strongly role in helping to promote 35 Work in the nations and our and communities. encourages broadcasters to equality of opportunity within international engagement monitor all the characteristics the media industry. We want The UK’s creative industries already 39 Who we work with and how we work of their employees, because to see the best and brightest lead the world in innovation and diversity cannot improve unless it is talent forging successful 45 Financial review imagination. But more can be done effectively measured. careers in our creative sector, 51 Corporate responsibility to broaden the scope and depth of regardless of their background. 53 Sustainability report talented people who work both on Ofcom reviewed each broadcaster’s and off air. equal opportunities arrangements Broadcasting has a unique ability and provided them with an overall to shape and reflect the UK’s We have a duty to promote equal Accountability Report assessment and guidance on society and values. By publishing opportunities for men and women, 58 Directors’ report what was needed to improve their our annual monitoring report, we people from different ethnic arrangements. We made clear are encouraging broadcasters to 59 The Ofcom Board backgrounds, and disabled people that we will review broadcasters’ assess and improve their equal 61 Governance statement who are employed by television and arrangements annually and assess opportunities arrangements on a 74 Our employees radio broadcasters. them against our new guidance. regular basis. 79 Remuneration report What we have done Ahead of the second television And by increasing their diversity, 86 Certificate and report of the report, due to be published in 2018, broadcasters can deliver world- Comptroller and Auditor General to Ofcom launched a major Diversity we have engaged with industry class content that better reflects the Houses of Parliament in Broadcasting programme to help and other stakeholders to gather the diverse communities of the UK. improve diversity in the industry. feedback, share best practice and In September 2017, we published discuss broadcasters’ measures Financial Statements our Diversity and Equal Opportunities to promote equal opportunities Promote competition and 88 Statement of comprehensive income among their employees. We have in Television report,1 providing a 89 Statement of financial position discussed diversity across all the ensure that markets work comprehensive picture of how effectively for consumers 90 Statement of changes in equity television broadcasters are protected characteristics listed 91 Statement of cash flows performing on equality and diversity in the Equality Act 2010, and Ofcom wants people and overall. The findings shine a clear other important aspects such as businesses to benefit from 92 Notes to the accounts light on the scale and nature of the social mobility, geographic and a range of communications educational backgrounds. diversity challenge, revealing which products and services. Annex groups lack representation across We also want the communications major television broadcasters. 120 Ofcom Boards, Panels and Committees market to offer fair prices, high 123 Regulatory statements quality, healthy investment and innovation. 128 Investigations programme 129 Broadcasting complaints, We aim to do this by ensuring cases and sanctions markets work effectively, using Spectrum engineering and enforcement regulation where necessary, 133 so that consumers benefit 134 Spectrum licensing 1 https://www.ofcom.org.uk/__data/assets/ from strong competition. pdf_file/0017/106343/diversity-television- 139 Sustainability report-2017.pdf 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 20 Contents

Our objective What we have done Under our DPA requirements, Enabling competing operators to Openreach must ensure that The wholesale local access (WLA) invest in superfast and ultrafast its network of ducts and poles market refers to the connections Performance Report fixed-line networks is ready for use. It will have to 2 Our powers and duties from the local telephone exchange repair faulty infrastructure and Homes and businesses need more to a home or business premises clear blocked pipes on request, 5 Chairman’s message broadband capacity every year. The which are used to provide within a timeframe agreed with its 7 Chief Executive’s report amount of data flowing over UK broadband and other services at the wholesale customers. Openreach 11 Progress on delivering against our networks grew by a third last year. retail level. must also provide comprehensive Annual Plan priorities Some estimates suggest it may be We reviewed this market, aiming data on its network of ducts and fifty times higher in ten years’ time. 33 Principal risks and uncertainties to promote competition and boost poles, to allow competitors to plan 35 Work in the nations and our The UK’s physical infrastructure must investment. As part of our review, network deployments. international engagement evolve to help meet this demand, to we decided that BT should be We have also levelled the playing field 39 Who we work with and how we work avoid a ‘capacity crunch’, which could required to make its telegraph poles by ensuring providers can lay fibre in undermine the UK’s position as a and underground ducts available BT’s ducts as easily, and at the same 45 Financial review world-leading digital economy. to rival operators wishing to install cost, as BT itself. This means BT will 51 Corporate responsibility their own ultrafast, full-fibre Ofcom wants to see widespread recover related costs, such as for 53 Sustainability report networks. The process is known as availability of competing fibre repairing ducts, in the same way that ‘duct and pole access’ (DPA). networks, offering a minimum it recovers these costs for its own download speed of 300 Mbit/s. But This will make it quicker, easier and deployments – by spreading them Accountability Report at present, full-fibre coverage in the cheaper for BT’s competitors to across all services that use the duct. 58 Directors’ report UK lags well behind other countries. build their own full-fibre networks. To help improve the economics 59 The Ofcom Board We estimate that using the existing Enabling competition is central to and strengthen the business 61 Governance statement ducts and poles can halve the our efforts to stimulate investment case for providers to invest in 74 Our employees upfront cost of laying fibre networks. ultrafast networks using DPA, in the UK’s telecoms market. 79 Remuneration report Competitive pressure will push BT A similar process has been used we decided to allow operators in 86 Certificate and report of the to either upgrade its network, or risk to successfully boost full-fibre some circumstances to use BT’s Comptroller and Auditor General to seeing rivals gain an advantage. investment in other countries. In infrastructure to provide ‘leased lines’. the Houses of Parliament Spain and Portugal, for example, These are dedicated high-speed lines We aim to create the best possible a version of duct and pole access used by large businesses. regulatory environment to encourage has helped to deliver full-fibre investment and innovation, enabling We also imposed a cap on the rental Financial Statements broadband coverage of 79% and competition for customers of charges Openreach can levy for 88 Statement of comprehensive income 70% respectively. access to its duct and pole network. superfast broadband today, and 89 Statement of financial position ultrafast broadband tomorrow. We recognise that competing 90 Statement of changes in equity providers will only invest in building 91 Statement of cash flows their own networks if this is more 92 Notes to the accounts attractive than buying wholesale services from BT. Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, The amount of data flowing over UK cases and sanctions 133 Spectrum engineering and enforcement networks grew by a third last year 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 21 Contents

These companies also need The aim is to help kick-start We have observed in several confidence that in return for investing competitive network investments other countries that full-fibre in full fibre they will be able to recoup that will deliver a fibre future for the investment goes hand-in-hand Performance Report some of the costs through future UK in the long term. with network competition. 2 Our powers and duties prices on their network. With the WLA review, Ofcom’s Since we proposed measures to 5 Chairman’s message So, our regulation is designed regulation has evolved to address promote full-fibre investment, 7 Chief Executive’s report to strike a balance between the new, emerging broadband strong momentum has built behind promoting competition and priorities of the UK. Our policies are the technology, with a range of 11 Progress on delivering against our incentivising investment. focused on promoting investment broadband companies announcing Annual Plan priorities in full-fibre lines that can support plans to invest. 33 Principal risks and uncertainties To promote competition and guard future digital services and benefit 35 Work in the nations and our against high prices, we cut the BT plans to connect up to three the wider economy. international engagement wholesale price for Openreach’s million premises to full-fibre most popular 40 Mbit/s superfast Competition remains the most networks by 2020. The company 39 Who we work with and how we work broadband product. This means that important driver behind our has also outlined a longer-term 45 Financial review ambition to reach ten million homes companies can offer an affordable regulation. This was the case more 51 Corporate responsibility superfast service at a competitive than a decade ago, when opening by the mid-2020s. But we want BT 53 Sustainability report rate, and we can help protect up BT’s exchanges to competing to make a firmer commitment and broadband customers from rising providers led to strong retail make that ambition a reality. prices in the near term. competition, lower retail prices and Virgin Media intends to extend its Accountability Report faster broadband speeds. To protect incentives for operators ultrafast cable and fibre network 58 Directors’ report to invest, we are allowing Competition between rival networks to reach a further four million 59 The Ofcom Board Openreach to set prices for its is the best way to drive innovation premises. CityFibre and Vodafone 61 Governance statement fastest wholesale superfast and investment in full fibre, including announced a partnership that broadband products. by BT, leading to higher quality and will see them roll out full-fibre 74 Our employees better value services for consumers. broadband to a million homes by 79 Remuneration report 2020, with the potential to reach 86 Certificate and report of the five million homes by 2025. Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 22 Contents

Other providers such as Gigaclear, This would be a step forward from The BCMR examines the dedicated Hyperoptic and KCOM are also today’s 4%, but will still leave the UK high-speed data links (leased lines) playing an increasing role. trailing behind other countries. There used by large businesses and mobile Performance Report is more to be done to help deliver broadband operators to transfer data Hyperoptic plans to connect five 2 Our powers and duties on our long-term strategy. We want on their networks. Our measures will million premises with full fibre by broadband companies to go further safeguard competition and protect 5 Chairman’s message 2025, while Gigaclear expects to and build for the future, so the UK the interests of consumers until 7 Chief Executive’s report reach 150,000 rural properties by can secure its place as one of the completion of a further market review. 2020, and KCOM intends to cover 11 Progress on delivering against our world’s leading digital economies. 200,000 premises in the Hull area At the same time, we consulted on Annual Plan priorities by March 2019. Separately, following a judgment proposals to introduce a restricted 33 Principal risks and uncertainties by the Competition Appeal Tribunal ‘dark fibre’ remedy, a process which 35 Work in the nations and our In February, TalkTalk announced on our 2016 Business Connectivity involves BT opening up its optical fibre international engagement plans to create a joint venture which Market Review (2016 BCMR), network to wholesale customers aims to invest £1.5bn to connect up 39 Who we work with and how we work in November 2017 we revoked for leased line services at and below to three million UK homes to a new regulations on certain business 1Gbit/s. In response, the companies 45 Financial review full-fibre network. services, and at the same time most likely to purchase dark fibre 51 Corporate responsibility If operators make good on their imposed temporary regulations on made it clear that a service at higher 53 Sustainability report current commitments, full-fibre BT-operated leased line services bandwidths would be significantly broadband could reach up to six at and below 1Gbit/s in certain more useful to them. We therefore million premises, or 20% of the geographic markets across the UK. decided not to introduce this remedy, Accountability Report country, by 2020. but instead to consider the potential 58 Directors’ report for a dark fibre remedy as part of our 59 The Ofcom Board further market review. 61 Governance statement 74 Our employees Remuneration report Post 79 As the postal regulator, Our monitoring of the postal market revealed that 11.7 86 Certificate and report of the Ofcom requires Royal billion addressed letters were sent last year, down 5% Comptroller and Auditor General to Mail to provide a universal on the previous year, and 2.1 billion parcels were sent, the Houses of Parliament postal service in the UK. up 7% over the 12 months. The research also found that the majority of residential consumers are satisfied with This includes a requirement to postal services overall (86%), and with value for money Financial Statements deliver and collect letters six days a week (and parcels (75%), as were the majority of small businesses. 88 Statement of comprehensive income five days a week) at an affordable and uniform price throughout the UK. The service is relied on by millions of In our Annual Plan 2017/18, we said we would 89 Statement of financial position people and businesses across the UK’s nations, and in review whether the regulation of Royal Mail’s quality 90 Statement of changes in equity rural areas. of service remains appropriate in light of market 91 Statement of cash flows developments. We have assessed the current service As part of our work to ensure users benefit from a 92 Notes to the accounts quality framework, and decided that it would not be universal service which is financially sustainable and appropriate to pursue any changes at this time. affordable to users, we have carried out work in a number of areas as set out in our previous Annual Plan. We have revised Royal Mail’s regulatory financial Annex reporting requirements, and have been developing a 120 Ofcom Boards, Panels and Committees We offer advice to Government on the financial costing model, to help our understanding of Royal Mail’s 123 Regulatory statements sustainability of the universal postal service, costs of delivery. We have also reviewed the approach and on EU internal cross-border parcel delivery 128 Investigations programme to recovering the costs of regulation and the consumer services, and we have continued our work to 129 Broadcasting complaints, advocacy bodies in relation to postal services. better understand the causes and effects of cases and sanctions surcharging for parcels in Northern Ireland and We are continuing with our investigation of a complaint 133 Spectrum engineering and enforcement the Highlands and Islands of Scotland. by Whistl UK in relation to the prices, terms and 134 Spectrum licensing conditions on which Royal Mail offered to provide access to certain letter delivery services. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 23 Contents

What we have done

In March 2017, BT met our requirements for a new, legally Performance Report separate Openreach subsidiary. 2 Our powers and duties Openreach has now become a distinct 5 Chairman’s message company, with its own management, 7 Chief Executive’s report strategy and a legal purpose to serve 11 Progress on delivering against our all its customers equally. Annual Plan priorities BT has yet to implement in full its 33 Principal risks and uncertainties commitments to reform Openreach. 35 Work in the nations and our Many of the governance changes international engagement have already been implemented by BT and Openreach, but the 39 Who we work with and how we work new model is not fully in place. In 45 Financial review particular, the majority of staff have 51 Corporate responsibility not yet been transferred from BT to 53 Sustainability report Openreach, due to complexities with the pension scheme.

The legal separation of Openreach Accountability Report represents the biggest reform in 58 Directors’ report the company’s history, one that will 59 The Ofcom Board provide a foundation for further 61 Governance statement improvements in the market. 74 Our employees By managing its network 79 Remuneration report independently, Openreach will Competition between Openreach’s 86 Certificate and report of the Our objective help provide clarity and confidence network and rival, full-fibre Comptroller and Auditor General to Promoting competition in fixed- to other companies, investors networks, which are being planned the Houses of Parliament line services by strengthening and the wider sector. We expect by other operators, will take time to Openreach’s strategic and the new Openreach to respond emerge. In the meantime, given the operational independence from BT constructively to different company’s position in the market, Financial Statements models of investment proposed Ofcom’s Strategic Review of Digital regulation of Openreach will continue 88 Statement of comprehensive income by its customers, including joint Communications, which concluded in to play a central role in delivering investment and risk sharing. 89 Statement of financial position 2017, set out our strategy to deliver improvements across the sector. 90 Statement of changes in equity fast, reliable broadband services We recognise that large-scale We were concerned that across the UK. Promoting competition investments in infrastructure – and 91 Statement of cash flows Openreach’s position within BT and effective regulatory interventions the benefits which come with it, 92 Notes to the accounts Group meant new, strategic are at the heart of efforts to drive such as more competition, better investment decisions were being investment, increase quality, provide service quality and lower prices – taken at BT Group level, in the more choice and deliver lower prices may take some time to emerge. Annex for people and businesses. interests of that company – rather 120 Ofcom Boards, Panels and Committees than those of competing users and In the meantime, we will 123 Regulatory statements Openreach is the part of BT Group that wider customers. scrutinise aspects of the new develops and maintains the UK’s main structure, such as improvements 128 Investigations programme telecoms network. This is used by BT So, we proposed complete reform in Openreach’s engagement and 129 Broadcasting complaints, Consumer and its direct competitors, of Openreach’s relationship with consultation with customers, as cases and sanctions BT, strengthening its independence such as Sky, TalkTalk and Vodafone, to signs of longer-term success. deliver phone and broadband services from BT by making it a distinct, 133 Spectrum engineering and enforcement to their customers. standalone company with its own 134 Spectrum licensing board and strategy. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 24 Contents

We have already started to measure the effects of the Openreach changes, examining whether people Performance Report and businesses using Openreach’s 2 Our powers and duties network are receiving good speeds and service. 5 Chairman’s message 7 Chief Executive’s report We will measure, and report on, Openreach’s contribution to growing 11 Progress on delivering against our fibre broadband networks, including Annual Plan priorities full-fibre lines which are currently 33 Principal risks and uncertainties available to only 4% of UK premises. 35 Work in the nations and our international engagement We have established a dedicated Openreach Monitoring Unit within 39 Who we work with and how we work Ofcom, to analyse whether the new 45 Financial review arrangements are implemented 51 Corporate responsibility successfully. This unit assesses 53 Sustainability report whether new rules are being observed, and whether Openreach is acting more independently of Our objective What we have done Accountability Report BT, making its own decisions, and Making available better, more Throughout the year, we continued 58 Directors’ report treating all its customers equally. granular information for people and our regular research programme 59 The Ofcom Board It will consider whether BT and businesses, and improving their aimed at helping shoppers Openreach are living by both the letter ability to engage with the market 61 Governance statement when they’re considering a new and the spirit of the commitments, 74 Our employees and creating a culture that promotes For competition to work, people communications service or provider. 79 Remuneration report Openreach’s independence. and businesses need to be able Our bi-annual data, comparing the to take advantage of the choices 86 Certificate and report of the speeds of residential fixed-line We will publish our findings within available to them. This includes Comptroller and Auditor General to broadband in the UK, sets out the six months of the commitments being able to switch between the Houses of Parliament average actual speeds delivered to coming into effect, and every services and providers and having consumers. It compares differences year after that. This will include the information they need to make between speeds, and other BT’s delivery on arrangements in effective choices. Financial Statements Northern Ireland, where Openreach performance measures, across 88 Statement of comprehensive income does not operate, and where new Switching between providers providers and technologies. We 89 Statement of financial position rules will govern the relationship must be as easy as possible, and also monitor and publish annual between Northern Ireland Networks customers need confidence that the data on pricing trends, and how 90 Statement of changes in equity and BT Group. process will run smoothly. changes in tariffs and contracts 91 Statement of cash flows affect different consumers. 92 Notes to the accounts We have seen encouraging moves Each year we publish a range by Openreach to act in the interests of research to help consumers For the first time this year, we of its customers, including an compare providers and make published a new annual report on Annex industry-wide consultation on how informed decisions. This covers quality of service (see page 14), 120 Ofcom Boards, Panels and Committees to make full-fibre broadband viable the availability, speed, quality and comparing a range of measures on a large scale. pricing of communications services. across providers in one easy-to- 123 Regulatory statements We also work with third parties to navigate publication. Separately, 128 Investigations programme But over the longer term, if our ensure consumers are well informed. we continue to publish quarterly 129 Broadcasting complaints, reforms to BT’s network division do This includes accreditation of price telecoms complaints data. cases and sanctions not produce the desired results, we comparison services and working will reconsider the need to split the alongside consumer representatives 133 Spectrum engineering and enforcement companies entirely. such as Which? and Citizens Advice, 134 Spectrum licensing and through media outlets. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 25 Contents

Through our research and The coverage and quality of mobile Switching providers tends to be information on service quality and services are increasingly important much harder when consumers have delivery, we provide customers to people’s personal and working to contact their existing provider as Performance Report with independent, comparative lives. We published research part of the process. 2 Our powers and duties performance data across providers. analysing the consumer mobile In December 2017, we announced This helps them to make informed experience, including comparisons 5 Chairman’s message new rules that mean customers will decisions and incentivises providers across operators. 7 Chief Executive’s report be able to switch mobile provider to improve their performance. The data was collated using the without having to speak to their 11 Progress on delivering against our Our complaints data and quality- Ofcom mobile research app, which current provider, simply by sending a Annual Plan priorities of-service research suggests was first introduced in December free text message. 33 Principal risks and uncertainties a continued improvement in 2016. The number of users taking Work in the nations and our We also announced an initiative to 35 the overall performance of part continues to increase and is make it easier for customers to get international engagement communications providers. helping us build a comprehensive better deals, and to help break down 39 Who we work with and how we work We expect to see a sustained and independent benchmark on barriers they may face. We launched improvement over time. factors such as app use, voice call 45 Financial review this work by inviting views from reliability, signal strength, location 51 Corporate responsibility Too often, there is a gap between the the public, consumer groups and and data speeds. 53 Sustainability report broadband speed a customer thinks companies on these barriers, and they are signing up for and what they Price comparison websites (PCWs) conducted consumer research. We actually receive. To help address this, play an important role in helping plan to consult in July on proposals Accountability Report we placed tougher requirements on consumers to identify deals which for end of contract notifications, so 58 Directors’ report internet providers to provide more best suit their needs. To give people that providers would proactively realistic speed information at the confidence in these services, we inform customers when they are 59 The Ofcom Board point of sale, including a minimum run regular audits of PCWs as approaching, or are at the end of, 61 Governance statement speed guarantee. part of an accreditation scheme. their minimum contractual term. 74 Our employees In January 2018, we accredited an Our updated broadband speeds Our work on switching and boosting 79 Remuneration report eighth PCW, Broadbanddeals.co.uk. code of practice gives people more consumer engagement with the We also supported the Competition 86 Certificate and report of the power to hold broadband providers market should increase people’s and Markets Authority in its market Comptroller and Auditor General to to account for poor service levels. confidence when looking to switch study of digital comparison tools, the Houses of Parliament Providers must now allow customers providers, by making the process which concluded in September 2017. to walk away penalty-free if they simple, quick and hassle-free. fail to deliver on the minimum Offering more and better Financial Statements Ofcom’s new rules on mobile speed guarantee. The number of information is only part of the task. switching will come into force in 88 Statement of comprehensive income consumers able to exercise their right Consumers should be able to act on summer 2019. They include a ban on 89 Statement of financial position to exit has also increased; that right it by switching providers, so they providers charging for notice periods now extends to those with phone can benefit from tariffs and services 90 Statement of changes in equity running after the switch date. This and pay-TV services bought with that best suit their needs. 91 Statement of cash flows will put an end to people paying for broadband, and to customers of all 92 Notes to the accounts Our research shows that around new and old services at the same broadband technologies. two in five customers who switch time – saving UK mobile customers mobile provider (38%) – 2.5 million around £10m a year in total. Annex people – experienced at least one Empowering people to make better 120 Ofcom Boards, Panels and Committees major problem during the process, choices is a priority for Ofcom. We while around 70% encountered at 123 Regulatory statements will continue to monitor the market, least some difficulty. 128 Investigations programme stepping in if we see opportunities to increase consumer engagement, 129 Broadcasting complaints, improve switching processes or cases and sanctions provide better information. 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 26 Contents

Our objective Over the past year we have also We want to see Scottish audiences Ensuring fair and effective undertaken work on the BBC’s well served by the BBC. Ofcom’s job competition to deliver a wide range commercial subsidiaries and their is to consider whether the public Performance Report of high quality and varied content relationships with the ‘public service’ value offered by a new BBC channel 2 Our powers and duties for broadcasting audiences part of the BBC. Under the Charter would justify any adverse effects and Agreement, the BBC ‘public on fair and effective competition 5 Chairman’s message Healthy competition benefits service’ is allowed to carry out some in Scotland. We consulted on our 7 Chief Executive’s report viewers and listeners. It can increase specific commercial trading which provisional findings for BBC Scotland 11 Progress on delivering against our the choice of programmes on offer, supports its core public-service in April 2018, and aim to publish a Annual Plan priorities stimulate investment in the sector, work. In July 2017, we established final decision by July 2018. 33 Principal risks and uncertainties and encourage broadcasters to find requirements and guidance on how In the year ahead, we will be new ways to serve their audience. the BBC carries out these activities. 35 Work in the nations and our consulting on updates to our international engagement As the BBC’s regulator, Ofcom We also looked at the BBC’s plans requirements and guidance on the 39 Who we work with and how we work upholds the national broadcaster’s to merge two of its commercial BBC’s commercial activities. We will standards and performance. But subsidiaries: BBC Studios and BBC also be gathering evidence on the 45 Financial review we also have a role to ensure that, Worldwide, and in March 2018, the activities of BBC Studios, and plan to 51 Corporate responsibility if the BBC makes changes to its BBC provided voluntary commitments issue a call for inputs early in 2019 53 Sustainability report services, any adverse impacts to us in relation to the merger. on the scope of our future work. on fair and effective competition are justified by the public value In November 2017, the BBC In March 2017, the then Secretary of Accountability Report delivered by the change. published its final proposals for a State for Digital, Culture, Media and 58 Directors’ report new Scottish television channel Sport issued a European intervention 59 The Ofcom Board What we have done to begin broadcasting in autumn notice in relation to plans by 21st 2018. We invited comments on Century Fox to acquire the shares 61 Governance statement Competition concerns may arise if the proposals and held meetings in Sky it did not already own, which 74 Our employees the BBC’s public service activities and workshops with stakeholders required Ofcom to report on two 79 Remuneration report are considered to be crowding out in Scotland. In January 2018, we public interest considerations. competition, or deterring others published a letter to the BBC 86 Certificate and report of the We provided our report to the from investing or innovating. confirming that we would undertake Comptroller and Auditor General to Secretary of State in June, finding There is also a risk that, without a competition assessment of the the Houses of Parliament that the proposed transaction appropriate safeguards, the BBC’s planned BBC Scotland service. raised public interest concerns public funding could be used to As part of this work, we have relating to media plurality, but not Financial Statements subsidise or benefit its commercial conducted research among Scottish on the grounds of a commitment to subsidiaries, for example by offering viewers, and sought the views of 88 Statement of comprehensive income broadcasting standards. services on favourable terms. parties which might be affected by 89 Statement of financial position We are required to put in place the BBC’s plans. 90 Statement of changes in equity measures to ensure the BBC 91 Statement of cash flows complies with the competition 92 Notes to the accounts provisions of its Charter and Agreement. Following consultation, we set out in June 2017 how we Annex intended to enforce our competition 120 Ofcom Boards, Panels and Committees requirements on the BBC. We 123 Regulatory statements explained how we would expect to handle complaints, carry out New rules on mobile switching will 128 Investigations programme investigations and, if necessary, 129 Broadcasting complaints, impose sanctions. come into force in the summer of cases and sanctions 2019 saving UK mobile customers 133 Spectrum engineering and enforcement around £10m a year in total 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 27 Contents

Protect consumers from harm Performance Report We work to protect communications 2 Our powers and duties customers, including vulnerable people, from harm or sharp practices. 5 Chairman’s message 7 Chief Executive’s report We take action when they are exposed to harmful behaviour by 11 Progress on delivering against our businesses, and address offensive Annual Plan priorities content on television and radio 33 Principal risks and uncertainties through our broadcasting rules. 35 Work in the nations and our international engagement Our objective 39 Who we work with and how we work Protecting audiences from 45 Financial review harmful content in TV, radio and on-demand services 51 Corporate responsibility 53 Sustainability report Audiences expect high standards when they watch and listen to programmes broadcast Accountability Report on TV and services. 58 Directors’ report Ofcom has a duty to protect viewers 59 The Ofcom Board and listeners – especially those who 61 Governance statement are under 18s – from harmful or 74 Our employees inappropriate material broadcast on We also assessed whether the TV and radio. 79 Remuneration report takeover would mean Sky would 86 Certificate and report of the We continue to hold broadcasters no longer be a fit and proper holder Comptroller and Auditor General to to account by enforcing the rules of a broadcasting licence. The the Houses of Parliament in our Broadcasting Code. The available evidence did not provide a Code sets the standards which reasonable basis to conclude that broadcasters must follow. We also this would be the case. Financial Statements have rules for on-demand services, 88 Statement of comprehensive income The Secretary of State referred such as catch-up players and the proposed merger to the certain subscription platforms. 89 Statement of financial position Competition and Markets 90 Statement of changes in equity Each year, we receive thousands Authority (CMA) for a phase-two of complaints from the public 91 Statement of cash flows investigation on both grounds. about TV, radio and on-demand 92 Notes to the accounts In January 2018, the CMA published programmes. We consider every its provisional findings. It agreed complaint carefully and assess it with Ofcom’s phase-one advice against our rules to decide whether Annex that the deal raises concerns under we need to investigate further. If 120 Ofcom Boards, Panels and Committees media plurality, but not in respect of a broadcaster breaks our rules, 123 Regulatory statements broadcasting standards. The CMA we take clear enforcement action. 128 Investigations programme also consulted on options to remedy We also routinely monitor TV and 129 Broadcasting complaints, these concerns. It provided a final radio services to ensure they are cases and sanctions report to the Secretary of State on 1 complying with our rules. May 2018. 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 28 Contents

With the BBC, we have set out how this will work.2 We also published our procedures for handling complaints Performance Report about BBC online material. 2 Our powers and duties Over the past year we have 5 Chairman’s message embedded these new duties for 7 Chief Executive’s report dealing with BBC complaints into our ongoing work on content standards. 11 Progress on delivering against our We assessed 2001 BBC complaints Annual Plan priorities in total between 3 April 2017 and 31 33 Principal risks and uncertainties March 2018. If a complainant had 35 Work in the nations and our not completed the BBC’s process international engagement before complaining to Ofcom (the 39 Who we work with and how we work ‘BBC First’ approach), we explained the process and redirected them to 45 Financial review the BBC. 51 Corporate responsibility 53 Sustainability report We set a new requirement for the BBC to publish clear, fortnightly What we have done We also fined Ariana International information on the complaints it has £200,000, Kanshi Radio £17,500, Accountability Report Continued to ensure broadcast received. This builds and maintains and Radio Dawn £2,000 for serious 58 Directors’ report public confidence in the operation of content meets appropriate standards breaches of our rules in this area. the BBC First approach and provides 59 The Ofcom Board Our Broadcasting Code includes Further details about our transparency for the public. 61 Governance statement rules which prohibit the broadcast of enforcement work can be found on Our work ensures that the 74 Our employees material that is likely to encourage pages 129-132. or incite crime or disorder. This is BBC’s viewers and listeners are 79 Remuneration report a critically important duty and we Embedded our new BBC duties into appropriately protected through a 86 Certificate and report of the have taken robust enforcement our work on content standards fair, transparent and independent Comptroller and Auditor General to action against broadcasters for complaints process. This means the Houses of Parliament serious breaches of our rules, Under the BBC Charter and that the BBC will be held to account involving hate speech and material Agreement, Ofcom is responsible for its content standards, through likely to incite crime or disorder. for regulating all areas of BBC strong enforcement of our rules. Financial Statements broadcast and on-demand 88 Statement of comprehensive income In the most serious case, we found content – including, for the first 89 Statement of financial position that the licence holder for Iman FM time, accuracy, impartiality and was not a fit and proper licensee and commercial references. These new 90 Statement of changes in equity we revoked its broadcast licence. responsibilities came into force on 3 91 Statement of cash flows This community radio station in 1 April 2017. 92 Notes to the accounts Sheffield broadcast lectures by a radical Muslim cleric which contained The Government’s BBC Charter material likely to incite crime, hate and Agreement also gives Ofcom a Annex speech and justified intolerance new role to provide an independent 120 Ofcom Boards, Panels and Committees towards non-Muslim people. opinion on whether the BBC has met its editorial guidelines in public 123 Regulatory statements service online material. 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement

2 https://www.ofcom.org.uk/__data/assets/pdf_ 134 Spectrum licensing file/0022/112099/Review-of-the-mandatory- 1 Our duties for regulating the BBC for accuracy and daytime-protection-rules-in-the-Ofcom- 139 Sustainability impartiality came into force on 22 March 2017. Broadcasting-Code.pdf 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 29 Contents

Mandatory daytime protection for Our objective TV programmes Ensuring landline-only customers get value for Our Broadcasting Code requires Performance Report money from voice services television broadcasters to comply 2 Our powers and duties with two key requirements which Over the past decade, the UK 5 Chairman’s message have been put in place to protect telecoms landscape has been 7 Chief Executive’s report children from content which might transformed. Competition has 11 Progress on delivering against our be unsuitable for them: the 9pm helped bring about new services, Annual Plan priorities watershed and mandatory daytime wider choice and better quality. protection. Mandatory daytime 33 Principal risks and uncertainties Fifty-nine per cent of telecoms protection allows films rated up 35 Work in the nations and our customers now buy a bundle, to ‘15’ by the British Board of Film international engagement including a landline telephone Classification to be broadcast during service and a broadband service. 39 Who we work with and how we work the daytime on premium subscription People who buy bundled services 45 Financial review channels, and up to ‘18’ on pay-per- are getting more for their money view film channels, provided they are 51 Corporate responsibility than ever before. protected by a PIN code that cannot 53 Sustainability report be removed or bypassed by viewers. But customers who do not take bundled services have not benefited Our Broadcasting Code must from competition in the same way. Accountability Report remain appropriate and relevant. 58 Directors’ report As the way in which people We had been particularly concerned 59 The Ofcom Board watch television evolves, we about people who buy only a are continuing to ensure that landline from a provider. These 61 Governance statement regulation keeps pace. We must customers have had less choice of 74 Our employees also ensure that audiences supplier, and have not benefited 79 Remuneration report continue to be protected from This research report was published from strong price competition or 86 Certificate and report of the harmful content. This is especially alongside the consultation.2 promotional offers. Often these are Comptroller and Auditor General to important for young audiences older or vulnerable customers, who The consultation set out Ofcom’s view the Houses of Parliament and is a key priority for Ofcom. rely on their landline and are less that the proposed extension of the likely to switch. They are often loyal IIn March 2018 we published a rules in this area would enable the to their supplier but are penalised by consultation 1 seeking stakeholder Code to reflect the evolving viewing Financial Statements ever-higher prices. views on a proposal to extend the habits of TV audiences, and would 88 Statement of comprehensive income mandatory daytime protection allow adults to have increased choice In recent years, all the major landline 89 Statement of financial position rules in the Code beyond premium in daytime viewing. Importantly, our providers have increased their line 90 Statement of changes in equity subscription and pay- per- view film proposal would not affect the 9pm rental charges significantly, by channels, so that programmes which watershed, which is a trusted and between 25% and 49% in real terms. 91 Statement of cash flows can currently only be shown after the fundamental feature of broadcast This was despite a fall of around 92 Notes to the accounts 9pm watershed could be shown on regulation that continues to ensure 25% in the underlying wholesale cost scheduled television channels at any protection for children. of providing a landline service. time of day, provided that a mandatory Annex We are currently considering Our aim is to protect customers, PIN protection is in place. 120 Ofcom Boards, Panels and Committees stakeholder responses and expect to particularly the vulnerable, where 123 Regulatory statements To inform this work, we commissioned publish a statement in summer 2018. the market fails to do so. research on family viewing habits 128 Investigations programme and audience awareness, use of 129 Broadcasting complaints, and attitudes towards PIN systems. cases and sanctions 133 Spectrum engineering and enforcement

1 Available at: https://www.ofcom.org.uk/__data/ 134 Spectrum licensing assets/pdf_file/0022/112099/Review-of-the- 2 Available at: https://www.ofcom.org.uk/research- mandatory-daytime-protection-rules-in-the- and-data/tv-radio-and-on-demand/tv-research/ 139 Sustainability Ofcom-Broadcasting-Code.pdf daytime-pin-research 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 30 Contents

A further 200,000 customers of BT’s ‘Home Phone Saver’ package could also be eligible. These Performance Report customers can choose to stay on 2 Our powers and duties their current package or move to the standard product which has been 5 Chairman’s message reduced in price, depending on which 7 Chief Executive’s report is the best deal for them. 11 Progress on delivering against our Although the price cut does not Annual Plan priorities apply to people who buy a telephone 33 Principal risks and uncertainties service from one provider and 35 Work in the nations and our broadband from another, the international engagement agreement requires BT to help 39 Who we work with and how we work these customers take advantage of the deals on offer in the market, 45 Financial review by explaining that they could get a 51 Corporate responsibility better deal if they bought services 53 Sustainability report as part of a bundle. Separately, we are examining Accountability Report measures to help people shop 58 Directors’ report around with more confidence, so What we have done To help us understand how landline- they can take full advantage of 59 The Ofcom Board only customers approach these the wide choice of competitive 61 Governance statement We launched a review of how the questions, we commissioned services and find deals best suited 74 Our employees market was working for customers market research on their attitudes to their needs. This is part of our 79 Remuneration report who buy only a landline service. We towards switching provider or tariff, broader work to make it easier for found that these customers were and what might encourage them to customers to get better deals. We 86 Certificate and report of the getting poor value for money. consider switching. will continue this summer with a Comptroller and Auditor General to consultation on whether providers the Houses of Parliament Two-thirds of the UK’s 1.5 million Following our intervention, BT should proactively inform customers landline-only customers are with BT. agreed in October 2017 to our when they are approaching or So, in February 2017, we proposed proposal in full. The company Financial Statements are at the end of their minimum rules to cut the cost of BT’s line reduced its monthly line rental by contractual term. 88 Statement of comprehensive income rental for customers with landline- £7 per month from 1 April 2018, for 89 Statement of financial position only contracts, by between £5 and customers who take only a landline. Following BT’s move, the Post 90 Statement of changes in equity £7 per month. This means more than 700,000 Office, which serves the second- We also outlined measures to require of BT’s landline-only customers, largest share of the landline-only 91 Statement of cash flows BT to trial different approaches for typically elderly and vulnerable, now market after BT, confirmed to 92 Notes to the accounts communicating with its landline-only benefit from an annual saving of Ofcom that it would reduce its rental customers. This would help them £84 on their phone bill. price from £16.99 to £11.50 from May. We now expect other providers Annex consider what they are paying, and BT’s agreement included further to follow suit. 120 Ofcom Boards, Panels and Committees how other BT packages – or even commitments for a three-year other providers – might offer better period from April 2018, including We will also continue to keep a close 123 Regulatory statements value for money. capping the price of calls and eye on landline prices, to ensure BT’s 128 Investigations programme line rental by the rate of inflation actions address the problems we have 129 Broadcasting complaints, each year, and improving the identified. If we have any concerns, we cases and sanctions information available to landline- will consider further action. 133 Spectrum engineering and enforcement only customers. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 31 Contents

We are part of a global effort, Our objective What we have done Accountability Report Addressing nuisance calls involving regulators, industry and Since 2015, Ofcom has helped to others, to tackle ‘number spoofing’, 58 Directors’ report Nuisance calls cause annoyance and lead a working group on nuisance where a caller deliberately presents a 59 The Ofcom Board anxiety for many people. calls, which includes ten of the false number in order to mislead the Governance statement UK’s largest communications 61 Working with the Government and person receiving the call. The IETF providers. The group has explored 74 Our employees industry, Ofcom and the Information plans to implement a new technical technical measures to block or filter 79 Remuneration report Commissioner’s Office (ICO) share lead standard in the US this year to nuisance calls at the network level. responsibility for tackling this problem. support the verification of CLI on calls 86 Certificate and report of the We continue to use our expertise that originate from internet-based Comptroller and Auditor General to and influence to help providers We have specific responsibility for networks. Ofcom has agreed a liaison the Houses of Parliament tackling silent and abandoned calls, develop technical measures that plan with our US counterparts to help while the ICO regulates marketing disrupt nuisance calls. We are also prioritise the UK implementation of calls and messages. encouraging providers with business this new standard. Financial Statements customers who are making these 88 Statement of comprehensive income We aim to minimise consumer calls to take action. In June 2017, we outlined formal harm by: blocking directions which require 89 Statement of financial position Over the course of the year, we communications providers to block 90 Statement of changes in equity • preventing nuisance calls from continued our engagement with being connected in the first place; calls when requested by Ofcom to 91 Statement of cash flows the Internet Engineering Task Force do so, based on fraud or misuse. 92 Notes to the accounts • helping people to make informed (IETF), a global internet standards judgments about these calls, and body, on standardising how a caller’s what to do when they receive number is shown to the recipient. Annex them; and This is known as calling line identification (CLI). 120 Ofcom Boards, Panels and Committees • taking effective enforcement 123 Regulatory statements action against companies who 128 Investigations programme make these unlawful calls. 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Progress on delivering against our Annual Plan priorities Ofcom Annual Report & Accounts 2017/18 32 Contents

Our latest figures suggest that Performance Report around 3.9 billion unwanted calls to 2 Our powers and duties UK landlines are being made in a year, 5 Chairman’s message 7 Chief Executive’s report down 20% in three years 11 Progress on delivering against our Annual Plan priorities In September 2017, we imposed a Within industry, several providers 33 Principal risks and uncertainties ban on charging for caller display have successfully acted on our 35 Work in the nations and our facilities, which can help people to call to block nuisance calls. By late international engagement screen nuisance calls. The new rules 2017, BT had diverted 85 million 39 Who we work with and how we work mean telephone numbers displayed calls, and Vodafone has blocked to people receiving calls must be 373 million calls. Sky has launched 45 Financial review valid and dialable, and must uniquely Sky Talk Shield, a call-screening 51 Corporate responsibility identify the caller. Providers are service that aims to crackdown 53 Sustainability report also required to identify and block on unwanted and nuisance phone calls with an invalid or non-dialable calls by allowing users to choose number, so they don’t get through the calls they want toanswer and Accountability Report to consumers. We also consulted block the ones they don’t, even 58 Directors’ report on new guidance to help providers before they are connected. 59 The Ofcom Board comply with these new CLI Since July 2013, Ofcom and the ICO 61 Governance statement requirements, which will come into have carried out a joint action plan effect in October this year. 74 Our employees to tackle nuisance calls. We continue 79 Remuneration report In addition, Ofcom will now be able to collaborate with the ICO, sharing to take back blocks of telephone intelligence and information, as well 86 Certificate and report of the numbers which are systematically as with other bodies, both in the UK Comptroller and Auditor General to used to cause harm or anxiety to and internationally. We have also Following action by industry and the Houses of Parliament people, such as through nuisance calls. further developed our relationship regulators, the volume of nuisance We made that change under a review with UK Finance, an industry body calls in the UK is now declining. Our Financial Statements of the rules that apply to telecom representing the UK financial sector, latest figures suggest that around companies, the General Conditions, to help address nuisance calls 3.9 billion unwanted calls to UK 88 Statement of comprehensive income which we completed in March. involving financial scams. landlines are being made in a year, 89 Statement of financial position down 20% in three years. 90 Statement of changes in equity While there is no simple answer 91 Statement of cash flows to preventing nuisance calls, our 92 Notes to the accounts initiatives are making a positive difference for consumers. Total complaints made to the ICO Annex and Ofcom about nuisance calls 120 Ofcom Boards, Panels and Committees have fallen for the second year 123 Regulatory statements in succession, reversing a near 128 Investigations programme decade-long trend of increases. 129 Broadcasting complaints, But there is still much more work to cases and sanctions do. Helping to tackle nuisance calls 133 Spectrum engineering and enforcement remains a priority for Ofcom, and we will pursue all available avenues to 134 Spectrum licensing protect consumers. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 33 Contents Principal risks Performance Report and uncertainties 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our The table below highlights some of the key risks and uncertainties Annual Plan priorities that Ofcom is currently facing. Further information about how we 33 Principal risks and uncertainties manage risks can be found on page 71 35 Work in the nations and our international engagement 39 Who we work with and how we work Principal risks Key mitigating actions 45 Financial review 51 Corporate responsibility Brexit 53 Sustainability report

The terms and timescale for the UK’s • We’re working closely with Government to provide technical, departure from the EU are uncertain but legislative advice on the domestic regulatory framework, and with Accountability Report may have a significant impact on the stakeholders to understand their concerns. 58 Directors’ report sectors we regulate (e.g. investment, 59 The Ofcom Board • We remain fully engaged on all EU work, continuing to provide our competition, choice for consumers), on our technical expertise. 61 Governance statement regulatory framework and on our ability 74 Our employees to recruit and retain high quality talent. • We’ve established a network, supported at senior level, for Ofcom’s EU national colleagues. 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to Cyber and Physical Security the Houses of Parliament

Ofcom’s increased public profile, our • We have an ongoing programme of work designed Financial Statements expanding remit in cyber security and the to improve our cyber security framework. This nature of some of the decisions we take has included Cyber Essentials certification. 88 Statement of comprehensive income has increased the risk that Ofcom could be 89 Statement of financial position • We continue to enhance our information security processes in line the subject of a malicious attack. with the international standard ISO 27001. 90 Statement of changes in equity 91 Statement of cash flows • We’ve engaged with security consultants to undertake physical security reviews of our offices. Alongside this we’re rolling out a 92 Notes to the accounts programme of security awareness to all colleagues. Annex Broadband Universal Service Obligation 120 Ofcom Boards, Panels and Committees 123 Regulatory statements The Government has legislated for a • We will learn lessons from other comparable industry experiences and 128 Investigations programme broadband universal service obligation, ensure we have appropriate expertise where needed. 129 Broadcasting complaints, which Ofcom will implement. Failure cases and sanctions to deliver on time or if we deliver a USO that has limited impact may undermine 133 Spectrum engineering and enforcement benefits to consumers. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Principal risks and uncertainties Ofcom Annual Report & Accounts 2017/18 34 Contents

Principal risks Key mitigating actions Performance Report Litigation 2 Our powers and duties 5 Chairman’s message Litigation by stakeholders can • We seek to engage proactively with stakeholders to avoid litigation delay and potentially undermine where possible. 7 Chief Executive’s report decisions we make in the interests of 11 Progress on delivering against our • We robustly defend any litigation to seek to uphold the effectiveness consumers and businesses, and can Annual Plan priorities of our decisions. deter investment and innovation. 33 Principal risks and uncertainties 35 Work in the nations and our international engagement Spectrum Pipeline 39 Who we work with and how we work Financial review Releasing spectrum to satisfy the • We have a detailed work programme to release airwaves at different 45 increasing demand is challenging. frequencies over the coming years. 51 Corporate responsibility The commercial interests of 53 Sustainability report • We will ensure that future awards sit within an overall vision for mobile stakeholders may give rise to future services including 5G. challenge or litigation which delays the release of spectrum. Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement Investment in competing fibre networks 74 Our employees 79 Remuneration report The regulatory environment needs to • Ensure that we communicate the importance of competition to drive 86 Certificate and report of the encourage investment in competing investment and stress the cost benefits of access to the existing duct Comptroller and Auditor General to fibre networks. If it doesn’t, then and pole network. the Houses of Parliament consumers may have to wait longer • We have a programme of stakeholder engagement alongside the for higher quality, faster services consideration of investment incentives. and this may deter innovation and Financial Statements service differentiation. • We’re working closely with Government to consider perceived barriers 88 Statement of comprehensive income to investment. 89 Statement of financial position 90 Statement of changes in equity Consumer outcomes 91 Statement of cash flows 92 Notes to the accounts We have an ambitious programme • We’ve focused our priorities on those areas where we believe we can in place to improve outcomes for make the biggest impact within reasonable timelines. consumers. If this programme isn’t as Annex • We’re undertaking robust consumer research, coupled with the trailing effective as we anticipate then it may 120 Ofcom Boards, Panels and Committees of remedies, to identify the most effective approaches to increase undermine benefits for consumers. Regulatory statements consumer engagement. 123 128 Investigations programme • We’re actively engaging with stakeholders on all aspects of our 129 Broadcasting complaints, consumer programme, including the UK and Nations governments. cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 35 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility Work in the nations and 53 Sustainability report Accountability Report our international engagement 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees Our work in the UK’s nations and regions 79 Remuneration report 86 Certificate and report of the We work to ensure people across The views, interests and needs of England Comptroller and Auditor General to the UK get the best from their people across the UK are important the Houses of Parliament communications services and are to us. Our offices in each of the The Communications Market Report and the Connected Nations protected from business practices UK’s nations allow us to engage which might cause them harm, while directly with governments, elected report published in 2017 showed Financial Statements enabling competition and innovation representatives and local stakeholders. that, although England as a 88 Statement of comprehensive income to thrive. To do this effectively, we whole is relatively well served by 89 Statement of financial position We have statutory Advisory must consider the UK’s different communication services, areas Committees for each nation, and 90 Statement of changes in equity nations, cultures, population within it (especially rural areas) still a Nations Committee that reports 91 Statement of cash flows densities and landscapes. suffer from poor provision. directly to the Ofcom Board. Our 92 Notes to the accounts For example, we recognise that Content Board and Consumer Panels We continued to prioritise work providing fixed broadband, mobile also have members representing for areas that are poorly served, and postal services that meet the each nation. for example by promoting Annex investment in new networks and needs of people in rural and remote 120 Ofcom Boards, Panels and Committees Although much of Ofcom’s work areas is still a challenge. publishing granular maps to inform affects people across all of the UK, consumers and league tables of the 123 Regulatory statements Northern Ireland, Scotland, and this section highlights some specific performance of different providers. 128 Investigations programme Wales, as well as some English work we carried out in each of the UK’s We have also provided advice and 129 Broadcasting complaints, regions, have a high proportion of nations in the past year. In addition evidence to the UK Government and cases and sanctions these remote areas. In another to activity highlighted here, we have Parliament throughout the year. 133 Spectrum engineering and enforcement part of Ofcom’s work, public service published dedicated Communications broadcasting needs to reflect Market and Connected Nations reports 134 Spectrum licensing different cultural identities, at for England, Scotland, Wales and 139 Sustainability national and regional levels. Northern Ireland. 143 700 MHz clearance 145 Glossary

Performance Report

Work in the nations and our international engagement Ofcom Annual Report & Accounts 2017/18 36 Contents

Northern Ireland There remain many areas where We provided input into the UK broadband speeds are inadequate Government’s independent Our team in Northern Ireland and mobile coverage is poor. We review of S4C and continued our Performance Report brought together government, have worked closely with the UK engagement with the National 2 Our powers and duties industry and other interested and Scottish Governments on these Assembly for Wales, giving evidence parties for discussions on issues in the past year, sharing data to the Culture, Welsh Language and 5 Chairman’s message maximising the benefit of future and providing technical expertise to Communications Committee on its 7 Chief Executive’s report superfast broadband roll-outs, inform the Scottish Government’s inquiry into radio in Wales and to the 11 Progress on delivering against our whether they are commercially or assessment of the Digital Superfast Economy, Infrastructure and Skills Annual Plan priorities publicly funded. Scotland Broadband programme and Committee’s inquiry into digital 33 Principal risks and uncertainties The reform of Openreach (see the development of their ‘Reaching infrastructure in Wales. 100’ proposals. We facilitated 35 Work in the nations and our pages 23-24) did not apply directly We have continued making best a mobile summit, chaired by the international engagement to Northern Ireland, where we use of the Welsh language in our Scottish Cabinet Secretary for the 39 Who we work with and how we work decided that BT Northern Ireland communications and fulfilling Rural Economy and Connectivity and Networks (BTNIN) could continue our obligations under the Welsh 45 Financial review attended by a wide range of industry to act on Openreach’s behalf. We Language Standards regime. 51 Corporate responsibility agreed significant changes to the representatives, the UK Government 53 Sustainability report Northern Ireland model, which and other organisations working on We have focused on creative ways addressed industry concerns tackling these challenges as part of to communicate in Welsh, by and made BTNIN subject to the the Scottish Government’s Mobile improving our website’s Welsh- Accountability Report Action Plan. language functionality and through same monitoring and compliance 58 Directors’ report social media and video. This reflects as Openreach in Great Britain. We have also undertaken a step- Ofcom’s commitment to provide an 59 The Ofcom Board change in our engagement, in line As the UK prepares to leave the excellent service to anyone wishing 61 Governance statement with our new statutory duties European Union, we have worked to conduct their business with outlined in our Memorandum 74 Our employees closely with our counterparts in the Ofcom in Welsh. Republic of Ireland, ComReg and the of Understanding with the UK 79 Remuneration report Broadcasting Authority of Ireland, to Government, Scottish Government 86 Certificate and report of the identify cross-border services that and Scottish Parliament. This has Devolution Comptroller and Auditor General to included the provision of written could be affected. In Scotland, Bob Downes has been the Houses of Parliament and oral evidence to Holyrood’s appointed by Scottish ministers to Rural Economy and Connectivity the Ofcom Board, and in Wales, an Scotland Committee and proactive appointment is expected to be made Financial Statements participation in the Scotland’s Our Edinburgh office continued to later in 2018. In Northern Ireland, 88 Statement of comprehensive income Screen Sector inquiry being carried expand and there are now more than once devolution is restored, the 89 Statement of financial position out by the Culture, Tourism, Europe 30 Ofcom colleagues located there. Economy Minister, in consultation and External Relations Committee 90 Statement of changes in equity This is over three times the size of with the Secretary of State (DCMS), (to whom we have also provided 91 Statement of cash flows our previous presence in Scotland, can appoint a Northern Ireland evidence on our BBC responsibilities, and improves our ability to engage member to the Ofcom Board. 92 Notes to the accounts with a wide range of stakeholders including in respect of the proposed in Scotland. A stronger presence new BBC Scotland channel). Ofcom’s new Memorandum in Scotland helps to further our of Understanding with the UK Annex understanding of challenges that are Wales Government, Scottish Government 120 Ofcom Boards, Panels and Committees and Scottish Parliament came into common to all of the UK nations. 123 Regulatory statements Political and industry stakeholder force in April 2017. A Memorandum There has been a significant increase engagement has featured of Understanding with the UK 128 Investigations programme in fixed broadband coverage of prominently during the year, and Government, Welsh Government 129 Broadcasting complaints, communications services across we have continued to work with and Welsh Parliament has also been cases and sanctions Scotland in recent years. However, the Welsh Government in providing agreed and will come into force in the 133 Spectrum engineering and enforcement across Scotland the take-up of advice and support on broadband summer of 2018. 134 Spectrum licensing several communications services and mobile availability in rural areas. remains lower than the UK average. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 37 Contents

The new Memorandum of Understanding set out formal arrangements for Ofcom to consult Performance Report with devolved governments 2 Our powers and duties and legislatures on our strategic priorities, and to provide evidence 5 Chairman’s message to Committees of the Scottish 7 Chief Executive’s report Parliament, the Northern Ireland 11 Progress on delivering against our Assembly and the National Annual Plan priorities Assembly for Wales, as requested. 33 Principal risks and uncertainties 35 Work in the nations and our Our international international engagement engagement 39 Who we work with and how we work Ofcom recognises the importance of 45 Financial review engaging internationally if we want Throughout 2017/18 we have during 2016 and 2017, and we 51 Corporate responsibility to make communications work for supported the various debates continue to engage across a range 53 Sustainability report everyone in the UK. around the EECC, including on the of RSPG working groups, including promotion of competition and co-leading the RSPG’s work on We have always sought to investment, the incorporation of facilitating sharing of best practice Accountability Report participate in international policy internet-based TV services in the and peer review. and legislative debates, and to 58 Directors’ report regulatory framework, and on the maintain a regular dialogue with our Through this work, the RSPG 59 The Ofcom Board approach to European coordination peers, as well as with European and has set up member state of spectrum management. We 61 Governance statement international institutions. workshops, focusing on individual expect the review of the EECC to 74 Our employees spectrum awards, which enable We seek to learn from our overseas continue into 2018/19. the sharing of policy ideas and 79 Remuneration report counterparts, to share regulatory On the AVMSD we have supported learnings between countries. 86 Certificate and report of the experiences and good practice with arguments for proportionate, Comptroller and Auditor General to them, and to monitor international We also organised a first RSPG practical regulation that helps the Houses of Parliament developments to help inform our study visit to Hong Kong, Korea protect audiences from harmful policy work. To do this, we attend and Japan in December 2017, which content while continuing to regulatory and inter-governmental focused on understanding spectrum encourage the production of high- Financial Statements meetings as well as international developments in Asia, especially in quality innovative content. It is 88 Statement of comprehensive income events. We also welcome delegations relation to 5G. hoped that the AVMSD negotiations Statement of financial position from around the world to exchange 89 will conclude during 2018. Ofcom represents the UK at the views on topics ranging from 90 Statement of changes in equity Radio Spectrum Committee (RSC), spectrum auctions to online content Beyond the EU, we contributed 91 Statement of cash flows which has produced technical regulation and the promotion of to the development of Council of conditions enabling the harmonised 92 Notes to the accounts investment in telecoms infrastructure. Europe recommendations on media use of spectrum for services and pluralism and transparency of This year we have continued our applications throughout Europe, media ownership, and participated Annex work supporting the Government in including for mobile broadband and in several international conferences ensuring the interests of consumers other consumer products and devices. 120 Ofcom Boards, Panels and Committees focused on the importance of and citizens in the UK remain at the 123 Regulatory statements independent media regulation. Ofcom also represents the UK heart of legislative change, notably in the telecoms standardisation 128 Investigations programme in the context of the ongoing Ofcom represents the UK on and radiocommunications 129 Broadcasting complaints, reviews of the Audiovisual Media a number of European and sectors of the International cases and sanctions Services Directive (AVMSD) and international committees that Telecommunications Union (ITU), of the Electronic Communications address spectrum policy. The 133 Spectrum engineering and enforcement which works to provide a global Framework (renamed the European Group Director of Spectrum at 134 Spectrum licensing framework for telecommunications Electronic Communications Code, Ofcom served as Chair of the Radio Sustainability and spectrum use. 139 or EECC). Spectrum Policy Group (RSPG) 143 700 MHz clearance 145 Glossary

Performance Report

Our international engagement Ofcom Annual Report & Accounts 2017/18 38 Contents

Ofcom led the UK delegation to During 2017, the Group Director the World Telecommunication responsible for Ofcom’s Strategy, Development Conference in Buenos International, Technology and Chief Performance Report Aires in October 2017 and is an active Economist Teams served as a Vice- 2 Our powers and duties participant in the UK’s preparation for Chair of BEREC and was responsible the ITU Plenipotentiary Conference for organising the annual BEREC 5 Chairman’s message which takes place in October to Stakeholder Forum and a study trip 7 Chief Executive’s report November 2018. to India. 11 Progress on delivering against our Ofcom continues to play an active We are also active in European and Annual Plan priorities role in the Body of European international postal bodies, and 33 Principal risks and uncertainties Regulators for Electronic work closely with fellow regulators, 35 Work in the nations and our Communications (BEREC), and in particular most recently on international engagement we have once again been heavily cross-border parcel delivery and 39 Who we work with and how we work involved with BEREC’s work cost accounting issues. We also programme over the past year. collaborate with audio-visual 45 Financial review regulators in Europe, providing 51 Corporate responsibility Ofcom was co-chair of the Net expert advice to the Commission 53 Sustainability report Neutrality Expert Working Group through the European Regulators Leaving the (EWG) that developed the guidelines Group for Audiovisual Media European Union on net neutrality during 2015/16 to Services (ERGA), and chairing one Accountability Report implement the EU’s net neutrality As the UK prepares to leave the of its working groups on self- and 58 Directors’ report legislation. Ofcom has also been the European Union, we will seek to co-regulation. co-chair of the Remedies EWG for ensure that the communications 59 The Ofcom Board a number of years – most recently sector is given sufficient priority, 61 Governance statement this EWG has been responsible given its critical importance to the 74 Our employees for producing and monitoring the UK economy, and we will continue 79 Remuneration report implementation of best practice on our engagement work with European wholesale access markets. and international institutions. 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Performance Report

Overview ofcom.org.uk 39 Contents Who we work with and Performance Report how we work 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities Engagement with stakeholders 33 Principal risks and uncertainties 35 Work in the nations and our Consumers and citizens While we cannot resolve The Consumer Forum for international engagement Communications, with more than individual complaints about 39 Who we work with and how we work Understanding consumers’ and telecommunications services, we 50 members from consumer 45 Financial review citizens’ interests and behaviour provide advice to complainants and bodies, meets every quarter with is vital to our work. Ofcom makes refer them to the alternative dispute Ofcom to discuss consumer policy 51 Corporate responsibility extensive use of market research resolution (ADR) schemes that we topics. We also hold regular bilateral 53 Sustainability report to understand trends in the take- have approved. We do, however, meetings with consumer stakeholder up and use of communications handle complaints about TV and organisations as well as consultation services and the behaviour and radio programmes. meetings on specific topics. Accountability Report concerns of consumers. Our annual 58 Directors’ report Communications Market Report and Our separate offices in each of the Industry and Government 59 The Ofcom Board Adults’ Media Use and Attitudes nations of the UK provide Ofcom reports, in particular, highlight and with detailed and expert insights Ofcom engages with a wide 61 Governance statement analyse these trends. into the particular challenges range of stakeholders, including 74 Our employees faced by citizens and consumers companies and industry bodies Ofcom’s Consumer Contact Team 79 Remuneration report in different parts of the country. in the sectors we regulate, received around 99,000 calls, web 86 Certificate and report of the Our advisory committees for each consumers and consumer groups, forms, emails and letters directly Comptroller and Auditor General to nation of the UK offer information the UK Government and devolved from consumers in 2017/18, and the the Houses of Parliament and advice to Ofcom on aspects institutions, co-regulators and other information that consumers provide of its work, and communications regulators. We are members of the helps us target our policy-making in general, which are of particular UK Regulators Network and the and enforcement work. Consumers Financial Statements importance to each nation. National UK Competition Network, and we also contact us through our website. 88 Statement of comprehensive income interests are also represented engage with various international by members of Ofcom’s Content organisations and regulatory bodies. 89 Statement of financial position Board and by the Communications 90 Statement of changes in equity Consumer Panel. Ofcom has a statutory duty to take into account in its decisions the 91 Statement of cash flows views and interests of those who 92 Notes to the accounts live in different parts of the UK. Our operations in the nations are led by senior directors in Edinburgh, Annex Cardiff, Belfast and London, who 120 Ofcom Boards, Panels and Committees work to ensure that the views, 123 Regulatory statements needs and special circumstances of 128 Investigations programme the nations receive Ofcom’s direct 129 Broadcasting complaints, attention. Our advisory committees cases and sanctions for each of the nations also provide advice about the interests and 133 Spectrum engineering and enforcement opinions of the nations and regions 134 Spectrum licensing on all communications matters. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Who we work with and how we work Ofcom Annual Report & Accounts 2017/18 40 Contents

Accountability Report 58 Directors’ report Co-regulators and other bodies The Competition and Markets When we regulate 59 The Ofcom Board Authority (CMA) has concurrent 61 Governance statement Ofcom has a co-regulatory powers under specific consumer The Communications Act 2003 partnership with the Advertising protection legislation and within requires us to have regard to the 74 Our employees Standards Authority (ASA), which the framework of competition law principles of better regulation: that 79 Remuneration report was formed in 2004. This covers regulation should be transparent, for the communications sector. 86 Certificate and report of the broadcasters and advertising proportionate, consistent, We work with the CMA to ensure Comptroller and Auditor General to on video-on-demand services. accountable, and targeted only at a consistent and co-ordinated the Houses of Parliament Broadcasters are obliged to comply approach in relation to issues where cases where action is needed. with the advertising codes under we have concurrent powers. We When Ofcom was established, their broadcast licences issued by discuss which body is best placed to Financial Statements Ofcom. When the ASA adjudicates we built on these principles by lead in each case. 88 Statement of comprehensive income on an advertisement, broadcasters developing a more specific set of comply with rulings immediately regulatory principles to inform our 89 Statement of financial position under the conditions of their day-to-day work. The speed with 90 Statement of changes in equity which the communications sector licences. Where necessary, the ASA 91 Statement of cash flows is able to refer licensees to Ofcom. is changing makes it especially important for us to have clear 92 Notes to the accounts Ofcom has responsibility for the guiding principles. regulation of premium-rate services (PRS) which enable consumers to Annex purchase goods and services by 120 Ofcom Boards, Panels and Committees charging the cost to their phone bills 123 Regulatory statements and pre-pay accounts. The day-to- 128 Investigations programme day regulation of PRS is carried out 129 Broadcasting complaints, on Ofcom’s behalf by the Phone- cases and sanctions paid Services Authority through its enforcement of a code of practice 133 Spectrum engineering and enforcement approved by Ofcom. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 41 Contents

Ofcom’s Regulatory Principles Performance Report How we regulate How we support regulation 2 Our powers and duties Ofcom will always seek the least Ofcom will research markets 5 Chairman’s message intrusive regulatory methods of constantly and will aim to 7 Chief Executive’s report When we regulate achieving its objectives. remain at the forefront of 11 Progress on delivering against our Ofcom will operate with a bias We will strive to ensure that technological understanding. Annual Plan priorities against intervention, but with a interventions are evidence- We will consult widely with 33 Principal risks and uncertainties willingness to intervene promptly based, proportionate, consistent, all relevant stakeholders and and effectively where required. accountable and transparent in assess the impact of regulatory 35 Work in the nations and our both deliberation and outcome. international engagement We will intervene where there is action before imposing a specific statutory duty to work We will regulate with a clearly regulation on a market. 39 Who we work with and how we work towards a goal that markets alone articulated and publicly reviewed 45 Financial review cannot achieve. annual plan, with stated objectives. 51 Corporate responsibility 53 Sustainability report

Figure 1: Impact of our statements on the regulatory burden to stakeholders: 2017/18 Reducing regulation Accountability Report Ofcom is focused on reducing 58 Directors’ report regulation where it is appropriate. 59 The Ofcom Board We believe ‘better regulation’ means 61 Governance statement ensuring rules are properly targeted, and do not impose undue burdens 74 Our employees on stakeholders. 9% 75% 79 Remuneration report During the past year we have made 4 33 86 Certificate and report of the a number of significant regulatory Comptroller and Auditor General to decisions. While our longer-term Grand Total: the Houses of Parliament focus is on reducing regulation, this year, in preparation for our new Financial Statements regulatory responsibilities for the BBC, our work has led to increased 44 88 Statement of comprehensive income regulation in the broadcasting sector. 89 Statement of financial position In order to safeguard the interests 90 Statement of changes in equity of citizens and consumers, some 14% 2% 91 Statement of cash flows of our other decisions also required 6 1 additional or strengthened regulation, 92 Notes to the accounts for example supporting investment in ultrafast broadband networks. The Annex volume of documents we published 120 Ofcom Boards, Panels and Committees has stayed broadly the same. Increased/new regulation 4 9% 123 Regulatory statements Figure 1 provides an overview Mixed/no change/ongoing 33 75% 128 Investigations programme of how the regulatory burden on Reduced regulation 6 14% stakeholders changed as a result of 129 Broadcasting complaints, Ofcom’s regulatory decisions and Streamlined/co-regulatory 1 2% cases and sanctions statements in 2017/18. 133 Spectrum engineering and enforcement An overview of the key decisions and statements that we have made during 134 Spectrum licensing the year can be found in the Annex on 139 Sustainability pages 123 to 127. 143 700 MHz clearance 145 Glossary

Performance Report

Who we work with and how we work Ofcom Annual Report & Accounts 2017/18 42 Contents

Consultations • Category 2: consultations which, while containing important policy Public consultations allow proposals, will be of interest to a Performance Report stakeholders to comment on, and limited number of stakeholders 2 Our powers and duties respond to, our proposals before who will have awareness of the any final decisions are made. issues; in these cases, we will 5 Chairman’s message If the period for consultation is too normally consult for six weeks. 7 Chief Executive’s report Progress on delivering against our short, some of those with important • Category 3: consultations which 11 views to share may not have enough fall within one or more of the Annual Plan priorities time to prepare their responses. If following categories, where 33 Principal risks and uncertainties it is too long, the market concerned the normal time period for 35 Work in the nations and our may have changed dramatically. consultations is one month: international engagement When we decide how long a - technical issues; 39 Who we work with and how we work consultation should last, we need - where there is a need to complete 45 Financial review to strike the right balance between the project in a specified timetable 51 Corporate responsibility these two considerations. because of market developments 53 Sustainability report There are generally three categories or other factors which require the of consultation: project to be concluded within a - where the proposal will have a short period; limited effect on a market; or Accountability Report • Category 1: consultations which contain major policy initiatives - where the issue has already been - where the proposal is a limited 58 Directors’ report and/or are of interest to a wide the subject of a consultation; amendment to an existing policy 59 The Ofcom Board range of stakeholders (especially or regulation. 61 Governance statement those who may need a longer time Figure 2 sets out an analysis of the 74 Our employees to respond); in these cases, we will length of our consultations by sector. normally consult for ten weeks. 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to Figure 2: Analysis of consultation duration: 2017/18 the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position Telecoms Broadcasting Spectrum Post Other Total 90 Statement of changes in equity 91 Statement of cash flows 5 1 3 0 1 10 92 Notes to the accounts

(=22%) (In 2016/17 32%) Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 21 6 7 1 1 36 128 Investigations programme 129 Broadcasting complaints, cases and sanctions (=78%) (In 2016/17 68%) 133 Spectrum engineering and enforcement 134 Spectrum licensing Consultation period at least ten weeks Consultation period less than ten weeks 139 Sustainability (including category 2 and category 3 consultations) 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 43 Contents

Ofcom collects statistics on the number of responses to consultations, as shown in in Figure 3. Performance Report We received more than 800 2 Our powers and duties responses to our consultations 5 Chairman’s message where we subsequently issued 7 Chief Executive’s report statements in 2017/18. 11 Progress on delivering against our Annual Plan priorities Figure 3: Responses to consultations: 2017/18 33 Principal risks and uncertainties

Range of responses received 35 Work in the nations and our international engagement 0 5 10 15 20 25 39 Who we work with and how we work 45 Financial review 0 8 4 51 Corporate responsibility 1-10 11 -9 53 Sustainability report

11-20 13 11 Accountability Report 21-30 4 -1 58 Directors’ report 59 The Ofcom Board 31-40 2 0 61 Governance statement

41-50 4 4 74 Our employees Change compared to 2016/17 79 Remuneration report

Number of consultation responses of Number received 50+ 2 -1 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament Timeliness of decision making We analyse how long it takes us to publish a decision following the closure of a consultation (see Figure 4). In 2017/18, Financial Statements more than thirty percentage of our decisions were announced within 20 weeks of closing a consultation, the majority 88 Statement of comprehensive income within ten weeks. 89 Statement of financial position 90 Statement of changes in equity Figure 4: Analysis of the time taken to publish an Ofcom decision from the close of the consultation period: 2017/18 91 Statement of cash flows Range of responses received 92 Notes to the accounts 0 5 10 15 20 25 Annex 6 0-10 -16 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 11-20 8 4 128 Investigations programme 21-30 14 9 129 Broadcasting complaints, cases and sanctions Period in weeks 31+ 16 9 Change since 2016/17 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Who we work with and how we work Ofcom Annual Report & Accounts 2017/18 44 Contents

Impact assessments • the potential effects that would Figure 5 highlights that, in 2017/18, flow from each option are analysed 83% of consultations had conducted Impact assessments are an carefully; and an impact assessment, explicitly Performance Report important part of the decision- referenced in a specific section or • the costs associated with the 2 Our powers and duties making process. Section 7 of annex of the consultation document. chosen option are outweighed by the Communications Act 2003 In some circumstances, it may not be 5 Chairman’s message the benefits. requires us to carry out an impact necessary or appropriate to conduct 7 Chief Executive’s report assessment when we are proposing • We must publish a list of the an impact assessment, or it may be 11 Progress on delivering against our to do anything for the purposes impact assessments we carry out implicit within the consultation. Annual Plan priorities of, or in connection with, the during the year; this is in the Annex We will continue to ensure that 33 Principal risks and uncertainties carrying out of our functions, and on pages 126-127. we consider the proposal to be impact assessments are carried 35 Work in the nations and our important. Impact assessments In July 2005, we published the out and properly presented in all international engagement relevant cases. ensure, among other things, that in guidelines: Better policy-making: 39 Who we work with and how we work relation to our decisions: Ofcom’s approach to impact 45 Financial review assessment, which emphasised • a wide range of options are Ofcom’s commitment to conducting 51 Corporate responsibility considered, including the option of assessments as an integral part 53 Sustainability report not regulating; of the policy-making process, and • these options are clearly presented; stated that we expected to carry out impact assessments in the majority Accountability Report of our policy decisions. 58 Directors’ report 59 The Ofcom Board

Figure 5: Analysis of impact assessments carried out 61 Governance statement 74 Our employees 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to Telecoms Broadcasting Spectrum Post Other Total the Houses of Parliament

25 7 11 1 2 46 Financial Statements 88 Statement of comprehensive income

(=22%) 89 Statement of financial position (In 2016/17 32%) 90 Statement of changes in equity 91 Statement of cash flows 21 5 10 1 1 38 92 Notes to the accounts Annex (=83%) 120 Ofcom Boards, Panels and Committees 123 Regulatory statements Number of consultation documents Impact assesments (IA) explicit in 128 Investigations programme publishment document 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 45 Contents Financial review Performance Report 2 Our powers and duties 5 Chairman’s message We set a budget of £121.7m in 2017/18, which continues 7 Chief Executive’s report to build on Ofcom’s track record of delivering efficiencies. 11 Progress on delivering against our Annual Plan priorities This includes our expanded remit for regulating the BBC 33 Principal risks and uncertainties 35 Work in the nations and our Delivering our duties international engagement and value for money 39 Who we work with and how we work Ofcom has now delivered 13 45 Financial review consecutive years of like-for-like real- 51 Corporate responsibility terms budget reductions, and we have 53 Sustainability report taken active measures to reduce our fixed and administrative overheads. This will continue to be a feature of Accountability Report the 2018/19 budget and beyond. 58 Directors’ report Following a renegotiation of our 59 The Ofcom Board Head Office lease, along with our 61 Governance statement new approach to working flexibly, 74 Our employees we have reduced our London office space by a further 25%. 79 Remuneration report 86 Certificate and report of the The new lease on our London office Comptroller and Auditor General to fixes costs over the duration of the the Houses of Parliament lease until 2030, reducing volatility and mitigating financial risk in future rent. Additionally, as part of Financial Statements this arrangement the landlord has 88 Statement of comprehensive income committed to significant investment 89 Statement of financial position in the building infrastructure. Financial performance 2017/18 Ofcom invoiced and collected a total of £326.7m (2016/17: £381.3m) 90 Statement of changes in equity By identifying areas where we can In April 2017 Ofcom’s new BBC for the public purse from licence do things differently, as well as 91 Statement of cash flows responsibilities commenced. This fees collected under the Wireless responding to new challenges in the 92 Notes to the accounts followed our work in the previous year Telegraphy Act 2006, geographic markets we regulate, we have set preparing for these new duties. Our telephone numbers, additional our budget for 2018/19 at £124.2m. 2017/18 spending cap was increased payments from broadcasting Annex to reflect the new BBC responsibilities This incorporates our new licensees and the levying of fines 120 Ofcom Boards, Panels and Committees regulatory duties to implement as agreed with Government. and penalties on stakeholders. 123 Regulatory statements a broadband universal service Note 2 to the accounts provides These are presented in separate 128 Investigations programme obligation (USO), and the Network Ofcom’s £121.6m annual running cost accounts prepared under Section and Information Systems Directive. on an adjusted cash accounting basis, 400 of the Communications Act 129 Broadcasting complaints, 2003, and exclude spectrum auction cases and sanctions We continue to look at how we versus a budget set of £121.7m. deposits held at the end of the prioritise our resources to make 133 Spectrum engineering and enforcement financial year. choices in line with our goals, with 134 Spectrum licensing the aim of making communications 139 Sustainability work for everyone. 143 700 MHz clearance 145 Glossary

Performance Report

Financial Review Ofcom Annual Report & Accounts 2017/18 46 Contents

Financial framework We currently receive grant- in-aid in respect of the 700 Under Paragraph 8(1) of the Schedule MHz clearance programme. to the Office of Communications Act Performance Report 2002, Ofcom is required to balance Grant-in-aid arrangements for our 2 Our powers and duties its expenditure with its income in core responsibilities remained in 5 Chairman’s message each financial year. place during the financial year until 7 Chief Executive’s report the end of November 2017 when the Sections 38 and 347 of the change of funding approach began. 11 Progress on delivering against our Communications Act 2003 and Annual Plan priorities Schedule 4 of the Postal Services Ofcom raises its funds from the 33 Principal risks and uncertainties Act 2011 also require Ofcom to raise following sources: income from each of the sectors it 35 Work in the nations and our Sector stakeholder funding regulates, such that it covers the international engagement costs to be incurred by Ofcom in Broadcast licence fees for: 39 Who we work with and how we work regulating that sector. • television 45 Financial review Ofcom must also apportion its • radio 51 Corporate responsibility common operating costs (those 53 Sustainability report which do not relate directly to any Administrative charges for: Operating results one sector) in a proportionate • electronic networks and Despite facing an unprecedented manner across each of those sectors. Accountability Report services and making available level of litigation, and with a Ofcom funding associated facilities significant ongoing refurbishment 58 Directors’ report project to facilitate a move to an agile 59 The Ofcom Board The Digital Economy Act 2017 • postal services regulation working environment, we were able introduced legislative amendments 61 Governance statement to deliver on budget in 2017/18 with which simplify Ofcom’s funding Grant-in-aid 74 Our employees an operating outturn of £121.6m. We model. Following consent of • To cover Ofcom’s operating costs 79 Remuneration report navigated the financial position to the new funding ‘Statement of for spectrum management (until budget using scenario modelling and 86 Certificate and report of the Principles’ by HM Treasury and the December 2017). by running a comprehensive review Comptroller and Auditor General to Secretary of State, Ofcom will no • To cover statutory functions of our expenditure. the Houses of Parliament longer receive grant-in-aid funding and duties, which Ofcom must for its core responsibilities. discharge, but for which there is Note 2 of the accounts within Section no matching revenue stream (until C reconciles the total operating Ofcom is permitted to retain Financial Statements December 2017). expenditure as presented in the sums received in connection with 88 Statement of comprehensive income Statement of Comprehensive Income its functions under the Wireless • To cover the costs for spectrum 89 Statement of financial position to Ofcom’s actual operating outturn Telegraphy Act 2006 (WTA receipts). clearance and awards, including of £121.6m. The note also reconciles 90 Statement of changes in equity Ofcom may retain such sums in spectrum efficiency grants. income on the same basis and Statement of cash flows order to fund its general spectrum 91 Wireless Telegraphy Act 2006 presents Ofcom’s actual operating management functions, as well as 92 Notes to the accounts receipts retention (From December outturn and income by sector. to meet the costs of undertaking its 2017 onwards) other functions for which it cannot Ofcom includes separate lines in our • To cover Ofcom’s operating costs Annex otherwise levy fees and charges. accounts to differentiate costs of for spectrum management. 120 Ofcom Boards, Panels and Committees These changes were implemented work relating to Spectrum Clearance 123 Regulatory statements in December 2017 and Ofcom’s core • To cover statutory functions and Awards from core Ofcom responsibilities are now funded and duties, which Ofcom must operating costs to aid transparency. 128 Investigations programme We have set out in the following entirely through industry fees and discharge, but for which there is 129 Broadcasting complaints, sections the separate elements. charges. This is a more efficient no matching revenue stream. cases and sanctions model and helps to underline our Ofcom also receives rental income 133 Spectrum engineering and enforcement status as a regulator independent of from sub-let office space, bank 134 Spectrum licensing Government. Ofcom may continue interest in respect of bank balances, 139 Sustainability to receive grant-in-aid to deliver and income from services incidental certain major Government projects. to Ofcom’s statutory duties. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 47 Contents

Operating income As we look forward, the reduction in To support our expanded BBC remit, our London office space will reduce our we increased our staff levels in The 2017/18 operating financial risk and volatility. 2017/18; average staff numbers income covering Ofcom’s core Performance Report were 868 FTE (2016/17 828 responsibilities (excluding Spectrum • administration and office expenses 2 Our powers and duties FTE). As a result, total staff costs Clearance and Awards) was increased by £1.1m, through the increased by £3.6m to £72.0m. 5 Chairman’s message £122.4m (2016/17: £115.8m). one-off purchase of non-capital Restructuring costs increased by 7 Chief Executive’s report furniture as part of a move Significant changes from the prior £0.4m with some reorganisation of towards a more flexible working 11 Progress on delivering against our year operating income include: teams throughout the organisation. environment, and an increase in Annual Plan priorities • an increase in the broadcasting corporate membership costs from Spectrum clearance and awards 33 Principal risks and uncertainties regulatory licence charges, foreign exchange movements on 35 Work in the nations and our 700 MHz clearance is a major covering the first full year of our European memberships. international engagement programme of work to modify the new duties regarding the BBC. • IS & IT costs fell by £0.7m due to the digital terrestrial television (DTT) 39 Who we work with and how we work • an increase in the Network and additional expenditure incurred in transmission infrastructure, a high 45 Financial review Services administrative charges the previous year in preparation for priority for Ofcom. The Government 51 Corporate responsibility following the implementation agile working. is funding this and we operate a 53 Sustainability report of the Digital Communications grant scheme to disburse the funds. • 2017/18 outsourced services costs Review outcomes and a continued reduced by £1.6m. This was largely The Spectrum Clearance and Awards review of market reviews required a result of our Riverside House grant-in-aid funding supports Accountability Report under the EU framework. lease arrangements. With the the changes required to the DTT 58 Directors’ report • an increase in funding to cover reduction in floors to manage we infrastructure necessary to clear the 59 The Ofcom Board were able to significantly reduce our spectrum band, to enable broadcasters costs of managing the UK 61 Governance statement spectrum. This is partially offset outsourced property service costs to operate at lower frequencies. 74 Our employees by reduced activity on cases under including security. The programme spans several the Competition Act. 79 Remuneration report Additionally, in the previous year we financial years, with clearance 86 Certificate and report of the introduced a new ICT system requiring planned to complete in 2020. Operating expenditure Comptroller and Auditor General to significant support from our ICT Significant infrastructure work took the Houses of Parliament Operating expenditure relating to outsourced service provider. place across the UK in 2017/18, Ofcom’s core responsibilities in along with regional clearance • we reduced our professional 2017/18 increased by £2.3m to events. This led to a sharp increase services spend by £0.4m with a Financial Statements £48.0m (2016/17 £45.7m), excluding in the value of grants paid. staff costs. The significant differences lower requirement for external 88 Statement of comprehensive income from the previous year’s expenditure consultancy to support the Delivering value for money is at 89 Statement of financial position programme of work. We also the heart of our work on the grant are attributable to the following: 90 Statement of changes in equity received a net credit in year scheme. To this end, we have a robust • premises costs increased by £4.7m, regarding legal cost awards assurance framework in place to make 91 Statement of cash flows relative to 2016/17. There are following successful conclusion of sure that only the efficiently-incurred 92 Notes to the accounts several aspects to this. The previous a number of appeals. incremental costs of clearance are year included a one-off credit of publicly funded. This assurance • temporary staff and recruitment £0.6m relating to the successful framework involves detailed scrutiny Annex costs decreased by £0.5m: we appeal of the rates liability for of grant applications by technical 120 Ofcom Boards, Panels and Committees used short-term staff in 2016/17 Riverside House. In 2017/18, as part experts and by an independent non- to deliver key ICT implementation 123 Regulatory statements of our new Riverside House lease, executive advisory panel. we incurred costs including stamp projects and reduced our 128 Investigations programme duty tax of £1.0m. Additionally in reliance on head-hunters for More broadly, a focus of our work 129 Broadcasting complaints, 2016/17 we were able to credit permanent recruitment. is ensuring that we complete the cases and sanctions property costs with regards to rental 700 MHz clearance programme 133 Spectrum engineering and enforcement income as part of the onerous lease in a manner which maximises the 134 Spectrum licensing provision. This has now ended as benefits to the wider UK economy. Sustainability part of taking on the new lease. 139 143 700 MHz clearance 145 Glossary

Performance Report

Financial Review Ofcom Annual Report & Accounts 2017/18 48 Contents

Additional funds collected on behalf of HM Treasury Performance Report Ofcom prepares a separate 2 Our powers and duties set of Financial Statements for the purposes of Section 400 5 Chairman’s message of the Communications Act 7 Chief Executive’s report 2003. The fees, payments and 11 Progress on delivering against our penalties are reported, with Annual Plan priorities further detail provided, within 33 Principal risks and uncertainties these Financial Statements in Note 23 to the accounts. 35 Work in the nations and our international engagement Since December 2017, following the Any surplus funds arising as a 39 Who we work with and how we work consequence of budgetary savings enactment of the Digital Economy 45 Financial review achieved during the financial year Bill, Ofcom retains certain amounts are returned to stakeholders from Wireless Telegraphy Act 51 Corporate responsibility through a reduction in the annual 2006 (WTA) licence fees to fund 53 Sustainability report its spectrum management work Spectrum Clearance and Awards tariffs raised in the two following and those costs which it cannot expenditure amounted to £82.1m in financial years. otherwise recover by imposing Accountability Report 2017/18 (2016/17: £24.7m), which The funding surplus for the financial fees and charges. The Statement includes £81.1m of grants paid to 58 Directors’ report year is set out in Note 2 to the detailing the principles under spectrum licence holders. 59 The Ofcom Board accounts and totals £5.9m (in which these funds are retained 61 Governance statement We received income totalling 2016/17 this was a £0.6m deficit). can be found at the link below: £85.4m (2016/17: £25.3m). The 74 Our employees Accounting surplus or deficit https://www.ofcom.org.uk/__data/ excess amount is held on the Remuneration report assets/pdf_file/0017/107702/ 79 Statement of Financial Position for An accounting surplus is required to statement-principles-wta.pdf 86 Certificate and report of the cover expenditure not reflected in payment in 2018/19. Comptroller and Auditor General to the Statement of Comprehensive Ofcom collected £326.7m (2016/17: In line with previous years, costs the Houses of Parliament Income, including capital expenditure £381.3m) on behalf of HM Treasury, relating to Spectrum Clearance and deficit recovery payments of which £23.9m (2016/17 Nil) and Awards are reported necessary in respect of the two was retained in line with the Financial Statements separately from Ofcom’s core defined benefit pension plans. new funding Statement that responsibilities in the financial 88 Statement of comprehensive income permits Ofcom to retain Wireless statements to aid transparency. An accounting deficit occurs where 89 Statement of financial position Telegraphy Act receipts to fund depreciation, amortisation and other some of its core responsibilities. 90 Statement of changes in equity Surplus/deficit for non-cash transactions are greater 91 Statement of cash flows financial year than the income received to cover The balance of £309.3m (which the cash costs of capital items and excludes spectrum auction 92 Notes to the accounts Funding surplus or deficit the defined benefit pension plans. deposits) has been transferred to Government accounts. The operating revenue required by The accounting surplus for the Annex Ofcom to fulfil its duties and deliver financial year after tax, recorded in The revenue is collected 120 Ofcom Boards, Panels and Committees its programme of work for any the Statement of Comprehensive from four sources: 123 Regulatory statements financial year is calculated based Income for the year under review, on Ofcom’s statement of charging was £2.9m (2016/17: £1.5m surplus). • Wireless Telegraphy 128 Investigations programme principles. This approach specifies Act licence fees; 129 Broadcasting complaints, the actual funds that need to be • additional payments from cases and sanctions collected to discharge cash liabilities television and radio licensees; 133 Spectrum engineering and enforcement during the year. • financial penalties; and 134 Spectrum licensing 139 Sustainability • geographic numbering 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 49 Contents

2018/19 tariffs Although Ofcom’s headline budget • An average decrease of 10.4% has increased since last year, the (12.2% real-terms decrease) for the On 28 March 2018, Ofcom published fees and charges will vary by sector radio sector, driven by the reduced the Tariff Tables for 2018/19, Performance Report as they reflect planned work for level of planned expenditure in which were based on an estimated 2 Our powers and duties 2018/19 and the variances to the 2018/19. operating expenditure outturn in 2017/18 budget. 5 Chairman’s message • While the overall TV sector, 2017/18 of £121.7m, together with 7 Chief Executive’s report the budgeted costs for 2018/19 and Specifically, sector fees and charges which includes the BBC, shows 11 Progress on delivering against our the variances set out below. for 2018/19 will change by: an average decrease of 1.8% (3.8% real-terms decrease), the Annual Plan priorities The 2016/17 actual £0.5m variance • An average increase of 4.6% (2.5% underlying charges for the sector, 33 Principal risks and uncertainties between the prior years’ actual real-terms increase) for network excluding the BBC, have primarily 35 Work in the nations and our operating outturn and the estimated and service operators. This reflects increased due to a lower level international engagement operating outturn used to set fees the incremental costs of both of expected savings in 2017/18 and charges for 2017/18 will be the broadband universal service 39 Who we work with and how we work (compared to 2016/17). passed back to stakeholders through obligation and the Network and 45 Financial review tariffs for 2018/19 in line with our Information Services Directive. The chart below shows Ofcom 51 Corporate responsibility Statement of Charging Principles. funding over the past nine years. • An increase of 12.2% (9.9% real- 53 Sustainability report Ofcom’s budget for 2018/19 is terms increase) for the post sector. £124.2m, which represents an While the planned expenditure increase of £2.4m from the 2017/18 for 2018/19 in the sector has Accountability Report budget. This is purely reflective of decreased since 2017/18, the 58 Directors’ report DCMS and HMT’s approved increase administrative charge incorporates 59 The Ofcom Board in our 2018/19 spending cap to enable the required prior-year adjustment 61 Governance statement us to carry out new or expanded roles which offsets this saving. 74 Our employees in respect of the broadband universal service obligation and the Network 79 Remuneration report and Information Systems Directive. 86 Certificate and report of the Comptroller and Auditor General to Figure 6: Funding trends Spectrum Telecoms TV Radio Post the Houses of Parliament

80 £75.3m Financial Statements 70 88 Statement of comprehensive income £64.1m 89 Statement of financial position

60 £61.7m 90 Statement of changes in equity £53.2m £53.3m £49.7m 91 Statement of cash flows £49.4m £47.9m £48.8m 50 92 Notes to the accounts £39.6m £46.8.m £44.7m 40 £35.2m £34.6m £33.6m £34.9m Annex Millions (£) £27.2m 30 120 Ofcom Boards, Panels and Committees Regulatory statements £21.2m 123 £23.8m 20 £16.0m £15.3m £15.4m £15.2m 128 Investigations programme £12.8m £13.5m £20.4m £20.0m 129 Broadcasting complaints, £8.2m 10 £6.0m £5.5m £4.9m £4.4m cases and sanctions £4.0m £2.8m £2.9m £3.2m £2.6m £1.8m £1.5m £1.9m £2.0m £2.0m £2.1m £2.0m £1.8m 133 Spectrum engineering and enforcement 134 Spectrum licensing 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 139 Sustainability * This reflects the costs of additional duties in respect of BBC regulation 143 700 MHz clearance 145 Glossary

Performance Report

Financial Review Ofcom Annual Report & Accounts 2017/18 50 Contents

Pensions

Ofcom provides pension benefits Performance Report through a defined contribution pension allowance that is available 2 Our powers and duties to all colleagues. Ofcom colleagues 5 Chairman’s message are employed on terms with access 7 Chief Executive’s report to a stakeholder pension plan. The 11 Progress on delivering against our allowance may be used to contribute Annual Plan priorities to the Ofcom defined contribution stakeholder pension plan. 33 Principal risks and uncertainties 35 Work in the nations and our Colleagues who joined Ofcom from international engagement legacy regulators were entitled to retain membership of one of two 39 Who we work with and how we work defined benefit (DB) pension plans. 45 Financial review Both of these plans are closed to new 51 Corporate responsibility entrants and benefits accruals ceased 53 Sustainability report on 31 May 2011. From this time, all existing members were provided with access to the Ofcom stakeholder plan. Accountability Report Notes 1(k) and 19 to the accounts 58 Directors’ report provide further detail. Ofcom makes cash payments to the As part of the ongoing activity 59 The Ofcom Board The latest actuarial valuations for Ofcom Defined Benefit Plan and the to manage and mitigate risks 61 Governance statement both schemes as at 31 March 2015 Ofcom (Former ITC) pension plan on of the plans, further insurance- 74 Our employees highlighted a combined funding the basis of the actuarial valuations. backed benefit buy-ins in respect surplus of £1.3m. Cash payments, rather than the of pensioner members will be 79 Remuneration report amount charged to operating surplus considered in the future. 86 Certificate and report of the However, the 2017/18 financial as calculated under IAS19, are Comptroller and Auditor General to statements show a surplus of The next formal triennial funding included in operating expenditure the Houses of Parliament £18.2m, in part because the valuations for both plans will be at 31 outturn used to calculate the tariffs pension liabilities under the March 2018 and must conclude by charged to stakeholders each year. financial statements are prepared 30 June 2019. Financial Statements on the basis that the liabilities are As a consequence of the risk 88 Statement of comprehensive income discounted in line with the yields mitigation work between Ofcom and on high-quality bonds which, under the Trustees and Actuaries of both 89 Statement of financial position current market conditions, differ pension plans, approximately 80% of 90 Statement of changes in equity significantly from the approach the plans’ liabilities are now backed 91 Statement of cash flows used for determining Ofcom’s by annuities. 92 Notes to the accounts contributions. This also reflects the significant movements in financial markets since the date of the Annex actuarial valuations. 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 51 Contents Corporate responsibility Performance Report 2 Our powers and duties 5 Chairman’s message Ofcom’s commitment to corporate responsibility 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities Through our corporate responsibility • reducing our carbon footprint, Some of the benefits are: 33 Principal risks and uncertainties programme, we aim to be a providing value for money and • recognising and embracing the 35 Work in the nations and our responsible employer and to ensuring that Ofcom’s practices diversity of the UK population recognise and manage our impact are environmentally sustainable international engagement we serve helps us to make on the wider environment and (see Sustainability section on 39 Who we work with and how we work better decisions for citizens community through three key areas pages 53-56); and 45 Financial review and consumers, to make of activity: • engaging, inspiring and developing communications work for everyone; 51 Corporate responsibility • treating all colleagues with dignity colleagues, while supporting local 53 Sustainability report • valuing, promoting and and respect in an inclusive and fair initiatives (see Volunteering and encouraging diversity creates working environment, promoting community section below). a more engaged and efficient equality of opportunity for all, Accountability Report We believe that a proactive workforce; and not only within Ofcom but also in 58 Directors’ report approach towards corporate the sectors we regulate (see Our • being socially and environmentally responsibility fundamentally 59 The Ofcom Board Employees section on page 74); responsible reduces our contributes to our success 61 Governance statement operational costs and builds closer as a regulator. Our employees links with our local community. 74 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Performance Report

Corporate responsibility Ofcom Annual Report & Accounts 2017/18 52 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees Volunteering Last year we built on our relationship Apprenticeships 79 Remuneration report with an Academy in Peckham, and community and internships 86 Certificate and report of the helping students and teachers to Comptroller and Auditor General to We encourage colleagues to understand the skills that employers We aim to broaden the pathways the Houses of Parliament volunteer and participate in look for in job applicants. for young people to join the community schemes. We believe organisation. We are now paying the During 2017 we continued to this is an effective way for them Apprenticeship Levy and reviewing support colleagues speaking at Financial Statements to gain new skills, stay mentally our approach to apprenticeships, schools through STEMNET, which 88 Statement of comprehensive income healthy, boost their confidence and to offer valuable long-term paid aims to inspire young people in promote our diversity objectives. skills-based work placements. 89 Statement of financial position science, technology, engineering 90 Statement of changes in equity In 2017, we engaged with our local and mathematics. We also offer summer internships stakeholders in many ways, including: through Career Ready – in 91 Statement of cash flows Our colleagues also supported the summer of 2017 we again 92 Notes to the accounts the Access Project, which pairs supported the Career Ready Schools students from disadvantaged programme, hosting nine interns We continued to run a reading areas with graduates who help from local schools and academies. Annex mentoring scheme with a local to boost the student’s grades 120 Ofcom Boards, Panels and Committees primary school in Southwark, giving and confidence through weekly Ofcom charity 123 Regulatory statements colleagues the opportunity to tutorials. Other colleagues 128 Investigations programme support young children to improve volunteered to mentor students During 2017 colleagues carried out their literacy skills. through Career Ready, helping a variety of fundraising activities to 129 Broadcasting complaints, them prepare for corporate life. raise money for Ofcom’s nominated cases and sanctions Ofcom colleagues have visited charity, Macmillan Cancer Support. 133 Spectrum engineering and enforcement schools and hosted school trips to Colleagues have also set up other Ofcom to engage with young people volunteering opportunities on an ad 134 Spectrum licensing about future career options. hoc basis, supporting causes that 139 Sustainability are important to them. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 53 Contents Sustainability report Performance Report 2 Our powers and duties 5 Chairman’s message This section presents an overview of Ofcom’s sustainability 7 Chief Executive’s report strategy and our performance in this area 11 Progress on delivering against our Annual Plan priorities It contains sustainability data and associated financial costs, 33 Principal risks and uncertainties presented in a format that conforms to the sustainability 35 Work in the nations and our reporting guidelines issued by HM Treasury for 2017/18 international engagement 39 Who we work with and how we work

Ofcom’s initial 25% reduction target 45 Financial review represented a reduction across seven 51 Corporate responsibility areas: information services, utilities, 53 Sustainability report waste, business travel, procurement materials, procurement capital and commuting. Accountability Report

In 2009, Ofcom commissioned our 58 Directors’ report second independent carbon audit, 59 The Ofcom Board which confirmed that a 15% reduction 61 Governance statement in carbon emissions had been 74 Our employees achieved. A third carbon audit was 79 Remuneration report undertaken in 2013, which confirmed that Ofcom had achieved a 30% 86 Certificate and report of the reduction in its carbon emissions - Comptroller and Auditor General to exceeding the original 25% savings the Houses of Parliament target originally set in 2007. In 2015, Ofcom was re-certified Financial Statements to the Carbon Trust Standard, 88 Statement of comprehensive income achieving a further reduction in 89 Statement of financial position Ofcom’s History of reduction targets our footprint of 10.5% since 2013. Ofcom continue to be re-certified to 90 Statement of changes in equity sustainability strategy In 2007, Ofcom commissioned the Carbon Trust Standard this year, 91 Statement of cash flows an independent carbon audit and Introduction achieving a further 1.5% reduction 92 Notes to the accounts subsequently committed to reducing in our footprint since 2015. The Over the years, Ofcom has internal carbon emissions by 25% by report produced by the Carbon implemented a number of initiatives the end of 2012/13 (relative to the Trust alongside our recertification Annex to deliver carbon reductions. This 2007 baseline). Ofcom’s Footprint contains several recommendations 120 Ofcom Boards, Panels and Committees includes: approaching a new way and Sustainability project was set which we will seek to implement to of working; substantial energy 123 Regulatory statements up to identify and drive forward continue minimising emissions. reduction projects at Riverside actions to ensure that Ofcom met 128 Investigations programme Further detail about Ofcom’s House; transforming our ICT its carbon reduction commitment 129 Broadcasting complaints, sustainability performance can be infrastructure; and moving from and that its operating practices cases and sanctions printed publications to online were environmentally sustainable. found on our website: 133 Spectrum engineering and enforcement publications. We also actively https://www.ofcom.org.uk/about- promote recycling, sustainable 134 Spectrum licensing ofcom/what-is-ofcom/corporate- travel and good energy practice to 139 Sustainability responsibility/footprint-and- our colleagues. sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Sustainability report Ofcom Annual Report & Accounts 2017/18 54 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees 79 Remuneration report 2017/18 performance We adopted new portable IT This is partly why our business 86 Certificate and report of the technology that has made it easy for travel this year has increased Comptroller and Auditor General to Greenhouse gas emissions colleagues to work from any location compared to last year. We seek the Houses of Parliament and collaborate with colleagues no to see the benefits of our video- This year, we have started to matter where they are based. This conferencing capability in the implement a new agile way of allows colleagues to work more coming years. Financial Statements working and we’ve commenced flexibly, such as working at home, 88 Statement of comprehensive income work to reduce our floor space Our expenses policy requires which should contribute to further 89 Statement of financial position in our head office. We reduced colleagues to consider the impact reductions in our carbon footprint. our workspace in our offices as on Ofcom’s carbon footprint before 90 Statement of changes in equity we move to a flexible working We have invested in our video- planning to travel, and to consider 91 Statement of cash flows environment. As a result, we conferencing capability across all our lower-carbon travel alternatives 92 Notes to the accounts reduced our greenhouse gas offices, to reduce the need for travel such as email, audio and video emission by 17% compared to and to support more agile working. conferencing. We also provide staff 2016/17. We have continued to This includes training our staff to with cycling to work schemes as Annex reduce our greenhouse gas emission use Skype for Business and video part of their benefit package to 120 Ofcom Boards, Panels and Committees in the last four years. conferencing. To ensure the correct encourage staff to reduce their 123 Regulatory statements facilities were in place to enable carbon footprint. In addition to our new way of colleagues to work in a more agile 128 Investigations programme working, all staff were encouraged In 2016, we opened two new offices way, the Facilities and ICT teams 129 Broadcasting complaints, to reduce their paper storage and in Edinburgh and Warrington as visited our offices in the Nations and cases and sanctions encouraged to find new initiatives part of our out-of-London project. Regions frequently. to use less paper, such as electronic We have sub-let our offices 133 Spectrum engineering and enforcement signatures and holding important in Glasgow, and are using our 134 Spectrum licensing documents electronically. Haydock office for storage since 139 Sustainability our staff vacated the premises. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 55 Contents

Waste minimisation Finite resource consumption Sustainable procurement and management Water consumption comes primarily The consideration of sustainability Performance Report Ofcom has a ‘no waste to from washrooms and drinking water forms an integral part of landfill’ policy across its in all offices, as well as catering our procurement processes. 2 Our powers and duties entire property portfolio. We facilities in our London office. Ofcom Ofcom includes provisions in its 5 Chairman’s message recycle paper, cardboard, cans, monitors water consumption on procurement documentation that 7 Chief Executive’s report plastics, glass, batteries, toners a monthly basis. Costs in 2017/18 require suppliers to demonstrate 11 Progress on delivering against our and CDs. All disposal of ICT include credit notes from suppliers their approach to sustainability and Annual Plan priorities equipment complies with the relating to previous years. reducing carbon emissions. Bidders’ Waste Electrical and Electronic responses to these provisions 33 Principal risks and uncertainties Our use of paper has reduced by Equipment Directive (WEEE). are then considered as a specific 35 Work in the nations and our 38% compared to 2016/17, as we part of the overall evaluation of international engagement A third-party supplier was involved in start to use less paper and hold the tender. We also make use of the collection, disposal and potential documents electronically. 39 Who we work with and how we work the framework agreements that resell of around 1,000 items of ICT 45 Financial review the Crown Commercial Service equipment this year. Accurate ICT Biodiversity action planning has in place. These frameworks 51 Corporate responsibility waste in tonnes were not available include specifications and offer 53 Sustainability report for this disposal. Any disposal costs Biodiversity is not a significant standard contract terms that help that are incurred will be offset by the consideration for Ofcom and we buying organisations to monitor / remarketing of the equipment. do not undertake data collection in Accountability Report this area. reduce their environmental impact and to embed sustainability in 58 Directors’ report procurement contracts. 59 The Ofcom Board 61 Governance statement 74 Our employees 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Performance Report

Overview Ofcom Annual Report & Accounts 2017/18 56 Contents

Future plans As we continue to move to a more A summary of Ofcom’s emissions agile way of working, and adopt over the past five years is provided in In the coming years, Ofcom mobile technology, we will continue Figure 7. Please refer to the Annex on will continue to monitor its Performance Report to encourage colleagues to reduce pages 139-142 for more detail. carbon emissions on a regular 2 Our powers and duties their reliance on paper and ease the basis with particular focus on requirement to travel. 5 Chairman’s message energy consumption and waste 7 Chief Executive’s report management. We will also continue Once we have fully adjusted to a 11 Progress on delivering against our to promote sustainable behaviour to new way of working, we plan to Sharon White Annual Plan priorities our colleagues. develop new carbon objectives Chief Executive and and emission reduction targets to 33 Principal risks and uncertainties Accounting Officer implement further improvements. 35 Work in the nations and our 19 June 2018 international engagement 39 Who we work with and how we work Figure 7: Sustainability performance overview 45 Financial review 2013/14 2014/15 2015/16 2016/17 2017/18 51 Corporate responsibility 53 Sustainability report Greenhouse tCO2e 1,498 1,649 1,569 1,456 1,209 gas emissions (Scopes 1,2)1,2 Expenditure £442,226 £475,135 £444,964 £405,810 £459,238 Accountability Report 58 Directors’ report Business tCO2e 346 290 250 312 519 59 The Ofcom Board travel (Scope 3)3 61 Governance statement Expenditure £628,340 £596,116 £569,099 £663,705 £705,602 74 Our employees 79 Remuneration report Waste tCO2e 173 166 173 172 76 86 Certificate and report of the Expenditure £60,796 £45,500 £32,023 £37,984 £7,004 Comptroller and Auditor General to the Houses of Parliament

Finite resource Water consumption (m3) 13,694 14,213 10,767 11,282 9,379 consumption Financial Statements Expenditure £20,107 £24,931 £16,784 £22,248 £6,929 88 Statement of comprehensive income 89 Statement of financial position Paper reams 7,721 5,993 7,545 6,317 3,915 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 1 We have re-stated our electricity consumption for 2015/16 following clarification of the allocation of 129 Broadcasting complaints, consumption in our remote sites. cases and sanctions 2 In our 2014/15 Annual Report & Accounts emissions data relating to business travel (flights) 133 Spectrum engineering and enforcement was restated for 2013/14 following enhanced data 134 Spectrum licensing provided by our travel company.

3 We have restated our paper consumption figure for 139 Sustainability 2014/15 following clarification from our supplier. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 57 Contents

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme Accountability 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing Report 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

XXXXXXX Ofcom Annual Report & Accounts 2017/18 58 Contents Directors’ report Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities Register of 33 Principal risks and uncertainties disclosable interests 35 Work in the nations and our Board members, their partners and international engagement dependent children are required 39 Who we work with and how we work not to hold interests (including 45 Financial review shareholdings, directorships and employments) in companies whose 51 Corporate responsibility core business activities (and hence 53 Sustainability report share price) could be affected by Ofcom’s decisions. Accountability Report Ofcom maintains a register of 58 Directors’ report disclosable interests, which can be 59 The Ofcom Board found on our website at: 61 Governance statement https://www.ofcom.org.uk/about- 74 Our employees ofcom/how-ofcom-is-run/register- disclosable-interests 79 Remuneration report 86 Certificate and report of the Pension liabilities Non-audit work Sickness absence data Comptroller and Auditor General to the Houses of Parliament Ofcom has a range of pension No fees for non-statutory audit Sickness absence data is reported schemes which include defined work were paid to the National in the Our Employees section of the contribution plans, defined benefit Audit Office during 2017/18 (no Annual Report on page 74. Financial Statements plans and unfunded plans. Note 1 fees for non-statutory audit work 88 Statement of comprehensive income in the Notes to the Accounts refers were paid to the National Audit Directors’ disclosure 89 Statement of financial position to the relevant accounting policy, Office during 2016/17). and Note 19 in the Notes to the As far as the Directors are aware, 90 Statement of changes in equity there is no relevant audit information Accounts provides details of Ofcom’s Protected personal 91 Statement of cash flows of which the auditors have not been retirement benefit obligations. data-related incidents 92 Notes to the accounts made aware. All reasonable steps The pension allowance paid to Ofcom reported one protected have been taken by the Directors in Executive Directors during 2017/18 personal data-related incident to the order to make themselves aware of Annex is detailed in the Remuneration Information Commissioner’s Office any relevant audit information and to 120 Ofcom Boards, Panels and Committees Report on page 79. (ICO) in 2017/18. The ICO decided that establish that the auditors are aware 123 Regulatory statements no further action was necessary. of this information. 128 Investigations programme

129 Broadcasting complaints, cases and sanctions Sharon White 133 Spectrum engineering and enforcement Chief Executive and 134 Spectrum licensing Accounting Officer 139 Sustainability 19 June 2018 143 700 MHz clearance 145 Glossary

Accountability Report

Directors’ report ofcom.org.uk 59 Contents The Ofcom Board Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report

1 2 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility 3 4 5 6 7 53 Sustainability report

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees 8 9 10 11 12 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to 1 Lord Burns, GCB 3 Sharon White the Houses of Parliament Lord Burns was appointed as Chairman of the Ofcom Sharon White took over as Chief Executive and Accounting Board on 1 January 2018. He is a Special Adviser to Banco Officer of Ofcom in March 2015. Before joining Ofcom, Financial Statements Santander SA Chairman of the Young Classical Artists Sharon had a long career in the civil service. She was Second Trust and Vice Chairman of the Hay Festival of Literature Permanent Secretary at HM Treasury, responsible for 88 Statement of comprehensive income and the Arts Ltd. He is a former Chief Economic Advisor overseeing the public finances. Before that she held board- 89 Statement of financial position and Permanent Secretary to HM Treasury, Chairman of level positions at the Ministry of Justice and the Department 90 Statement of changes in equity Santander UK plc, Channel Four Television, Marks and for International Development and has worked in the Prime 91 Statement of cash flows Spencer plc and Welsh Water, and an Independent Adviser Minister’s Policy Unit and in Washington DC as a senior to the Secretary of State on the BBC Charter Review. He economist at the World Bank. 92 Notes to the accounts is also Chairman of the Mid Wales Music Trust and Vice President of the Royal Academy of Music. He is Chairman Annex of Ofcom’s Nominations Committee and a Member of the 4 Baroness Noakes, DBE Remuneration Committee. 120 Ofcom Boards, Panels and Committees Baroness Noakes was appointed to the Ofcom Board on 123 Regulatory statements 1 June 2014 as its Deputy Chairman. Sheila is a chartered 128 Investigations programme 2 Dame Patricia Hodgson, DBE accountant and spent 30 years at KPMG. She was President of the Institute of Chartered Accountants in England and 129 Broadcasting complaints, Dame Patricia Hodgson, DBE was appointed as a Wales. In 2000, she was appointed to the House of Lords as cases and sanctions Non-Executive Member of the Ofcom Board on 1 July a life peer. She is a non-executive director of Royal Bank of 133 Spectrum engineering and enforcement 2011, became Deputy Chairman on 1 January 2012 and Scotland Group plc, and chairs its Board Risk Committee. 134 Spectrum licensing Chairman on 1 April 2014. Patricia retired as Chairman of the Ofcom Board at the end of 2017. She is Chairman of Ofcom’s Remuneration and Risk and Audit 139 Sustainability Committees, and a Member of the Nominations Committee. 143 700 MHz clearance 145 Glossary

Accountability Report

The Ofcom Board Ofcom Annual Report & Accounts 2017/18 60 Contents

5 Graham Mather, CBE 9 Nick Pollard

Graham Mather was appointed as a Non-Executive Nick Pollard was appointed as a Non-Executive Member Member of Ofcom’s Board in June 2014, and re-appointed of Ofcom’s Board in November 2016. He was appointed Performance Report for a further 4 years from June 2018 to May 2022. He was to Ofcom’s Content Board in April 2016. Nick Pollard 2 Our powers and duties a member of Ofcom’s Consumer Panel from 2004 to 2008. has had a long career as a journalist and broadcasting 5 Chairman’s message He served as a member of the Monopolies and Mergers executive. He was Executive Producer of News at Ten at 7 Chief Executive’s report Commission and, between 2000 and 2012, was also a ITN (1987-92), Head of Sky News (1996-2006), and Chief 11 Progress on delivering against our member of the Competition Appeal Tribunal, the body Executive of SSVC, the organisation that runs the British Annual Plan priorities that deals with appeals from the UK regulators. Graham Forces Broadcasting Service (2009-2015). He is a former is currently the President of the European Policy Forum chairman of the Royal Television Society Journalism 33 Principal risks and uncertainties and Chairman of its Regulatory Best Practice Group. He is Awards and a recipient of the RTS’s Lifetime Achievement 35 Work in the nations and our a member of the Board of the Office of Rail and Road. He Award for Television Journalism. Nick is Chairman of international engagement is a Member of Ofcom’s Nations Committee, Nominations the Content Board and a Member of the Nominations 39 Who we work with and how we work Committee, Remuneration Committee, and Risk and Audit Committee and Remuneration Committee. 45 Financial review Committee. Graham was appointed CBE in the Queen’s 2017 Birthday Honours list for services to economic 51 Corporate responsibility regulation, competition and infrastructure development. 10 Tim Suter 53 Sustainability report Tim Suter was appointed as a Non-Executive Member of 6 Ben Verwaayen Ofcom’s Board in October 2017. He was a BBC producer, Accountability Report editor and senior manager for 15 years and Head of 58 Directors’ report Ben Verwaayen was appointed as a Non-Executive Broadcasting Policy in the Department for Culture, Media Member of Ofcom’s Board in January 2016. He has had 30 and Sport in 2002, responsible for the Communications 59 The Ofcom Board years’ experience in running major telecoms, technology Act of 2003 and the creation of Ofcom. He joined Ofcom 61 Governance statement and media companies in executive and non-executive at its inception and left to found Perspective Associates, 74 Our employees roles. He is a former Chief Executive of BT, KPN in the advising on media policy and regulation. He has been a 79 Remuneration report Netherlands, and Alcatel Lucent, and has served as a special advisor to the House of Lords Communications Chairman of Endemol. He is currently a General Partner at Committee, and the chair of an expert panel advising 86 Certificate and report of the investment fund Keen Venture Partners and holds various the Council of Europe. He is also a member of Ofcom’s Comptroller and Auditor General to Board positions, including at Akamai in the US and mobile Content Board, Chairman of the Nations Committee, the Houses of Parliament operator Bharti Airtel in India. He is a Member of Ofcom’s and a Member of the Remuneration Committee and Remuneration Committee and Nominations Committee. Nominations Committee. Financial Statements 88 Statement of comprehensive income 7 Jonathan Oxley 11 Bob Downes 89 Statement of financial position 90 Statement of changes in equity Jonathan Oxley joined Ofcom as Group Director, Bob Downes was appointed as the first Ofcom Non- Competition in November 2014 and was appointed to the Executive Board member for Scotland in February 2018. 91 Statement of cash flows Ofcom Board in January 2015. Before joining Ofcom, he He is the current chairman of the Scottish Environment 92 Notes to the accounts was a Partner in PwC’s Strategy and Economics practice, Protection Agency and of CENSIS, an innovation centre specialising in telecoms, media and technology, having for sensors and imaging systems. Bob is a trustee of joined PwC in 1995. the Mackintosh Campus Renewal Appeal for Glasgow Annex School of Art, and an advisor to a number of small 120 Ofcom Boards, Panels and Committees technology businesses. Formerly he was a senior 123 Regulatory statements 8 Dr Steve Unger executive with BT Group. 128 Investigations programme Steve Unger is Group Director, Strategy, International, 129 Broadcasting complaints, Technology and Chief Economist Group, and was appointed 12 Dame Lynne Brindley, DBE cases and sanctions to the Ofcom Board in March 2015, having been Acting 133 Spectrum engineering and enforcement Chief Executive from January 2015 until Sharon White took Dame Lynne Brindley, DBE was appointed as a Non- up the post in March 2015. He has been with Ofcom since Executive Member of the Ofcom Board on 1 September 134 Spectrum licensing its inception and has held a variety of senior roles, including 2011. Lynne retired as a Non-Executive Member of the 139 Sustainability Ofcom Board in August 2017. Ofcom’s Chief Technology Officer. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 61 Contents Governance statement Performance Report 2 Our powers and duties 5 Chairman’s message The governance structure 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities The Ofcom Board leads the organisation, and its core activities include: 33 Principal risks and uncertainties • setting the overall • obtaining assurance that material • defining Ofcom’s appetite 35 Work in the nations and our strategy for Ofcom; risks to Ofcom are identified for risk; and international engagement and that appropriate systems • acting as the ultimate • Board and executive management 39 Who we work with and how we work of risk management and control decision-making authority; succession planning. 45 Financial review exist to mitigate such risks; 51 Corporate responsibility 53 Sustainability report Figure 8: Ofcom’s Board and Committees

Accountability Report The Ofcom Board 58 Directors’ report 59 The Ofcom Board 61 Governance statement Board Committees Executive Committees Non-board Advisory Committees 74 Our employees 79 Remuneration report Content Board Policy & Management Nations Committee Board (PMB 86 Certificate and report of the Community Radio Advisory Committee Comptroller and Auditor General to • Policy Steering Groups Fund Panel for Scotland the Houses of Parliament - e.g. Telecoms Election Committee - e.g. Consumer Advisory Committee for Northern Ireland Financial Statements Nominations Committee 88 Statement of comprehensive income Operations Board Advisory Committee 89 Statement of financial position for England Risk & Audit Committee • Corporate Social 90 Statement of changes in equity Responsibility 91 Statement of cash flows Advisory Committee Renumeration Committee • Security for Wales 92 Notes to the accounts • DC Pensions Committee Non-executive Renumeration Committee • Health & Safety Ofcom Spectrum Advisory Board Annex 120 Ofcom Boards, Panels and Committees Consumer Communications 123 Regulatory statements Panel/Advisory Committee 128 Investigations programme on Older & Disabled People 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 62 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message The Ofcom Board 7 Chief Executive’s report Whilst Ofcom is not subject to the 11 Progress on delivering against our UK Corporate Governance Code Annual Plan priorities published by the Financial Reporting Council, we adopt the principles 33 Principal risks and uncertainties where appropriate. For the purposes 35 Work in the nations and our of adopting the key principles of the international engagement UK Corporate Governance Code: 39 Who we work with and how we work • the Board considers all of the 45 Financial review Non-Executive Members to be 51 Corporate responsibility independent of management 53 Sustainability report and free of any business or other relationship which could materially interfere with the exercising of their Accountability Report judgement. However, should special 58 Directors’ report circumstances arise, appropriate 59 The Ofcom Board action is taken to ensure that independence is maintained; 61 Governance statement 74 Our employees • the Board believes that the Members have, between them, a 79 Remuneration report wide range of experience which 86 Certificate and report of the Comptroller and Auditor General to The Ofcom Board is led by the The Chairman and Non-Executive ensures an effective Board to lead Chairman, who manages the Board Members of the Ofcom Board are and control Ofcom; the Houses of Parliament to ensure that: appointed by the Secretary of State • the Non-Executive Members for Digital, Culture, Media & Sport, • Ofcom has appropriate objectives comprise a majority of the Board. Financial Statements for periods of three to four years. The Deputy Chairman is regarded and an effective strategy; 88 Statement of comprehensive income The Scotland Member is appointed as being the senior Non-Executive • a structure is in place to allow 89 Statement of financial position by Scottish Ministers, following Member for the purposes of the UK the effective contribution 90 Statement of changes in equity consultation with the Secretary Corporate Governance Code; and of all Members; 91 Statement of cash flows of State for Digital, Culture, Media • the Board meets at regular intervals • the Chief Executive and and Sport. Executive Members during the year. During 2017/18 the 92 Notes to the accounts other executives are able to of the Board are appointed by Board met on 12 occasions. The implement the strategy; the Chairman and all of the Non- role of executive management is to Annex Executive Members, with the Chief implement Board policies. The work • the Board Committees Executive’s appointment requiring of both the Board and the Executive 120 Ofcom Boards, Panels and Committees are properly established, approval by the Secretary of State is informed by the contributions of a 123 Regulatory statements composed and operated; for Digital, Culture, Media & Sport. number of advisory bodies. 128 Investigations programme • procedures are in place to inform Members’ duties and responsibilities Minutes and notes from Ofcom 129 Broadcasting complaints, the Board of performance are set out in a Members’ Code of Board meetings are available on the cases and sanctions against objectives; and Conduct, and a Register of Members’ website at: 133 Spectrum engineering and enforcement • Ofcom is operating in accordance Interests is maintained. Both are https://www.ofcom.org.uk/about- 134 Spectrum licensing with the highest standards available on the Ofcom website. ofcom/how-ofcom-is-run/ofcom- of corporate governance. 139 Sustainability board#accordion__target-87222 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 63 Contents

The Remuneration Committee

The Remuneration Committee consists of all the Non-Executive Performance Report Members of the Ofcom Board. The 2 Our powers and duties Chief Executive and the HR Director 5 Chairman’s message attend meetings at the invitation of 7 Chief Executive’s report the Remuneration Committee. 11 Progress on delivering against our The Committee advises Ofcom on Annual Plan priorities the remuneration and terms and 33 Principal risks and uncertainties conditions of service for the Chief 35 Work in the nations and our Executive, other Executive Members international engagement of the Board and the Senior Management Team. 39 Who we work with and how we work 45 Financial review The Committee also advises Ofcom on the terms and conditions of 51 Corporate responsibility the part-time Members of the 53 Sustainability report Content Board, the Communications Consumer Panel, the Advisory Committee on Older and Disabled Accountability Report People, the four National Advisory 58 Directors’ report Committees and other Non- 59 The Ofcom Board Executive Members of other bodies Board Committees The Nominations Committee 61 Governance statement in Ofcom’s governance structure. In the exercising of its powers under The Nominations Committee 74 Our employees the Office of Communications comprises all the Non-Executive The Committee oversees the 79 Remuneration report Act 2002, the Board delegates Members of the Ofcom Board. process for determining the 86 Certificate and report of the certain of its responsibilities to The Committee is responsible terms and conditions of all other Comptroller and Auditor General to the Executives within Ofcom and for reviewing the structure, size Ofcom colleagues. The Committee the Houses of Parliament certain responsibilities to Board and composition of the Ofcom also oversees and decides upon Committees with clearly defined Board, as well as overseeing the issues relating to the pension authority and terms of reference succession plan for all executive arrangements established by Ofcom Financial Statements (see Figure 9). Board members and the Senior for all Ofcom colleagues. 88 Statement of comprehensive income Management Team. The activities and main functions The remuneration of Non-Executive 89 Statement of financial position of these committees are described The Chairman works with the Members of the Ofcom Board is 90 Statement of changes in equity below. Ofcom has a number of other Department for Digital, Culture, determined by the Secretary of committees with a governance role Media & Sport (DCMS) (and where State for Digital, Culture, Media 91 Statement of cash flows or an advisory role to the Board, relevant the Ministries in the devolved & Sport. Should it be necessary 92 Notes to the accounts described in the Annex on pages administrations) on the process for for Ofcom to consider any aspect 120-122.. selecting Non-Executive Members of Non-Executive Member for the Ofcom Board (and, where remuneration, a Non-Executive Annex relevant, their re-appointment). Remuneration Committee has been 120 Ofcom Boards, Panels and Committees He ensures that the views of the established, comprising the Finance 123 Regulatory statements Director, the HR Director and the Committee are available to DCMS, 128 Investigations programme which makes the appointments. Corporation Secretary, which will 129 Broadcasting complaints, meet and report directly to the Appointments of Executive Secretary of State as appropriate. cases and sanctions Members to the Board are made by 133 Spectrum engineering and enforcement all the Non-Executive Members of Consequently, no Board Member is 134 Spectrum licensing the Board on the recommendation involved in the setting of his or her of the Committee. own remuneration. 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 64 Contents

Figure 9: Ofcom’s Board and Committees

Ofcom Remuneration Risk and Nominations Content Nations Election Performance Report Board Committee Audit Committee Board Committee Committee 2 Our powers and duties Committee 5 Chairman’s message Number of meetings 12 6 5 3 8 4 0 7 Chief Executive’s report Attendance 11 Progress on delivering against our Annual Plan priorities Lord Burns GCB1 3 2 N/A N/A N/A N/A 33 Principal risks and uncertainties Dame Patricia 9 4 4 3 N/A N/A 35 Work in the nations and our Hodgson DBE2 international engagement Sharon White 12 N/A N/A N/A N/A N/A 39 Who we work with and how we work Baroness Noakes 45 Financial review 12 6 5 3 N/A N/A DBE 51 Corporate responsibility Dame Lynne 53 Sustainability report 4 3 N/A 2 2 1 Brindley DBE3 Graham Mather CBE 11 5 5 2 N/A 4 Accountability Report Jonathan Oxley 11 N/A N/A N/A N/A N/A 58 Directors’ report 59 The Ofcom Board Dr Stephen Unger 12 N/A N/A N/A N/A N/A 61 Governance statement Ben Verwaayen 8 3 N/A 1 N/A N/A 74 Our employees Nick Pollard 4 10 6 N/A 3 8 N/A 79 Remuneration report Tim Suter5 5 3 N/A N/A 3 3 86 Certificate and report of the Comptroller and Auditor General to 6 Bob Downes 2 1 N/A N/A N/A N/A the Houses of Parliament

Risk and Audit Committee The role of the Risk and Audit The Committee is also responsible Financial Statements Committee is to provide for overseeing the appointment of 88 Statement of comprehensive income The Risk and Audit Committee assurance to the Board and the the internal auditors and the work 89 Statement of financial position comprises three Non-Executive Accounting Officer regarding the undertaken by both the internal Members of the Ofcom Board. The appropriateness and effectiveness and external auditors. This includes 90 Statement of changes in equity Chief Executive, the Group Director of Ofcom’s risk management the approval of the annual internal 91 Statement of cash flows – Corporate Services, the Finance processes and the internal control audit plan. The Committee’s 92 Notes to the accounts Director the Financial Controller framework and to advise in respect functions are fully described in its and the Risk & Insurance Manager of the accounting policies and terms of reference, available on the are invited to attend Committee the process for review, and the Ofcom website. Annex meetings, as are the internal and content of the draft annual financial The internal audit function is 120 Ofcom Boards, Panels and Committees external auditors. accounts and annual report. outsourced by Ofcom to KPMG. The 123 Regulatory statements provision of any other services by 128 Investigations programme KPMG to Ofcom is not permitted 1 Lord Burns was appointed as Ofcom Chairman on 1 January 2018 129 Broadcasting complaints, if it threatens the independence of 2 Dame Patricia Hodgson DBE left as Ofcom Chairman with effect on 31 December 2017 cases and sanctions internal audit and is decided on a 3 Dame Lynne Brindley DBE left as a Non-Executive Member of the Board with effect on 31 August 2017 case-by-case basis. The external 133 Spectrum engineering and enforcement 4 Nick Pollard was recused from one Board Meeting audit function is carried out by the 134 Spectrum licensing 5 Tim Suter was appointed as a Non-Executive Member of the Board with effect from 2 October 2017 National Audit Office on behalf of 139 Sustainability 6 the Comptroller and Auditor General. Bob Downes was appointed as a Non-Executive Member of the Board with effect from 1 February 2018 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 65 Contents

Figure 10: Senior Management Team The Content Board Policy and Management Board and Operations Board The Content Board is a committee Name Role Performance Report of the main Ofcom Board, with Membership of the Policy and Sharon White Chief Executive delegated and advisory responsibility Management Board is made up 2 Our powers and duties for a wide range of content issues, of the Senior Management Team, 5 Chairman’s message Philip Marnick Group Director, predominantly dealing with the Chief Economist, the Finance Spectrum 7 Chief Executive’s report broadcasting. It is set up under Director and the Human Resources 11 Progress on delivering against our Jonathan Group Director, statute, specifically section 12(1) of Director. Other senior executives Annual Plan priorities Oxley Competition the Communications Act 2003. attend by invitation. The Board provides an internal forum for senior 33 Principal risks and uncertainties The Ofcom Board may seek advice Lindsey Group Director, executives to scrutinise and oversee 35 Work in the nations and our and recommendations from the Fussell Consumer the internal development of Ofcom’s international engagement Content Board on any content- agenda and for overseeing the Dr Steve Group Director, related aspects of decisions it has 39 Who we work with and how we work management of Ofcom. Unger Strategy, reserved for itself. 45 Financial review International, The Operations Board is The Content Board serves as 51 Corporate responsibility Technology and responsible for overseeing Ofcom’s Ofcom’s primary forum for the 53 Sustainability report Economists internal operational initiatives regulation of television and radio to ensure that they support the Kevin Group Director, quality and standards. effective delivery of Ofcom’s Bakhurst Content and Accountability Report It is charged with understanding, remit. The Board is chaired by Media Policy 58 Directors’ report analysing and championing the the Group Director, Corporate 59 The Ofcom Board Alison Group Director, voices and interest of the viewer, Services, and membership Crosland Corporate the listener and the citizen. includes senior executives from 61 Governance statement Services across the organisation. 74 Our employees 79 Remuneration report Polly General Weitzman Counsel 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 66 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board Board performance Accountability Compliance with the Corporate 61 Governance statement and effectiveness Governance Code Ofcom’s Annual Report and 74 Our employees The Board meets regularly. It is Accounts is sent to DCMS, which Ofcom is not subject to the UK 79 Remuneration report provided with regular strategic lays copies of it before both Houses Corporate Governance Code published 86 Certificate and report of the updates, briefings on the markets of Parliament. by the Financial Reporting Council. Comptroller and Auditor General to Ofcom regulates, the activities of key the Houses of Parliament The Board is responsible for However, the principles of the Code stakeholders, and reports on Ofcom’s ensuring that proper records are provide a useful benchmark for all operational and policy activities. maintained, which disclose with bodies wishing to make a statement Financial Statements In addition, all Members have access reasonable accuracy, at any time, about their corporate governance 88 Statement of comprehensive income to the Secretary to the Corporation the financial position of Ofcom, performance. To this end, Ofcom to assist them with the provision and enable it to ensure that the will continue to adopt the principles 89 Statement of financial position of information and the making of Statement of Accounts complies of the Code where it is appropriate 90 Statement of changes in equity with the Communications Act 2003. arrangements for informal meetings to do so. In this regard Ofcom has 91 Statement of cash flows with executives within Ofcom, to gain complied with the principles of the In addition, the Board is responsible 92 Notes to the accounts greater knowledge of specific issues. UK Corporate Governance Code for safeguarding Ofcom’s assets and during the period 1 April 2017 to 31 The effectiveness of the Board is hence for taking reasonable steps March 2018. reviewed on an annual basis. In for the prevention and detection of Annex 2017 this review was undertaken by fraud and other irregularities. 120 Ofcom Boards, Panels and Committees the Corporation Secretary under the How Ofcom manages the public 123 Regulatory statements guidance of the Deputy Chairman. funds it receives, and its relationship 128 Investigations programme Externally-facilitated evaluation is with DCMS in this regard, is set out undertaken periodically. 129 Broadcasting complaints, in the Framework Document. cases and sanctions The performance of individual 133 Spectrum engineering and enforcement Board members is assessed by the 134 Spectrum licensing Chairman annually. 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 67 Contents

The membership of the bodies that make up the governance structure has been designed to offer specific Performance Report levels of expertise, so that Ofcom’s 2 Our powers and duties policies and projects can be tested and challenged robustly before 5 Chairman’s message decisions are reached. 7 Chief Executive’s report

The Communications Consumer 11 Progress on delivering against our Panel consists of eight independent Annual Plan priorities experts who work to protect and 33 Principal risks and uncertainties promote the interests of consumers, 35 Work in the nations and our citizens and small businesses international engagement in the communications sector. 39 Who we work with and how we work Ofcom shares information and ideas with the Panel at the early 45 Financial review stages of development, allowing it 51 Corporate responsibility to provide robust and independent 53 Sustainability report advice on policies to ensure that Transparency Engagement consumer interests are built into the decision-making process from Accountability Report Ofcom continues to review its Ofcom’s actions will affect people the outset. Additionally, Ofcom 58 Directors’ report publication scheme and make a and organisations across the UK. engages with a number of other 59 The Ofcom Board wide range of information readily As a result, it is very important that consumer consultation bodies, 61 Governance statement accessible on its website. Wherever it takes decisions at the right time including the Consumer Forum for possible, we make the data we and in the right way. These decisions Communications, which it hosts, and 74 Our employees collect and create available to the must be based on evidence and invites representation from a broad 79 Remuneration report public following open data principles. Ofcom needs to take into account, range of consumer advocate bodies. 86 Certificate and report of the Our open data is available in one when making these decisions, the Comptroller and Auditor General to public portal on our website and on views of those who have an interest This engagement is increasingly the Houses of Parliament the data.gov.uk portal, alongside data in the outcome. important in the devolved nations sets from all central government of the UK, where the role of the Consultation plays an important departments and many other public nations’ members of the Content part in obtaining this evidence. It Financial Statements sector bodies and local authorities. Board, the Communications allows those who could be affected Consumer Panel and the National 88 Statement of comprehensive income During 2017/18, Ofcom received 297 by or concerned about a particular Advisory Committees is immensely 89 Statement of financial position requests for information under the issue to give us their views before valuable in helping Ofcom take into 90 Statement of changes in equity Freedom of Information Act 2000 we decide on a course of action. account specific issues in its policy and the Environmental Information 91 Statement of cash flows Consequently, Ofcom consults formulation and implementation. Regulations 2004. Where we held 92 Notes to the accounts publicly on all its major strategic Ofcom also engages with other relevant information, we provided all priorities before making decisions. national regulatory authorities or part of the information requested Details about Ofcom’s method of (including participation in the UK in 63% of cases. Information is Annex consultation, and the consultations Regulators Network), European withheld only if it is exempt from 120 Ofcom Boards, Panels and Committees that took place during the year, are institutions and global bodies, so disclosure under legislation. Regulatory statements set out on page 127.. that decisions taken in international 123 Ofcom also received twelve fora are practical, proportionate and 128 Investigations programme requests for information under reflect the interests of citizens and 129 Broadcasting complaints, consumers in the UK. the Data Protection Act 1998 and, cases and sanctions where we held relevant information, 133 Spectrum engineering and enforcement we provided the requested 134 Spectrum licensing information in nine cases. 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 68 Contents

Figure 11: Ofcom’s control framework

The Ofcom Board Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report Policy & Management Board Risk & Audit Committee 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties Management & Risk Independent 35 Work in the nations and our Internal Control Management Assurance international engagement 39 Who we work with and how we work

The risk and control framework 45 Financial review 51 Corporate responsibility Ofcom’s risk and control framework 53 Sustainability report underpins the governance structure and is designed to support the delivery of its statutory duties and Accountability Report the achievement of its objectives, 58 Directors’ report while safeguarding public funds. 59 The Ofcom Board The control framework is built 61 Governance statement around three pillars of responsibility: 74 Our employees • management and internal control; 79 Remuneration report • risk management; and 86 Certificate and report of the Comptroller and Auditor General to • independent assurance. Management and Additionally, assurance is taken from the Houses of Parliament Each of these areas of internal control the work carried out by specialist responsibility is embedded across teams across the organisation, Responsibility for operating and the organisation and they come including the Security Committee, Financial Statements monitoring the internal control together to provide the Senior the Health and Safety Committee 88 Statement of comprehensive income system is delegated by the Ofcom Management Team and the Board and the Business Continuity Group. Statement of financial position Board to specific individuals 89 with the assurance needed to and committees. This scheme By carrying out impact assessments 90 Statement of changes in equity manage the business effectively of delegation is outlined in the (as required under the Communications 91 Statement of cash flows (see Figure 11). Act), which evaluate the impact of Delegations Framework and the 92 Notes to the accounts Financial Authorities Framework, any potential regulatory decision both of which were refreshed in 2017 across the range of stakeholders, to ensure that they are aligned with the consideration of risk sits at the Annex very centre of our activities. the structure of the organisation and 120 Ofcom Boards, Panels and Committees appropriately reflect its appetite for The following sections provide a 123 Regulatory statements risk. Group Directors are asked to brief insight into some of the work provide assurance that the system of 128 Investigations programme undertaken during the year to further internal controls is working effectively enhance the control framework. 129 Broadcasting complaints, within their area of responsibility, by cases and sanctions completing an annual internal control 133 Spectrum engineering and enforcement assurance statement. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 69 Contents

EU General Data Protection Physical and personal Major incident/disaster Regulation (GDPR) security arrangements recovery/business continuity planning Performance Report During the year, we established a Against a background of the programme of work designed to heightened threat level in the During 2017/18 we undertook 2 Our powers and duties ensure that Ofcom was prepared UK and the increased public two major incident exercises with 5 Chairman’s message for the General Data Protection profile of Ofcom in light of our Ofcom’s Senior Management Team. 7 Chief Executive’s report Regulation when it took effect new responsibilities to regulate Drawing on the lessons learnt from 11 Progress on delivering against our in May 2018. As part of this the BBC, we have undertaken both exercises, our major incident Annual Plan priorities programme Deloitte LLP completed a comprehensive review of our management plans have been a GDPR readiness assessment and physical and personal security updated. As part of a wider exercise 33 Principal risks and uncertainties produced a roadmap targeted at arrangements. The review with the Senior Management 35 Work in the nations and our addressing the thematic findings of included a series of discussions Team in May 2018, major incident international engagement the readiness assessment. with UK organisations with a workshops were held with ICT and 39 Who we work with and how we work similar risk profile to Ofcom, as the Communications Team. A Steering Group, drawing on 45 Financial review well as engagement with security expertise and representation Our migration to agile working specialists. We undertook security 51 Corporate responsibility from across the organisation, has and the investment in our ICT reviews at our headquarters at 53 Sustainability report been established to oversee the infrastructure has introduced a Riverside House as well as each programme of work. The Steering disaster recovery and business of our offices in the Nations and Group reports regularly to Ofcom’s continuity planning ‘by design’ Regions. The enhancements to Accountability Report Policy and Management Board and culture. The programme to virtualise our security programme have 58 Directors’ report to the Risk & Audit Committee and our server estate and move services not only increased our existing 59 The Ofcom Board the Board as required. into the cloud has allowed us to test security measures, but also allow our disaster recovery capability on 61 Governance statement us to respond more efficiently and a service by service basis and we Our employees effectively to any increase in threat. 74 updated our business continuity 79 Remuneration report plans during the year to reflect 86 Certificate and report of the changes to our property estate and Comptroller and Auditor General to our move to agile working. the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 70 Contents

Accountability Report Information security Ofcom gained Cyber Essentials Whistleblowing 58 Directors’ report certification in October 2017. policy and hotline 59 The Ofcom Board Work continued during the year Alongside this work we developed Governance statement to formalise our information 61 an ICT security strategy and road- We made some minor changes to security management system and 74 Our employees map to ensure that we implement our whistleblowing policy during the strengthen our defences against appropriate security controls. year, specifically to make it easier 79 Remuneration report cyber-attack. We adopted the policy for colleagues to make disclosures 86 Certificate and report of the framework for cyber security which The strategy and road-map were under the policy. Comptroller and Auditor General to has been established by the UK informed by a maturity assessment Additionally, we are introducing the Houses of Parliament government and is overseen by the against ISO27001. During the an externally-hosted and National Cyber Security Centre. year, we recruited a dedicated information security manager to administered whistleblowing The framework comprises Financial Statements lead the programme of work to hotline that allows colleagues to two elements: 88 Statement of comprehensive income enhance our information security make anonymous disclosures. 89 Statement of financial position • ’10 Steps to Cyber Security’ management system. which outlines a baseline set 90 Statement of changes in equity of measures for protection 91 Statement of cash flows from cyber-attacks; and 92 Notes to the accounts • ‘Cyber Security Essentials’ which allows organisations to Annex demonstrate that they meet a 120 Ofcom Boards, Panels and Committees government endorsed standard of cyber preparedness. 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 71 Contents

Figure 12: Ofcom’s risk hierachy

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<< Business Priorities Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report Programme/ 11 Progress on delivering against our Project Risk Registers Group Risk Registers Strategic Risk Registers Annual Plan priorities 33 Principal risks and uncertainties Risk Escalation >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 35 Work in the nations and our international engagement 39 Who we work with and how we work The recommendations that emerge Group level risks are reviewed by 45 Financial review from the review form part of an the Group Directors, their senior ongoing programme to improve our management teams and the Risk 51 Corporate responsibility risk management framework. and Insurance Manager on a monthly 53 Sustainability report cycle, and escalated onto the strategic Ofcom’s risk management policy risk register where appropriate. and procedures clearly define its Accountability Report approach to risk management, Senior managers are responsible for 58 Directors’ report as well as identifying specific risk ensuring that colleagues have the management roles, accountabilities appropriate skill levels to identify, 59 The Ofcom Board and responsibilities across assess and manage risk in line 61 Governance statement the organisation. with Ofcom’s policy to embed and 74 Our employees support a culture of well-managed Ofcom’s strategic risk register is 79 Remuneration report risk. In support of senior managers’ reviewed monthly by the Policy and 86 Certificate and report of the role in championing the risk process, Management Board and quarterly Comptroller and Auditor General to the Risk and Insurance Manager, by the Risk and Audit Committee. together with the Finance Business the Houses of Parliament On a quarterly basis, the Chairman Risk management Partners and Analysts, work across of the Risk and Audit Committee all areas of the organisation to provides an oral update to the Financial Statements Ofcom continues to demonstrate promote and integrate the risk main Board on the outcome of the 88 Statement of comprehensive income strong leadership in the management process and to Committee’s review of the Strategic management of risk through support and inform colleagues. 89 Statement of financial position the work of the Board and its risk register. Additionally, in January 90 Statement of changes in equity Committees. In providing support 2018 the main Board undertook a Ofcom has a statement of its risk to the Board, the Policy and more formal review of the Strategic appetite which is approved by the 91 Statement of cash flows Management Board and the risk register. It was agreed that that Board. It was last reviewed in January 92 Notes to the accounts Operations Board are responsible the Board would formally review the 2018. Work has continued to embed for providing leadership on the Strategic risk register twice a year. the consideration of risk appetite into management of risks arising the organisation’s decision-making Annex During the past year, the Strategic from specific operational and and planning processes. 120 Ofcom Boards, Panels and Committees risk register continued to evolve, regulatory developments. to ensure that it allowed the The table on page 33 highlights 123 Regulatory statements To ensure that our risk management Policy and Management Board some of the key risks being 128 Investigations programme framework is effective and to focus on the key risks that managed by the organisation. 129 Broadcasting complaints, aligned to the requirements of might undermine the delivery of cases and sanctions the organisation’s objectives. the organisation, a review of our 133 Spectrum engineering and enforcement risk management framework is 134 Spectrum licensing undertaken periodically as part of the internal audit plan. 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 72 Contents

Public interest disclosure During the year, the Risk and Audit Committee has considered: The Public Interest Disclosure Act 1998 gives legal protection • individual internal audit Performance Report to employees against being reports, management 2 Our powers and duties dismissed or penalised by their responses and progress 5 Chairman’s message against any actions raised; employers as a result of disclosing 7 Chief Executive’s report information which is considered • the internal auditor’s 11 Progress on delivering against our to be in the public interest. Ofcom annual report and opinion Annual Plan priorities is a ‘prescribed person’ as defined on the adequacy of our under the Public Interest Disclosure 33 Principal risks and uncertainties internal control system; (Prescribed Persons) Order 2014. 35 Work in the nations and our • National Audit Office reports international engagement As such, individuals working outside and recommendations; Ofcom, but in the communications 39 Who we work with and how we work sector, may contact Ofcom • regular reports on Ofcom’s 45 Financial review if they have concerns about strategic risk register, including 51 Corporate responsibility possible wrongdoing at their own the identification of risks to the 53 Sustainability report organisation. During 2017/18 Ofcom organisation’s system of internal did not receive any disclosures control and information about Independent assurance under the Public Interest Disclosure the controls that have been put in Accountability Report Act 1998 or otherwise. place to mitigate these risks; and over internal controls 58 Directors’ report Ofcom outsources its internal audit • any additional assurance reports 59 The Ofcom Board Statement of that have been requested by function to KPMG. KPMG carries 61 Governance statement Accounting Officer the Risk and Audit Committee. out its work in line with the Annual 74 Our employees Internal Audit Plan that is approved As Chief Executive and Accounting To my knowledge, and based on 79 Remuneration report by the Risk and Audit Committee Officer I have overall responsibility the advice I have received from 86 Certificate and report of the on an annual basis. The plan is for reviewing the effectiveness of those managers with designated Comptroller and Auditor General to informed by interviews held with the system of internal control. Group responsibilities for managing risks the Houses of Parliament stakeholders, a periodic assessment Directors have responsibility for and the risk management system, of risk management arrangements, the development and maintenance I am not aware of any significant of the internal control framework. evaluation of the previous year’s internal control findings for 2017/18. internal audit results, and an This framework informs the work Financial Statements ongoing consideration of the of internal audit and comments 88 Statement of comprehensive income environment in which Ofcom made by external auditors in their 89 Statement of financial position operates. During 2017/18, 11 management letter and other reports. Sharon White 90 Statement of changes in equity internal audits were undertaken, The Board has maintained strategic Chief Executive and 91 Statement of cash flows including financial controls, Ofcom’s oversight and review of internal Accounting Officer new funding model, cost allocation 92 Notes to the accounts control and risk management and tariff setting, mobile spectrum 19 June 2018 arrangements through regular auction readiness review, the 700 reports by directors on their areas Annex MHz clearance project, spectrum of responsibility, and through licensing including PMSE, IT General 120 Ofcom Boards, Panels and Committees specific reports for discussion at Controls, Business Continuity 123 Regulatory statements Risk and Audit Committee and Planning, Disaster Recovery and Board meetings. 128 Investigations programme Major Incidence Management, 129 Broadcasting complaints, Information Security, Fraud risk cases and sanctions and a high-level evaluation of the Governance Statement. 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 73 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility 53 Sustainability report Statement of The Board confirms that in preparing Chief Executive’s responsibilities this Statement of Accounts it has responsibilities observed the relevant accounting Accountability Report and disclosure requirements, applied The Chief Executive is appointed 58 Directors’ report The Board’s responsibilities suitable accounting policies on a by the Board, which delegates responsibility to her for the day- 59 The Ofcom Board Under the terms of the Office of consistent basis, made judgements to-day management of Ofcom. Communications Act 2002, the Board and estimates on a reasonable 61 Governance statement The Permanent Secretary for the is required to prepare a Statement of basis, followed applicable 74 Our employees Department for Digital, Culture, Accounts for each financial year. This accounting standards and prepared Media & Sport has designated 79 Remuneration report conforms to the Accounts Direction the statement of accounts on a the Chief Executive as Ofcom’s 86 Certificate and report of the issued by the Secretaries of State going-concern basis. Accounting Officer. The appointment Comptroller and Auditor General to for Business, Energy & Industrial The Board is responsible for carries with it duties of responsibility the Houses of Parliament Strategy and for Digital, Culture, ensuring that proper records are in respect of regularity, propriety, Media & Sport. The Board is also maintained, which disclose with value for money and good financial responsible for sending a copy of reasonable accuracy at any time management, and the safeguarding Financial Statements the Statement of Accounts to the the financial position of Ofcom of public funds. 88 Statement of comprehensive income Comptroller and Auditor General. and enable it to ensure that the The Chief Executive has specific 89 Statement of financial position This Statement of Accounts is Statement of Accounts complies responsibilities for ensuring 90 Statement of changes in equity prepared, in so far as applicable, in with the Companies Act 2006. compliance with the terms of the accordance with the Companies Act 91 Statement of cash flows In addition, the Board is responsible Framework Document. She must 2006 and the International Financial 92 Notes to the accounts for safeguarding Ofcom’s assets and also ensure that proper accounting Reporting Standards (IFRS), as well hence for taking reasonable steps records are maintained, and she as the interpretations issued by the for the prevention and detection of must sign the accounts. International Financial Reporting Annex fraud and other irregularities. Interpretations Committee (IFRIC), As a Member of the Board, the Chief 120 Ofcom Boards, Panels and Committees and on an accruals basis. It must Executive has to ensure that her 123 Regulatory statements give a true and fair view of the state accountability responsibilities do 128 Investigations programme of affairs of Ofcom as at the end of not conflict with her responsibilities 129 Broadcasting complaints, the financial year and of its income as a Board Member. The Chief cases and sanctions and expenditure, recognised gains Executive may be called upon by the and losses and cash flows for the Committee of Public Accounts and 133 Spectrum engineering and enforcement financial year. other Parliamentary committees to 134 Spectrum licensing give evidence on the discharge of 139 Sustainability her duties. 143 700 MHz clearance 145 Glossary

Accountability Report

Governance statement Ofcom Annual Report & Accounts 2017/18 74 Contents Our employees Performance Report 2 Our powers and duties 5 Chairman’s message Our values are central to the way we operate, 7 Chief Executive’s report shaping how we engage with our stakeholders 11 Progress on delivering against our Annual Plan priorities and work together to achieve our priorities 33 Principal risks and uncertainties 35 Work in the nations and our Ofcom’s values international engagement We have four core values that 39 Who we work with and how we work reflect our desire to work in an open, 45 Financial review effective and people-driven way. 51 Corporate responsibility They are: 53 Sustainability report • Excellence • Agility • Collaboration • Empowerment Accountability Report 58 Directors’ report Diversity and inclusion 59 The Ofcom Board Governance statement As an employer, we are committed 61 to treating all colleagues with 74 Our employees dignity and respect in an inclusive 79 Remuneration report and fair working environment. We 86 Certificate and report of the are determined to promote equality Comptroller and Auditor General to of opportunity for all colleagues, the Houses of Parliament irrespective of race, disability, gender identity, gender reassignment, age, religion or belief, or sexual Financial Statements orientation. This commitment sits at 88 Statement of comprehensive income the heart of our employment policies 89 Statement of financial position and our approach to recruitment and career development. 90 Statement of changes in equity 91 Statement of cash flows Our Single Equality Scheme (SES) describes how we go about 92 Notes to the accounts ensuring that diversity and inclusion are at the heart of how Annex we operate. It outlines our action plan, including a detailed account 120 Ofcom Boards, Panels and Committees of our objectives and programme 123 Regulatory statements of work. We report regularly to 128 Investigations programme the Ofcom Board and the Policy 129 Broadcasting complaints, and Management Board on the cases and sanctions progress of our various initiatives Ofcom’s DIP explains how diversity It reviews the progress we have under the SES. In March 2018 we and equality are essential to how we made since publishing our SES in 133 Spectrum engineering and enforcement published our new Diversity and operate, both as an employer and as 2014 and sets out our objectives 134 Spectrum licensing Inclusion Programme (DIP). the UK’s communications regulator. and actions for 2018-2022. 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Our Employees ofcom.org.uk 75 Contents

• continued to support and work with our Disability and Wellbeing Group; Performance Report • continued to support and work 2 Our powers and duties with our diversity networks: 5 Chairman’s message Ofcom Women’s Network (OWN); 7 Chief Executive’s report Parents and Carers Network; the Affinity Network which supports 11 Progress on delivering against our lesbian, gay, bisexual and Annual Plan priorities transgender (LGBT) colleagues 33 Principal risks and uncertainties and allies; and the RACE network; 35 Work in the nations and our international engagement • launched a Listening Network, with volunteers offering 39 Who we work with and how we work informal peer support; 45 Financial review These are to: In 2017/18 we extended our regular • strengthened our support 51 Corporate responsibility pay audit to cover ethnicity as well • build a diverse and inclusive for colleagues by introducing 53 Sustainability report as gender, and we published the workforce to better reflect resilience workshops, mandatory outcomes in March 2018. the UK population we serve; for all people managers, and The pay gap analysis showed that we open to all colleagues; Accountability Report • ensure that diversity and have continued to narrow our gender 58 Directors’ report inclusion are central to our work • maintained our gold-banded pay gap but there is further work 59 The Ofcom Board practices and culture, so everyone employer status within Business to do. This will include continuing understands, supports and is in the Community’s gender 61 Governance statement to make progress towards our accountable for diversity; and and race equality indices; 74 Our employees targets to increase the proportion of • ensure that differing needs women, and colleagues from ethnic • significantly improved our rating 79 Remuneration report and interests of all individuals minorities, in senior roles. in the 2018 Stonewall Workplace 86 Certificate and report of the are considered when carrying Equality Index, which looks at Comptroller and Auditor General to Our audit also found a high level out our regulatory work. our attitude to LGBT staff; the Houses of Parliament of consistency in pay across We have also published an Equality different professional categories, • commissioned a comprehensive Scheme for Northern Ireland, setting indicating that pay decisions are disability and engagement review, Financial Statements out how we will promote equality made carefully, taking into account conducted by Business Disability 88 Statement of comprehensive income of opportunity and good relations internal relativities, and that pay Forum (BDF); we will follow up 89 Statement of financial position across groups of people when gaps identified by previous audits the BDF’s recommendations; carrying out our functions relating to have been substantially reduced. 90 Statement of changes in equity • sponsored the Institution Northern Ireland. Statement of cash flows In the past year, we: of Electrical Engineering’s 91 To help us determine the strategic ‘Young Woman Engineer 92 Notes to the accounts • ran unconscious bias priorities and objectives in our of the Year’ award for the training for all managers; sixth consecutive year. equality schemes, we conduct Annex an annual report on the profile of • launched our move to agile Ofcom colleagues and processes. working, to deliver the 120 Ofcom Boards, Panels and Committees environment and working 123 Regulatory statements We monitor our policies and practices we need to support practices extensively through 128 Investigations programme our values and culture. The colleague surveys, consulting with 129 Broadcasting complaints, agile working changes are colleague networks, benchmarking cases and sanctions transformational, and we aim to and a biennial equal pay audit. meet the needs of all colleagues 133 Spectrum engineering and enforcement and shape the way we work 134 Spectrum licensing together in three key areas: 139 Sustainability people, place and technology; 143 700 MHz clearance 145 Glossary

Accountability Report

Our Employees Ofcom Annual Report & Accounts 2017/18 76 Contents

Figure 13: In 2015 we set ourselves the following targets for increasing the representation of women across Ofcom as a whole, and ethnic minority groups at senior levels. During 2017 we were pleased to report positive progress against all the targets Performance Report 2 Our powers and duties Gender 5 Chairman’s message

Ofcom 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities Current Ofcom composition Economically active1 Targets: By 2020 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 46% 54% 47% 53% 50% 50% 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility Principal/SMS 53 Sustainability report

Accountability Report 40% 60% N/A 40% 60% 58 Directors’ report 59 The Ofcom Board 61 Governance statement Ethnicity 74 Our employees 79 Remuneration report Ofcom 86 Certificate and report of the Comptroller and Auditor General to Current Ofcom composition Economically active Targets: By 2020 the Houses of Parliament

19% 75% 6% 13% No target Financial Statements Ethnic minority White Not known Ethnic minority 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity Principal/SMS 91 Statement of cash flows 11% 83% 6% 13% 92 Notes to the accounts N/A of colleagues to be from an ethnic Ethnic White Not known minority minority background Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements

Although we are starting with gender and ethnicity targets, we are committed to ensuring equality of opportunity 128 Investigations programme and providing an inclusive culture for all under-represented groups. 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 1 (2011 census) 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 77 Contents

Colleague involvement • the Ofcom Colleague Forum, a • regular group meetings, to speak and consultation consultation forum made up of to and hear from colleagues; representatives of colleagues • interactive group meetings Performance Report Colleagues are encouraged to across Ofcom which meets with the Chief Executive, which 2 Our powers and duties help ensure Ofcom has a diversity regularly with senior management provide a forum for colleagues of perspectives in its work. at Joint Consultative Group 5 Chairman’s message to ask her questions directly; Our regular formal methods meetings (which include two 7 Chief Executive’s report for informing and consulting members from the union); • colleague surveys, which 11 Progress on delivering against our invite colleagues to share colleagues include: • our colleague diversity networks; Annual Plan priorities their views anonymously on 33 Principal risks and uncertainties • the Ofcom intranet, which a wide range of topics. The 35 Work in the nations and our is available to all colleagues outcomes of these surveys international engagement in all of Ofcom’s offices; provide a foundation for our organisational development work. 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility 53 Sustainability report

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Accountability Report

Our Employees Ofcom Annual Report & Accounts 2017/18 78 Contents

Accountability Report Professional development Employment policies Absence 58 Directors’ report and processes The quality and commitment of our We encourage a culture where good 59 The Ofcom Board people are central to our ability to We are committed to ensuring that attendance is expected and valued. 61 Governance statement fulfil our duties. In mid-2017, we all colleagues are treated fairly, with However, we recognise that, from 74 Our employees launched an organisation-wide dignity and respect. We keep our time to time, absences for medical initiative: the Colleague Development staff policies and processes under reasons may be unavoidable. 79 Remuneration report Project. The project was launched review to ensure they are up to date 86 Certificate and report of the Our aim is to treat staff who are ill with the aim of providing several and consistent with our values, as Comptroller and Auditor General to with sympathy and fairness and, routes for colleagues to progress well as with the requirements of the Houses of Parliament where possible, to provide them within the organisation. employment law. with support which will enable them These include secondment During 2017, we rolled out our agile to recover their health and attend Financial Statements opportunities, leadership and working policy, and began drafting work regularly. In 2017/18, the 88 Statement of comprehensive income people management development, new policies including the transition number of working days lost was 89 Statement of financial position and coaching and mentoring and secondment policies. And we 4.9 days per annum per employee opportunities. In addition, launched a review of our current (2016/17: 4.2 days) This compares 90 Statement of changes in equity colleagues have the opportunity recruitment toolkit and policy, with favourably to the public sector 91 Statement of cash flows to shadow the Chief Executive and average of 8.5 days per annum per the aim of ensuring that all methods 92 Notes to the accounts other senior colleagues to gain were fair and transparent, and that employee in 2017 and is unchanged exposure to working areas outside diversity was considered at all times. since 2016. their own groups. Annex We moved from what was previously known as the ‘Two 120 Ofcom Boards, Panels and Committees Ticks’ scheme to the new Disability 123 Regulatory statements Confident scheme; we are now a 128 Investigations programme Disability Confident Employer. This 129 Broadcasting complaints, required us to conduct a review of cases and sanctions our existing procedures and commit to ensuring that disability is at the 133 Spectrum engineering and enforcement forefront of our work at all times. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 79 Contents Remuneration report Performance Report 2 Our powers and duties 5 Chairman’s message In preparing the remuneration report, and establishing its 7 Chief Executive’s report remuneration policy, the Board has given consideration to, 11 Progress on delivering against our Annual Plan priorities and adopts the provisions of, the UK Corporate Governance 33 Principal risks and uncertainties Code, and complies with the Government Financial Reporting 35 Work in the nations and our Manual where appropriate and applicable international engagement 39 Who we work with and how we work Ofcom is not required to comply 45 Financial review with Schedule 8 of the Large and 51 Corporate responsibility Medium-sized Companies and Groups (Accounts and Reports) 53 Sustainability report Regulations 2008, as amended in August 2013, but has prepared this Accountability Report report to be compliant so far as is Directors’ report practicable and appropriate. 58 59 The Ofcom Board 61 Governance statement 74 Our employees 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament Constitution of the General policy Remuneration Committee In setting Ofcom’s remuneration Financial Statements The constitution of the policy, the Remuneration Committee 88 Statement of comprehensive income believes that Ofcom should, within Remuneration Committee is set out 89 Statement of financial position on pages 63-64. the constraints of being a public body, provide rewards that will 90 Statement of changes in equity Advisers attract and retain the high-calibre 91 Statement of cash flows management necessary to enable 92 Notes to the accounts Where necessary, the Remuneration Ofcom to fulfil its statutory remit Committee takes advice and/or and responsibilities. The overall obtains services from specialist policy approach is not expected to Annex external organisations. change in the coming year. 120 Ofcom Boards, Panels and Committees The Committee also takes advice 123 Regulatory statements from Ofcom’s HR Director. The Chief 128 Investigations programme Executive and the Group Director, 129 Broadcasting complaints, Corporate Services are normally cases and sanctions invited by the Remuneration Committee to attend meetings of 133 Spectrum engineering and enforcement the Committee. No individual is 134 Spectrum licensing present for any discussion about his 139 Sustainability or her own remuneration. 143 700 MHz clearance 145 Glossary

Accountability Report

Remuneration report Ofcom Annual Report & Accounts 2017/18 80 Contents

Standard benefits Fair pay disclosure

Each Executive Member and Group Public sector organisations are Director receives certain standard required to disclose the relationship Performance Report benefits: specifically, private between the remuneration of 2 Our powers and duties medical insurance, life assurance, the highest-paid director in their 5 Chairman’s message group income protection and organisation and the median 7 Chief Executive’s report the opportunity to undertake an remuneration of the organisation’s 11 Progress on delivering against our annual health check. The total value workforce. The fair pay disclosure Annual Plan priorities of group income protection, life data is shown below. assurance and annual health checks 33 Principal risks and uncertainties The median remuneration excludes is not disclosed in the remuneration 35 Work in the nations and our the highest-paid director and tables because it is not treated international engagement is based on annualised, full- by HM Revenue & Customs as a time equivalent remuneration 39 Who we work with and how we work taxable emolument. of staff members as at the 45 Financial review Components end the financial year. Performance-related payments 51 Corporate responsibility of remuneration The remuneration of the highest- 53 Sustainability report Each Executive Member and Group paid director in Ofcom in the financial The main components of Executive Director participates in an annual year 2017/18 was in the band Members’ and Group Directors’ performance bonus scheme, which £380-£385,000 (£360-365,000 Accountability Report remuneration are: is calculated as a percentage of in 2016/17). This was 6.78 times 58 Directors’ report salary based on the individual’s (6.44 times in 2016/17) the median 59 The Ofcom Board Salary and flexible benefits performance, up to a maximum of remuneration of Ofcom’s workforce, 20% of salary, depending upon the 61 Governance statement The basic salary for Executive which was £56,704 in 2017/18 individual concerned. 74 Our employees Members and Group Directors is (£56,173 in 2016/17). determined by taking into account This allows Ofcom to recognise the 79 Remuneration report In 2017/18, remuneration ranged each colleague’s responsibilities, contribution of high performers 86 Certificate and report of the from £17,812 to the upper band performance and experience, in any year without raising base Comptroller and Auditor General to of £385,000 (the 2016/17 range together with market trends. In salary levels. the Houses of Parliament was £16,673 to £365,000). addition, a flexible benefits allowance For comparison purposes, the is made available to each Executive No element of a performance remuneration includes base salary, Member and Group Director, from bonus is pensionable. Performance Financial Statements bonuses noted against individuals performance-related pay, flexible which the individual concerned may 88 Statement of comprehensive income benefits and benefits in kind. It purchase certain benefits. All basic for the review period 1 April 2017 to excludes severance payments, any 89 Statement of financial position salaries are reviewed annually and 31 March 2018 have been approved employer pension contributions and 90 Statement of changes in equity any changes are effective from 1 July by the Remuneration Committee cash equivalent transfer values, in each year. and accrued but not paid as at the 91 Statement of cash flows line with the Government Financial year end. Annual bonuses relating to 92 Notes to the accounts the financial year 2017/18 are paid Reporting Manual. No employees in July 2018. Ofcom does not provide received remuneration in excess of a long-term performance bonus the highest-paid director. Annex scheme for its employees. 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme Fair pay disclosure 2017/18 2016/17 129 Broadcasting complaints, Band of highest-paid Board member’s total remuneration (£000) 380-385 360-365 cases and sanctions 133 Spectrum engineering and enforcement Median remuneration (£) 56,704 56,173 134 Spectrum licensing Remuneration ratio 6.78 6.44 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 81 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees Pension arrangements Guidance to the Where individuals are members of 79 Remuneration report more than one Board or Committee remuneration schedules 86 Certificate and report of the Under Ofcom’s pension (as set out on page 64) they appear Comptroller and Auditor General to arrangements, each Executive Details of remuneration received only once in the remuneration tables. the Houses of Parliament Member and Group Director for the Board, the Content Board All Executive Members are listed is provided with an allowance, and the Senior Management Team, under the Senior Management Team determined as a percentage of base which have been audited by the in Table 3. Financial Statements salary, which the individual can take National Audit Office, are set out in The guidance note reference 88 Statement of comprehensive income as extra salary or invest in a pension the following tables and notes. scheme of their choice. numbers shown against the names 89 Statement of financial position The tables reflect the remuneration of individuals refer to the notes on 90 Statement of changes in equity Patricia Hodgson retired as for that part of the year during the remuneration tables on pages 83 91 Statement of cash flows Chairman of the Ofcom Board on 31 which individuals were either and 85. December 2017; during her term she members of the Board or the 92 Notes to the accounts A note of the annual equivalent was in receipt of a pension from the Content Board, or members of the cost is shown below each table Ofcom (former ITC) Pension Plan. Senior Management Team. Those to provide a clear comparison of Annex No other Non-Executive Member individuals marked with ‘+’ against the total costs and to highlight received a pension benefit from their name were in their roles for 120 Ofcom Boards, Panels and Committees changes in pay policy between Ofcom during the year under review. only part of financial year 2016/17 123 Regulatory statements financial years. This reflects or 2017/18. the total annual cost for those 128 Investigations programme members in place at 31 March of 129 Broadcasting complaints, the year end and removes any cases and sanctions fluctuations from membership 133 Spectrum engineering and enforcement changes during the financial year. 134 Spectrum licensing The following tables are 139 Sustainability subject to audit. 143 700 MHz clearance 145 Glossary

Accountability Report

Remuneration report Ofcom Annual Report & Accounts 2017/18 82 Contents

Table 1: Ofcom Non-Executive Board Member remuneration: 2017/18

Name Guidance note reference Fees 17/18 Fees 16/17 £ £ Performance Report 2 Our powers and duties Dame Lynne Brindley DBE + 1,2 17,716 42,519 5 Chairman’s message Lord Burns GCB + 1,2 30,000 - 7 Chief Executive’s report Bob Downes + 1,2 7,087 - 11 Progress on delivering against our Annual Plan priorities Bill Emmott + 1 - 25,447 33 Principal risks and uncertainties Dame Patricia Hodgson DBE + 1,2 106,875 142,500 35 Work in the nations and our Graham Mather CBE 1 42,519 42,519 international engagement 39 Who we work with and how we work Baroness Noakes DBE 1 70,000 70,000 45 Financial review Nick Pollard + 1 42,519 29,603 51 Corporate responsibility Tim Suter + 1,2 21,260 - 53 Sustainability report Ben Verwaayen 1 42,519 42,519

380,494 395,107 Accountability Report Directors’ report Annual equivalent cost: 2017/18 £402,595; 2016/17 £382,576 58 59 The Ofcom Board 61 Governance statement Table 2: Ofcom Non-Executive Content Board Member remuneration: 2017/18 74 Our employees Remuneration report Name Guidance note reference Fees 17/18 Fees 16/17 79 £ £ 86 Certificate and report of the Comptroller and Auditor General to Jonathan Baker + 1,3 8,400 - the Houses of Parliament Andrew Chitty + 1,3 4,500 10,800 Juan Andrew Colman + 1,3 4,500 10,800 Financial Statements Aled Eirug 1 12,300 10,800 88 Statement of comprehensive income 89 Statement of financial position Robin Foster 1 12,300 10,800 90 Statement of changes in equity Zahera Harb 1 12,300 10,800 91 Statement of cash flows David Levy + 1,3 900 10,800 92 Notes to the accounts Lesley Mackenzie + 1,3 - 5,400

Philip Schlesinger 1 12,800 10,800 Annex 120 Ofcom Boards, Panels and Committees Monisha Shah + 1,3 8,400 - 123 Regulatory statements Mary Ann Sieghart + 1,3 4,500 10,800 128 Investigations programme Janey Walker 1 17,963 15,900 129 Broadcasting complaints, cases and sanctions 98,863 107,700 133 Spectrum engineering and enforcement Annual equivalent cost: 2017/18 £124,950; 2016/17 £102,300 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 83 Contents

Table 3: Ofcom Senior Management Team and Executive Content Board remuneration: 2017/18

Name Guidance Salary 17/18 Pension Flexible Benefits Performance Total Total Note entitlement/ benefits In kind Bonus remuneration Remuneration Performance Report reference allowance Allowance 17/18 17/18 17/18 16/17 2 Our powers and duties 17/18 17/18 5 Chairman’s message £ £ £ £ £ £ £ 7 Chief Executive’s report Kevin 4,5,6 230,000 34,500 15,000 2,848 20,000 302,348 118,763 11 Progress on delivering against our Bakhurst + Annual Plan priorities Tony Close 4,5 157,210 23,581 15,000 2,848 12,000 210,639 205,544 33 Principal risks and uncertainties Alison 35 Work in the nations and our 4,5 197,250 29,588 15,000 1,139 - 242,977 250,650 Crosland international engagement

Lindsey 39 Who we work with and how we work 4,5,6 193,500 29,025 15,000 2,848 20,000 260,373 229,887 Fussell + 45 Financial review

Philip 51 Corporate responsibility 4,5 215,695 32,354 15,000 2,848 - 265,898 271,881 Marnick 53 Sustainability report

Jonathan 4,5 263,025 39,454 15,000 2,848 15,000 335,327 330,458 Oxley Accountability Report James 58 Directors’ report 3 ------49,867 Thickett + 59 The Ofcom Board Steve 61 Governance statement 4,5 263,025 39,454 15,000 2,848 15,000 335,327 340,458 Unger 74 Our employees

Polly 79 Remuneration report 4,5,8 242,534 36,380 15,000 2,848 20,000 316,762 311,887 Weitzman 86 Certificate and report of the Comptroller and Auditor General to Sharon 4,5,7 333,750 66,750 15,000 2,848 33,500 451,848 430,309 the Houses of Parliament White

2,095,989 331,086 135,000 23,925 135,500 2,721,500 2,539,704 Financial Statements Annual equivalent cost: 2017/18 £2,721,500; 2016/17 £2,663,304 88 Statement of comprehensive income 89 Statement of financial position Notes to the The basic fee of the Content Board The Non-Executive Members of the 90 Statement of changes in equity Members is £16,800 per annum Ofcom Board and Content Board remuneration tables 91 Statement of cash flows (the exception being the fee paid to Members received no additional Notes to the accounts 1. The fees for all the Non-Executive Janey Walker of £24,150 per annum remuneration beyond their fees, 92 Members of the Ofcom Board are to reflect her additional work and other than the entitlement for the fixed in agreement with DCMS for responsibilities for standards work). Non-Executive Members of the Annex the duration of their appointment. The values shown represent the Ofcom Board only, to the provision 120 Ofcom Boards, Panels and Committees The fees shown represent the full full-year amount paid or, where of IT equipment. Not all Non- year under review. The basic fee of appropriate, part of the year, if the Executive Members of the Ofcom 123 Regulatory statements the Non-Executives of the Ofcom relevant Non-Executive Member Board took up the entitlement 128 Investigations programme Board (except for the Chairman joined or retired from the Ofcom during the period under review 129 Broadcasting complaints, and Deputy Chairman) has been Board or the Content Board, or took cases and sanctions £42,519 per annum since 1 April on additional responsibilities, during 133 Spectrum engineering and enforcement 2008. The fees for Non-Executive the period under review. Members of the Content Board 134 Spectrum licensing are fixed by Ofcom. 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Remuneration report Ofcom Annual Report & Accounts 2017/18 84 Contents

2. Tim Suter was appointed to the 3. Non-Executive Members of 4. The total annual remuneration Ofcom Board on 2 October 2017, the Content Board: Monisha shown for Ofcom executives Accountability Report Lord Burns was appointed as Shah and Jonathan Baker were who are, or were, members of 58 Directors’ report Chairman of the Ofcom Board on appointed to the Content Board the Senior Management Team, 59 The Ofcom Board 1 January 2018, and Bob Downes on 1 October 2017; Lesley includes basic salary, performance 61 Governance statement was appointed to the Ofcom Mackenzie left the Content bonus awarded for the financial Board on 1 February 2018. Dame Board on 17 September 2016; year, a cash allowance for flexible 74 Our employees Lynne Brindley DBE retired from Juan Andrew Colman, Mary Ann benefits and a percentage of 79 Remuneration report the Ofcom Board on 31 August Sieghart and Andrew Chitty basic salary paid as a pension 86 Certificate and report of the 2017 and Dame Patricia Hodgson retired from the Content Board allowance. This excludes Tony Comptroller and Auditor General to DBE retired from the Ofcom on 31 August 2017; David Levy Close, who was an Executive the Houses of Parliament Board on 31 December 2017. The retired from the Content Board Member of the Content Board values shown in Table 1 reflect on 30 April 2017. during the reporting period. The the amount paid in 2017/18; ‘benefits in kind’ column reflects Financial Statements Executive Members of the annualised costs are shown the cost to Ofcom of the provision Content Board: James Thickett 88 Statement of comprehensive income below the table to remove the of private medical insurance for left the Content Board on 28 June 89 Statement of financial position fluctuations of changes each executive. 2016. The full-year equivalent of in membership during the 90 Statement of changes in equity his salary was £158,000. 5. Sharon White, Alison Crosland, financial year. 91 Statement of cash flows Philip Marnick, Jonathan Oxley, 92 Notes to the accounts The annual equivalent fees are: Steve Unger, Kevin Bakhurst, Dame Patricia Hodgson Lindsey Fussell and Polly £142,500 Weitzman have been members Annex of the Senior Management Team Lord Burns Ofcom Boards, Panels and Committees throughout the period; Tony Close 120 £120,000 has been an Executive Member 123 Regulatory statements Baroness Noakes of the Content Board throughout 128 Investigations programme £70,000 the period. Steve Unger resigned 129 Broadcasting complaints, Non-Executive Members of the Board in March 2017 and will step cases and sanctions £42,519 down as a member of the Senior 133 Spectrum engineering and enforcement Management Team and the Ofcom Board on 30 June 2018. 134 Spectrum licensing The figures shown for 2017/18 139 Sustainability reflect a full year of his salary. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 85 Contents

that it does not give rise to conflicts of interest. Any fees paid to the Executive Member for such an Performance Report appointment may only be retained 2 Our powers and duties by the Executive at the discretion of the Remuneration Committee. 5 Chairman’s message 7 Chief Executive’s report Sharon White is a director of Sadler’s Wells Trust Ltd (registered charity), 11 Progress on delivering against our with effect from November 2017. Annual Plan priorities No fee was paid to Sharon White 33 Principal risks and uncertainties in respect of this appointment. 35 Work in the nations and our Sharon White is also paid £58,000 international engagement per annum as an independent 39 Who we work with and how we work non-executive director for Barratt Developments Plc, with effect from 45 Financial review January 2018; these fees are paid 51 Corporate responsibility direct to Ofcom and Sharon White 53 Sustainability report receives no part of them. 6. Lindsey Fussell joined Ofcom There were no redundancy payments as a member of the Senior relating to a member of the Senior No Executive Board Member holds Accountability Report Management Team on 18 April Management Team included in the or held any such directorships during 58 Directors’ report 2016. The full-year equivalent accounts for the year for loss of the year. salary for 2016/17 was office during 2017/18. 59 The Ofcom Board In addition, Polly Weitzman, who is a £180,000. Kevin Bakhurst joined 61 Governance statement member of the senior management Ofcom as a member of the Compensation for 74 Our employees Senior Management Team on team, is paid £12,120 per annum early termination 79 Remuneration report 31 October 2016. His full-year as a non-executive director of the Homerton University NHS equivalent salary (2016/17) was The arrangements for early 86 Certificate and report of the Foundation Trust; these fees are £230,000. termination of a contract of Comptroller and Auditor General to paid direct to Ofcom and Polly employment for an Executive the Houses of Parliament Weitzman receives no part of them. Contract of employment Member of the Ofcom Board, Content Board or member of the Senior On behalf of Ofcom, The Chief Executive and Jonathan Management Team are decided Financial Statements Oxley, Group Director of Competition, by the Remuneration Committee 88 Statement of comprehensive income have a notice period of 12 months. and will be made in accordance 89 Statement of financial position No other Executive Member of Sharon White with the contract of employment 90 Statement of changes in equity the Ofcom Board or other Ofcom of the relevant Executive Member Chief Executive and 91 Statement of cash flows colleague has a contract of or Group Director. Each contract of Accounting Officer 92 Notes to the accounts employment containing a notice employment provides for a payment 19 June 2018 period exceeding nine months. in lieu of notice on early termination at Ofcom’s discretion. The Non-Executive Members are Annex all on fixed-term appointments for Non-Executive Members have no 120 Ofcom Boards, Panels and Committees a set time commitment to Ofcom entitlement to compensation in the Ben Verwaayen 123 Regulatory statements of up to two days per week (with event of early termination. Chairman of the the exception of Lord Burns and Remuneration Committee 128 Investigations programme Baroness Noakes, who committed up 129 Broadcasting complaints, Outside directorships 19 June 2018 to three days per week and two-and- cases and sanctions a-half days per week respectively). No Executive Member of the Ofcom 133 Spectrum engineering and enforcement Board may accept a non-executive 134 Spectrum licensing appointment without the prior approval of the Board, to ensure 139 Sustainability 143 700 MHz clearance 145 Glossary

Accountability Report

Remuneration report Ofcom Annual Report & Accounts 2017/18 86 The certificate & report of the Comptroller & Auditor General to the Houses of Parliament Contents

Opinion on financial statements free from material misstatement, whether Other Information caused by fraud or error. Reasonable I certify that I have audited the financial assurance is a high level of assurance, but is The Board and the Accounting Officer are statements of the Office of Communications not a guarantee that an audit conducted in responsible for the other information. The Performance Report for the year ended 31 March 2018 under accordance with ISAs (UK) will always detect other information comprises information the Office of Communications Act 2002. a material misstatement when it exists. included in the annual report, other than 2 Our powers and duties The financial statements comprise: the Misstatements can arise from fraud or error the parts of the Remuneration Report Statements of Comprehensive Income, and are considered material if, individually or described in that report as having been 5 Chairman’s message Financial Position, Cash Flows, Changes in in the aggregate, they could reasonably be audited, the financial statements and my Equity; and the related notes, including the expected to influence the economic decisions auditor’s report thereon. My opinion on the 7 Chief Executive’s report significant accounting policies. These financial of users taken on the basis of these financial financial statements does not cover the other statements have been prepared under the statements. information and I do not express any form of 11 Progress on delivering against our accounting policies set out within them. I assurance conclusion thereon. In connection have also audited the information in the As part of an audit in accordance with ISAs with my audit of the financial statements, my Annual Plan priorities Remuneration Report that is described in that (UK), I exercise professional judgment and responsibility is to read the other information report as having been audited. maintain professional scepticism throughout and, in doing so, consider whether the other 33 Principal risks and uncertainties the audit. I also: information is materially inconsistent with In my opinion: the financial statements or my knowledge 35 Work in the nations and our • identify and assess the risks of material obtained in the audit or otherwise appears • the financial statements give a true and misstatement of the financial statements, to be materially misstated. If, based on the international engagement fair view of the state of the Office of whether due to fraud or error, design and work I have performed, I conclude that there Communications’ affairs as at 31 March perform audit procedures responsive to is a material misstatement of this other 39 Who we work with and how we work 2018 and of the surplus after tax for the those risks, and obtain audit evidence information, I am required to report that fact. I year then ended; and that is sufficient and appropriate to have nothing to report in this regard. 45 Financial review provide a basis for my opinion. The risk of • the financial statements have been not detecting a material misstatement Opinion on other matters 51 Corporate responsibility properly prepared in accordance with the resulting from fraud is higher than for one Office of Communications Act 2002 and resulting from error, as fraud may involve In my opinion: 53 Sustainability report the Secretary of State directions issued collusion, forgery, intentional omissions, thereunder. misrepresentations, or the override of • the parts of the Remuneration Report to internal control. be audited have been properly prepared Opinion on regularity in accordance with Secretary of State • obtain an understanding of internal control directions made under the Office of Accountability Report In my opinion, in all material respects the relevant to the audit in order to design Communications Act 2002; 58 Directors’ report income and expenditure recorded in the audit procedures that are appropriate in the financial statements have been applied to circumstances, but not for the purpose of • in the light of the knowledge and 59 The Ofcom Board the purposes intended by Parliament and the expressing an opinion on the effectiveness understanding of the Office of financial transactions recorded in the financial Communications and its environment of the Office of Communications’ internal 61 Governance statement statements conform to the authorities which control. obtained in the course of the audit, I have govern them. not identified any material misstatements • evaluate the appropriateness of accounting in the Performance Report or the 74 Our employees Basis of opinions policies used and the reasonableness Accountability Report; and of accounting estimates and related 79 Remuneration report I conducted my audit in accordance with disclosures made by management. • the information given in Performance International Standards on Auditing (ISAs) Report and Accountability Report for 86 Certificate and report of the (UK) and Practice Note 10 ‘Audit of Financial • conclude on the appropriateness of the financial year for which the financial Comptroller and Auditor General to Statements of Public Sector Entities in the management’s use of the going concern statements are prepared is consistent with United Kingdom’. My responsibilities under basis of accounting and, based on the audit the financial statements. the Houses of Parliament those standards are further described in the evidence obtained, whether a material Auditor’s responsibilities for the audit of the uncertainty exists related to events or Matters on which I report by exception financial statements section of my certificate. conditions that may cast significant doubt Those standards require me and my staff on the Office of Communications’ ability to I have nothing to report in respect of the to comply with the Financial Reporting continue as a going concern. If I conclude following matters which I report to you if, in Financial Statements Council’s Revised Ethical Standard 2016. I am my opinion: that a material uncertainty exists, I am 88 Statement of comprehensive income independent of the Office of Communications required to draw attention in my auditor’s in accordance with the ethical requirements • adequate accounting records have not report to the related disclosures in the 89 Statement of financial position that are relevant to my audit and the financial financial statements or, if such disclosures been kept or returns adequate for my audit statements in the UK. My staff and I have have not been received from branches not are inadequate, to modify my opinion. Statement of changes in equity fulfilled our other ethical responsibilities in My conclusions are based on the audit visited by my staff; or 90 accordance with these requirements. I believe evidence obtained up to the date of my that the audit evidence I have obtained is • the financial statements and the parts of 91 Statement of cash flows auditor’s report. However, future events or the Remuneration Report to be audited sufficient and appropriate to provide a basis conditions may cause the entity to cease to for my opinion. are not in agreement with the accounting 92 Notes to the accounts continue as a going concern. records and returns; or Responsibilities of the Board and Accounting • evaluate the overall presentation, structure Officer for the financial statements • I have not received all of the information and content of the financial statements, and explanations I require for my audit; or including the disclosures, and whether Annex As explained more fully in the Statement the financial statements represent the of Responsibilities, the Board and the • the Governance Statement does not reflect underlying transactions and events in a compliance with HM Treasury’s guidance. 120 Ofcom Boards, Panels and Committees Accounting Officer are responsible for the manner that achieves fair presentation. preparation of the financial statements and Report 123 Regulatory statements for being satisfied that they give a true and I communicate with those charged with fair view. governance regarding, among other matters, I have no observations to make on these 128 Investigations programme the planned scope and timing of the audit financial statements. Auditor’s responsibilities for the audit of the and significant audit findings, including any 129 Broadcasting complaints, financial statements significant deficiencies in internal control that cases and sanctions My responsibility is to audit, certify and report I identify during my audit. on the financial statements in accordance In addition, I am required to obtain evidence 133 Spectrum engineering and enforcement with the Office of Communications Act 2002. Sir Amyas C E Morse sufficient to give reasonable assurance that Comptroller and Auditor General An audit involves obtaining evidence about the income and expenditure reported in the 3 July 2018 134 Spectrum licensing the amounts and disclosures in the financial financial statements have been applied to statements sufficient to give reasonable the purposes intended by Parliament and National Audit Office, 139 Sustainability assurance that the financial statements are the financial transactions conform to the 157-197 Buckingham Palace Road, authorities which govern them. Victoria, London SW1W 9SP 143 700 MHz clearance 145 Glossary

Ofcom Annual Report & Accounts 2017/18

The certificate & report of the Comptroller & Auditor General to the Houses of Parliament ofcom.org.uk 87 Contents

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme Financial 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing Statements 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

XXXXXXX Ofcom Annual Report & Accounts 2017/18 88 Contents Statement of Performance Report comprehensive income 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities For the year ended 31 March 2018 33 Principal risks and uncertainties Notes 2017/18 2016/17 35 Work in the nations and our £’000 £’000 international engagement 39 Who we work with and how we work Income 3 122,410 115,781 45 Financial review Spectrum Clearance and Awards 3 82,077 24,685 51 Corporate responsibility Total income 204,487 140,466 53 Sustainability report Operating expenditure

Staff costs 4 (72,011) (68,459) Accountability Report 58 Directors’ report Other operating costs 6 (48,022) (45,721) 59 The Ofcom Board Spectrum Clearance and Awards 4,6 (82,078) (24,694) 61 Governance statement Total operating expenditure (202,111) (138,874) 74 Our employees 79 Remuneration report Operating surplus 2,376 1,592 86 Certificate and report of the Vacant property income/(cost) 15 76 (551) Comptroller and Auditor General to Finance income 74 58 the Houses of Parliament

Finance costs 15 (8) (22) Financial Statements Pension interest income 19 390 475 88 Statement of comprehensive income Surplus on ordinary activities for financial year before tax 2,908 1,552 89 Statement of financial position Taxation 7 - - 90 Statement of changes in equity Surplus for financial year after tax 2,908 1,552 91 Statement of cash flows 92 Notes to the accounts Other comprehensive income/(expenditure)

Remeasurement on pensions 19 1,318 615 Annex Total comprehensive income/(expenditure) 4,226 2,167 120 Ofcom Boards, Panels and Committees

The accounting policies and notes on pages 92 to 118 form part of these financial statements. 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Statement of comprehensive income ofcom.org.uk 89 Contents Statement of financial position Performance Report 2 Our powers and duties 5 Chairman’s message As at 31 March 2018 7 Chief Executive’s report 11 Progress on delivering against our Notes As at 31 March 2018 As at 31 March 2017 Annual Plan priorities £’000 £’000 33 Principal risks and uncertainties Non-current assets 35 Work in the nations and our Property, plant and equipment 8 9,524 6,429 international engagement Intangible assets 9 1,217 2,177 39 Who we work with and how we work Trade and other receivables 11 902 687 45 Financial review Retirement benefit assets 19 18,169 17,030 51 Corporate responsibility Total non-current assets 29,812 26,323 53 Sustainability report

Current assets Trade and other receivables 10 9,575 14,870 Accountability Report Cash and cash equivalents 12 25,233 10,097 58 Directors’ report 59 The Ofcom Board Total current assets 34,808 24,967 61 Governance statement Total assets 64,620 51,290 74 Our employees Current liabilities 79 Remuneration report Trade and other payables 13 33,857 25,348 86 Certificate and report of the Comptroller and Auditor General to Provisions for liabilities and charges 15 30 84 the Houses of Parliament Total current liabilities 33,887 25,432 Non-current liabilities Financial Statements Trade and other payables 14 1,064 299 88 Statement of comprehensive income Provisions for liabilities and charges 15 183 227 89 Statement of financial position Retirement benefit liabilities 19 1,142 1,214 90 Statement of changes in equity Total non-current liabilities 2,389 1,740 91 Statement of cash flows 92 Notes to the accounts Total liabilities 36,276 27,172

Assets less liabilities 28,344 24,118 Annex Equity 120 Ofcom Boards, Panels and Committees Reserves 28,344 24,118 123 Regulatory statements 128 Investigations programme Total equity 28,344 24,118 129 Broadcasting complaints, cases and sanctions The accounting policies and notes on pages 92 to 118 form part of these financial statements. These financial statements were approved by the Board on 19 June 2018. 133 Spectrum engineering and enforcement 134 Spectrum licensing Lord Burns Sharon White 139 Sustainability Chairman Chief Executive and Accounting Officer 143 700 MHz clearance 145 Glossary

Financial Statements

Statement of financial position Ofcom Annual Report & Accounts 2017/18 90 Contents Statement of changes in equity Performance Report 2 Our powers and duties 5 Chairman’s message For the year ended 31 March 2018 7 Chief Executive’s report 11 Progress on delivering against our Notes Reserve Annual Plan priorities £’000 33 Principal risks and uncertainties Balance as at 1 April 2016 21,951 35 Work in the nations and our international engagement Changes in equity for 2016/17 39 Who we work with and how we work Remeasurement on pensions 19 615 45 Financial review Surplus for year 1,552 51 Corporate responsibility Total comprehensive income for 2016/17 2,167 53 Sustainability report Balance as at 31 March 2017 24,118 Accountability Report Changes in equity for 2017/18 58 Directors’ report Remeasurement on pensions 19 1,318 59 The Ofcom Board Surplus for year 2,908 61 Governance statement Total comprehensive income for 2017/18 4,226 74 Our employees 79 Remuneration report Balance as at 31 March 2018 28,344 86 Certificate and report of the The accounting policies and notes on pages 92 to 118 form part of these financial statements. Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Performance Report

Overview ofcom.org.uk 91 Contents Statement of cash flows Performance Report 2 Our powers and duties 5 Chairman’s message For the year ended 31 March 2018 7 Chief Executive’s report 11 Progress on delivering against our Notes 2017/18 2016/17 Annual Plan priorities £’000 £’000 33 Principal risks and uncertainties Cash flows from operating activities 35 Work in the nations and our international engagement Operating surplus 2,376 1,592 39 Who we work with and how we work Adjustments for non-cash transactions 45 Financial review Amortisation 9 1,023 1,244 51 Corporate responsibility Depreciation 8 1,963 2,180 53 Sustainability report Loss/(Profit) on disposal of non-current assets 6 64 (7) Decrease/(Increase) in trade and other receivables 10,11 5,080 (5,899) Accountability Report Increase in trade and other payables 13,14 9,274 3,034 58 Directors’ report Decrease in provisions 15 (30) (604) 59 The Ofcom Board Decrease/(Increase) in retirement pension 19 497 (504) 61 Governance statement Net cash inflow from operating activities 20,247 1,036 74 Our employees

Cash flows from investing activities 79 Remuneration report Interest received 74 58 86 Certificate and report of the Comptroller and Auditor General to Purchases of property, plant and equipment 8 (5,159) (2,503) the Houses of Parliament Purchases of intangible assets 9 (63) (131) Proceeds from sale of non-current assets 67 37 Financial Statements (5,111) (2,509) Net cash outflow from investing activities 88 Statement of comprehensive income

Cash flows from financing activities 89 Statement of financial position 90 Statement of changes in equity Net cash outflow from financing activities - - 91 Statement of cash flows Increase/(Decrease) in cash and cash equivalents in the year 15,136 (1,473) 92 Notes to the accounts

Cash and cash equivalents at beginning of year 12 10,097 11,570 Increase/(Decrease) in cash and cash equivalents in the year 15,136 (1,473) Annex 120 Ofcom Boards, Panels and Committees Closing net funds 12 25,233 10,097 123 Regulatory statements The accounting policies and notes on pages 92 to 118 form part of these financial statements. 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Statement of cash flows Ofcom Annual Report & Accounts 2017/18 92 Contents Notes to the accounts Performance Report 2 Our powers and duties 5 Chairman’s message For the year ended 31 March 2018 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities These financial statements are Other new standards, amendments 1 Basis of presentation 33 Principal risks and uncertainties and principal prepared under the accounts and interpretations to existing direction from the Departments standards, listed below, have been 35 Work in the nations and our accounting policies for Business, Energy and Industrial published but do not have any international engagement The Office of Communications Strategy (BEIS) and Digital, Culture, material impact on the financial 39 Who we work with and how we work (Ofcom) is a statutory corporation Media & Sport (DCMS). statements of Ofcom and these 45 Financial review relate to future accounting periods. that provides a broad range of Amounts in the Financial 51 Corporate responsibility regulatory services, and is domiciled Statements are stated in pounds • IFRS 9 Financial Instruments 53 Sustainability report in the United Kingdom. The financial sterling, which is the functional applicable to annual periods statements of Ofcom for 31 currency of Ofcom. beginning on or after 1 January 2018 March 2018 have been prepared in Accountability Report accordance with the International a) Adoption of new and Ofcom has no significant exposure 58 Directors’ report Financial Reporting Standards revised standards to liquidity, interest rate or 59 The Ofcom Board (IFRS) issued by the International currency risks. Because of the 61 Governance statement Accounting Standards Board (IASB) Certain new standards, nature of its activities and the way as well as interpretations issued by amendments and interpretations in which Ofcom is financed, it is not 74 Our employees the International Financial Reporting to existing standards, listed below, exposed to the degree of financial 79 Remuneration report Interpretations Committee (IFRIC) as have been published but do not risk faced by business entities. The 86 Certificate and report of the endorsed by the European Union. have any material impact on the adoption of IFRS 9 has no material Comptroller and Auditor General to financial statements of Ofcom. These financial statements have impact to Ofcom’s results. the Houses of Parliament All standards below relate to the been prepared under the historical current accounting period. • IFRS15 Revenue from Contracts cost convention modified by the with Customers applicable to Financial Statements evaluation of certain non-current • IAS 7 Financial Instruments: annual periods beginning on or assets, on a going concern basis, Disclosure (Amendment) applicable after 1 January 2018 88 Statement of comprehensive income in accordance with International to annual periods beginning on or 89 Statement of financial position Financial Reporting Standards after 1 January 2017 Management have considered the 90 Statement of changes in equity (IFRS). The financial statements • Annual Improvement to IFRSs Communications Act 2003 and are prepared on the basis of all 91 Statement of cash flows 2014-2016 cycle (Minor Statement of Charging Principles. IFRS accounting standards and 92 Notes to the accounts amendments to the following There are no changes in the nature, interpretations and in accordance standard is applicable for annual amount, timing and uncertainty with the Companies Act 2006 periods beginning on or after 1 of revenue and cash flows arising applicable to companies reporting Annex January 2017). This standard is from contracts with customers, under IFRS and Article 4 of the 120 Ofcom Boards, Panels and Committees IFRS 12 Disclosure of Interests in following the adoption of IFRS 15. European Union IAS Regulation, Regulatory statements Other Entities 123 except where these are overridden 128 Investigations programme by the Office of Communications Broadcasting complaints, Act 2002. 129 cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts ofcom.org.uk 93 Contents

Other new standard, amendment and Clearance is undertaken by third Postal services, networks and interpretation to existing standards, parties who are funded by way services administrative fees listed below, has been published of capital grants that have been Income which comprises Performance Report that will have material impact on the considered and approved in-principle administrative fees invoiced by 2 Our powers and duties financial statements of Ofcom and by the Spectrum Clearance and Ofcom is accounted for on an these relate to future accounting Awards Programme Management 5 Chairman’s message accruals basis. Income in excess of periods and that this will be fully Board (SCAP-MB), with final approval 7 Chief Executive’s report networks and services and postal assessed once implantation guidance by HM Treasury. The programme is services’ cash costs is classified as 11 Progress on delivering against our has been issued and the further funded via grant-in-aid. deferred income and presented on Annual Plan priorities assessment completed. The grant recipients for the the Statement of Financial Position 33 Principal risks and uncertainties • IFRS 16 Leases applicable to programme request funding from as a payable. Cash costs in excess 35 Work in the nations and our annual periods beginning on or Ofcom once the grant conditions have of income received are classified as international engagement after 1 January 2019 been satisfied. For awarded grants, accrued income and presented on 39 Who we work with and how we work Ofcom will only pay monies for actual the Statement of Financial Position b) Income recognition costs incurred, and will recognise as a receivable at the end of the 45 Financial review the costs on agreement to pay the reporting date. 51 Corporate responsibility Income comprises the fair value recipient for the requested funds. 53 Sustainability report of the consideration received or Broadcasting licence fees receivable in the ordinary course of Wireless Telegraphy Income from broadcasting licence Ofcom’s activities. Income is shown Act Receipts Retention fees represents the amount invoiced Accountability Report net of value-added tax, returns, The Digital Economy Act 2017 to licensees and is accounted for on 58 Directors’ report rebates and discounts. introduced legislative amendments an accruals basis. Income in excess 59 The Ofcom Board Ofcom recognises income when the which simplify Ofcom’s funding of broadcasting’s cash costs is 61 Governance statement amount of income can be reliably model. Following consent of classified as deferred income and measured, and it is probable that the new funding ‘Statement of presented on the Statement of 74 Our employees future economic benefits will flow to Principles’ by HM Treasury and the Financial Position as a payable. Cash 79 Remuneration report the entity Secretary of State, Ofcom no longer costs in excess of income received 86 Certificate and report of the receive grant-in-aid funding for its are classified as accrued income Grant-in-aid Comptroller and Auditor General to core responsibilities. and presented on the Statement of the Houses of Parliament This income comprises grant-in-aid Financial Position as a receivable at Ofcom is permitted to retain from DCMS to meet the costs of the end of the reporting date. sums received in connection with spectrum management, spectrum Financial Statements its functions under the Wireless awards and clearance, competition Application fees Statement of comprehensive income Telegraphy Act. Ofcom may retain 88 law enforcement, public interest such sums to fund its general One-off broadcasting and networks 89 Statement of financial position tests, local media assessments, spectrum management functions, and services application fees are 90 Statement of changes in equity website blocking, joint ventures, as well as to meet the costs of non-refundable and accordingly are nuisance calls and consumer 91 Statement of cash flows undertaking its other functions for recorded as income on receipt of the protection. Grant-in-aid received 92 Notes to the accounts which it cannot otherwise levy fees stakeholder application. from DCMS is allocated and matched and charges. to costs in the year to which it relates. Grant-in-aid arrangements These changes were implemented Other income Annex for our core responsibilities remained in December 2017. Ofcom may Other income is accounted for on 120 Ofcom Boards, Panels and Committees in place during the financial year until continue to receive grant-in-aid to an accruals basis and is matched 123 Regulatory statements the end of November 2017 when the deliver certain major Government with the expenditure towards 128 Investigations programme change of funding approach began. projects. We currently receive grant- which it contributes. in-aid in respect of the 700 MHz 129 Broadcasting complaints, The 700 MHz clearance programme clearance programme. cases and sanctions oversees the clearance (including 133 Spectrum engineering and enforcement mitigation of potential interference) of the UHF 700 MHz band. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 94 Contents c) Receipts collected by Ofcom e) Property, plant and equipment Depreciation is calculated from the within the scope of Section 400 of month following that in which an Property, plant and equipment the Communications Act 2003 asset is brought into service. include the purchase of new assets Performance Report In accordance with Section 400 and extensions to, enhancements to, The assets’ residual values and useful 2 Our powers and duties of the Communications Act 2003, or replacement of, existing assets. lives are reviewed, and adjusted 5 Chairman’s message Broadcasting Act Additional if appropriate, at the end of each The minimum capitalisation 7 Chief Executive’s report Payments, Geographic Numbering reporting period. threshold is £2,500 and property, receipts and Financial Penalties 11 Progress on delivering against our plant and equipment is recorded Assets under construction represent levied by Ofcom are remitted to the Annual Plan priorities at cost or deemed cost, less costs incurred in developing tangible Consolidated Fund. Licence fees 33 Principal risks and uncertainties accumulated depreciation and any assets. Upon completion, these levied by Ofcom arising from the 35 Work in the nations and our impairment losses. Capitalisation assets will be transferred to the issue or renewal of licences under international engagement thresholds are applied to individual relevant asset class and depreciated the Wireless Telegraphy Acts (WTA) items rather than to groups of similar according to the accounting policy. 39 Who we work with and how we work are also remitted to DCMS for items, unless the effect of doing so 45 Financial review payment to the Consolidated Fund. Losses and gains on disposals are would be to eliminate a significant recognised within ‘Loss/(Profit) on 51 Corporate responsibility No entries are made in these portion of total capital assets. A disposal of non-current assets’ in the 53 Sustainability report Financial Statements in respect of Treasury direction on property, plant ‘Other operating costs’ note per the Section 400 related transactions, and equipment allows Ofcom to Statement of Comprehensive Income. unless payments and fees have use depreciated historical cost as a Accountability Report been collected and deposited into proxy for current valuation for non- 58 Directors’ report Ofcom’s main bank account at the property assets of a short useful life f) Intangible assets 59 The Ofcom Board end of the reporting date. or low value. All Ofcom assets fall in After initial recognition, an intangible this category. asset is carried at its cost less any 61 Governance statement Ofcom prepares a separate set of accumulated amortisation and any financial statements to 31 March Subsequent costs are included in the 74 Our employees accumulated impairment losses each year for the purposes of Section asset’s carrying amount or recognised 79 Remuneration report as per IAS 38 Intangible Assets. 400 of the Communications Act 2003 as a separate asset, as appropriate, 86 Certificate and report of the Expenditure capitalised includes the which are laid before Parliament. only when it is probable that future Comptroller and Auditor General to costs of software applications and economic benefits associated with the Houses of Parliament development and related licence d) Leases the item will flow to Ofcom and the fees. The minimum capitalisation cost of the item can be measured threshold is £2,500. Leases in which a significant reliably. The carrying amount of the Financial Statements portion of the risks and rewards of replaced part is derecognised. Capitalisation thresholds are applied 88 Statement of comprehensive income ownership are retained by the lessor to individual items rather than to are classified as operating leases. Property, plant and equipment are 89 Statement of financial position groups of similar items, unless Payments made and received under depreciated, on a straight-line basis, 90 Statement of changes in equity the effect of doing so would be to operating leases are recognised in at rates estimated to write off their eliminate a significant portion of total 91 Statement of cash flows Income or Expenditure on a straight- book values over their estimated capital assets. 92 Notes to the accounts line basis over the term of the lease. useful lives as follows: Lease incentives are recognised as Internally generated intangible non- an integral part of the total lease Fixtures & Fittings – Period of current assets, such as computer Annex value, over the non-cancellable term software, are recognised only if an Leasehold Improvements the lease 120 Ofcom Boards, Panels and Committees of the lease. asset is created that can be identified. 123 Regulatory statements Fixtures & Fittings 7 years Where no internally generated – Furniture intangible asset can be recognised, 128 Investigations programme Office and Field 4 to 7 development expenditure is recorded 129 Broadcasting complaints, Equipment years as an expense in the period in which it cases and sanctions is incurred. Computer Hardware 3 to 5 133 Spectrum engineering and enforcement years 134 Spectrum licensing Sustainability Motor Vehicles 5 years 139 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 95 Contents

Amortisation on capitalised h) Trade and other receivables k) Employee benefits development costs is charged to Trade receivables are amounts due Pension Schemes the Statement of Comprehensive from stakeholders for licences, fees Performance Report Income on a straight-line basis, from Ofcom has a range of pension and charges. If collection is expected 2 Our powers and duties the month following that in which an schemes which include a defined in one year or less (or in the normal asset is brought into service, over the contribution plan, two defined 5 Chairman’s message operating cycle of the business if estimated useful life of the asset of benefit plans and an unfunded plan. 7 Chief Executive’s report longer), they are classified as current three to five years. assets. If not, they are presented as 11 Progress on delivering against our Defined contribution plan Information technology relates to non-current assets. Annual Plan priorities the development of our core systems A defined contribution plan is a post- 33 Principal risks and uncertainties Trade receivables are recognised while systems under development employment benefit plan under 35 Work in the nations and our initially at fair value less provision comprise costs incurred in developing which Ofcom pays contributions into international engagement for impairment. software, which will replace some a separate entity and will have no 39 Who we work with and how we work of the current applications. No Prepayments are payments which legal or constructive obligation to 45 Financial review amortisation is provided on these have been made, but the benefits of pay further amounts. assets in the course of development. which have not been consumed. 51 Corporate responsibility Obligations under Ofcom’s defined 53 Sustainability report Accrued income – see Note 1(b) contribution scheme are recognised g) Impairment of assets income recognition. within staff costs as an expense in At each reporting date, the carrying the Statement of Comprehensive Accountability Report value of non-current assets is Income as incurred. i) Cash and cash equivalents 58 Directors’ report reviewed to determine if there is Cash and cash equivalents include New staff may join a stakeholder some indication that the carrying 59 The Ofcom Board cash in hand, deposits held at call pension scheme, which is a defined value of the assets may have been 61 Governance statement with banks, and amount due to the contribution scheme. impaired as per IAS 36 Impairment 74 Our employees Consolidated Fund. of Assets. Defined benefit plans 79 Remuneration report An asset’s carrying amount j) Trade and other payables 86 Certificate and report of the A defined benefit plan is a post- is written down immediately, Comptroller and Auditor General to Trade payables are obligations to employment benefit plan where the as an impairment loss, to its the Houses of Parliament recoverable amount if the asset’s pay for goods or services that have benefits its members are entitled carrying amount is greater than its been acquired in the ordinary course to are pre-determined by a formula. estimated recoverable amount. of business from suppliers. Accounts Ofcom’s net obligation in respect Financial Statements payable are classified as current of defined benefit pension plans 88 Statement of comprehensive income Material impairments are disclosed liabilities if payment is due within is calculated separately for each 89 Statement of financial position separately in the notes to the one year or less (or in the normal plan by estimating the amount of Statement of Comprehensive operating cycle of the business if future benefit that employees have 90 Statement of changes in equity Income and Statement of Financial longer). If not, they are presented as earned during their membership of 91 Statement of cash flows Position. Assets that suffered non-current liabilities. the plan. That benefit is discounted 92 Notes to the accounts impairment are reviewed for to determine its present value Other payables represent money possible reversal of the impairment and the fair value of plan assets owing to third parties at the at each reporting date. is deducted. The discount rate Annex reporting date. is the yield at the reporting date 120 Ofcom Boards, Panels and Committees on high quality bonds that have 123 Regulatory statements maturity dates approximating the terms of Ofcom’s obligations and 128 Investigations programme that are denominated in the same 129 Broadcasting complaints, currency in which the benefits are cases and sanctions expected to be paid. The calculation 133 Spectrum engineering and enforcement is performed annually by a qualified 134 Spectrum licensing actuary using the projected unit credit method. 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 96 Contents

When the calculation results in a Unfunded schemes Colleague leave liability benefit to Ofcom, the recognised Ofcom also has liabilities in respect Under IAS 19 Employee Benefits, asset is limited to the present value of pension payments to two former all costs must be recorded as an Performance Report of any future refunds. Actuarial Chairmen of the Independent expense as soon as the obligation to 2 Our powers and duties gains and losses are recognised in Television Commission, two former pay employees arises. This includes other comprehensive income within 5 Chairman’s message Chairmen of the Radio Authority, the cost of any untaken leave as at the Statement of Comprehensive 7 Chief Executive’s report two former Directors General of The the year end. Income in full in the period in which Office of Telecommunications and 11 Progress on delivering against our they occur. Interest income and Colleagues who have completed two former Chairmen of Postcomm. Annual Plan priorities costs, and administration costs five years of continuous service These unfunded benefits are 33 Principal risks and uncertainties of the defined benefit plans are are entitled to a paid sabbatical of accounted for under IAS 19 Work in the nations and our recognised in comprehensive five weeks and thereafter accrue 35 Employee Benefits via a provision income within the Statement of one week for each additional year international engagement in Ofcom’s Statement of Financial Comprehensive Income in the of service subject to a maximum 39 Who we work with and how we work Position equal to the actuarial value current period. of ten weeks. An accrual, based on of these liabilities. 45 Financial review management’s best estimates using Ofcom participates in two defined 51 Corporate responsibility current salary data, is included as benefit pension schemes which Other employee benefits 53 Sustainability report part of accruals. As from 1 January relate to staff that transferred to 2008, this benefit was withdrawn Ofcom from legacy organisations. Early retirement costs for new employees. These schemes are closed to new The annual compensation payment Accountability Report members and following consultation (ACP) is part of the severance 58 Directors’ report l) Provisions with Plan members have been package for some colleagues who 59 The Ofcom Board closed for future accrual as from 1 transferred to Ofcom on their old Provisions for early retirement, legal 61 Governance statement June 2011. Civil Service terms and conditions provisions and surplus property Our employees of employment. From the date of are recognised when: Ofcom has 74 The Ofcom Defined Benefit Pension early retirement until retiring age a present legal or constructive 79 Remuneration report Plan provides benefits that are the colleague receives an annual obligation as a result of past events; broadly equivalent to the Principal 86 Certificate and report of the compensation payment (ACP) equal it is probable that an outflow of Civil Service Pension Scheme Comptroller and Auditor General to to the preserved pension. resources will be required to settle (PCSPS). The second scheme is the the Houses of Parliament the obligation; and the amount has Ofcom (Former ITC) Staff Pension This is paid by monthly instalments been reliably estimated. Provisions Plan. This is a multi-employer in arrears like a pension. It begins are not recognised for future Financial Statements scheme with Ofcom, the ASA, and to accrue on the day immediately operating losses. 88 Statement of comprehensive income S4C as participating employers. The following the date of retirement assets of both schemes are held in and continues until the preserved Ofcom provides for obligations 89 Statement of financial position separately administered trusts. pension comes into payment, when relating to excess leased space 90 Statement of changes in equity it stops. in its properties, discounted by IAS 19 requires that, where a 91 Statement of cash flows appropriate market discount scheme is in surplus according to 92 Notes to the accounts rates. The provisions represent the IAS 19 assumptions, the surplus the net present value of the can only be recognised on Ofcom’s future estimated costs after Statement of Financial Position if an Annex recognising reasonably certain economic benefit is ‘available’ to it 120 Ofcom Boards, Panels and Committees future rental income. The unwinding as a result of the surplus. of the discount is included within 123 Regulatory statements finance costs in the Statement of 128 Investigations programme Comprehensive Income. 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 97 Contents

Where there are a number of Trade payables r) Areas of judgement and key similar obligations, the likelihood sources of estimation uncertainty Trade payables are not that an outflow will be required interest bearing and are The preparation of financial Performance Report in settlement is determined by stated at their fair value. statements requires management 2 Our powers and duties considering the class of obligations to make estimates and assumptions as a whole. A provision is recognised 5 Chairman’s message that affect the reported amounts even if the likelihood of an outflow p) Current tax 7 Chief Executive’s report of assets and liabilities, disclosures with respect to any one item HM Revenue and Customs has of contingent assets and liabilities 11 Progress on delivering against our included in the same class of ruled that Ofcom’s regulatory and the reported amounts of Annual Plan priorities obligations may be small. functions do not constitute a revenue and expenses during the 33 Principal risks and uncertainties trading business. Consequently, reporting period. Actual results 35 Work in the nations and our m) Settlement of claims Ofcom is unable to recover VAT on could differ from these estimates. international engagement expenditure which it incurs as part Provision is made for estimated Information about such judgements of its regulatory activities. 39 Who we work with and how we work third party legal costs and and estimations is contained in the 45 Financial review damages in respect of challenges Corporation Tax is assessable on accounting policies or the notes to to regulatory decisions of Ofcom interest received, and in respect of the financial statements, and the 51 Corporate responsibility where it is judged probable that rental income. key areas are summarised below. 53 Sustainability report these will be payable. The area of judgement that have q) Segmental analysis the most significant effect on the Accountability Report n) Foreign exchange amounts recognised in the financial A segment is a distinguishable 58 Directors’ report Transactions designated in foreign component of the organisation statements are as follow: 59 The Ofcom Board currencies are translated into that is engaged either in providing • Legal provisions – sterling at the rate of exchange 61 Governance statement products or services (business accounting policy (l) prevailing at the transaction date. segment), or in providing 74 Our employees • Revenue recognition and Monetary assets and liabilities products or services within a 79 Remuneration report designated in foreign currencies are particular economic environment assessment of unbilled revenue 86 Certificate and report of the translated at the rates prevailing (geographical segment), and is – accounting policy (b) Comptroller and Auditor General to at the reporting date with the subject to risks and rewards that • Contingent liabilities – Ofcom the Houses of Parliament resulting profit or loss recognised are different from those of other may be subject to appeal of in the Statement of Comprehensive segments. No analysis of Ofcom’s decisions made in carrying out Income for the year. turnover from operations by its functions as a regulator. Financial Statements geographical segment or business Note 24 to the accounts sets 88 Statement of comprehensive income segment has been presented as o) Financial instruments and out the contingent liability at all Ofcom’s activities are carried 89 Statement of financial position credit risk the reporting date. Ofcom have out in the UK and within the 90 Statement of changes in equity Cash and cash equivalents considered that no provision is regulatory sector. However, in order required in the accounts regarding 91 Statement of cash flows to meet with the requirements Cash and cash equivalents include this matter based on the best 92 Notes to the accounts of the Communications Act 2003 cash in hand, deposits held at information at the reporting date call with banks and amount to provide information on costs due to the Consolidated Fund. and fees, Note 2 to these financial The source of estimation Annex statements presents the Statement uncertainty that has a risk of Interest income receivable on 120 Ofcom Boards, Panels and Committees cash and cash equivalents is of Comprehensive Income for the causing a material adjustment to 123 Regulatory statements recognised as it is earned. year under review by sector. the carrying amounts of assets and liabilities within the next 128 Investigations programme Trade receivables financial year is as follows: 129 Broadcasting complaints, cases and sanctions Trade and other receivables are • Estimation of liabilities for pension 133 Spectrum engineering and enforcement non-interest bearing and stated at and other post-retirement fair value. Provision is made where benefits – accounting policy (k) 134 Spectrum licensing there is evidence that the balances 139 Sustainability will not be recovered in full. 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 98 Contents

2 Sectoral Analysis

The analysis below refers to income by sector for the year ended 31 March 2018, together with attributable costs. Performance Report This is prepared in accordance with the Communications Act 2003 and Postal Services Act 2011 and not in terms of IFRS 8 2 Our powers and duties Segmental Reporting, as per the accounting policy 1 (q) 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Spectrum Spectrum Networks Broadcasting Postal Other 2017/18 2016/17 Annual Plan priorities management clearance & services regulation regulatory Total Total activities 33 Principal risks and uncertainties £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 35 Work in the nations and our Revenue international engagement 39 Who we work with and how we work Licence and - - 41,465 25,973 3,713 - 71,151 64,058 administration fees 45 Financial review 51 Corporate responsibility Application fees - - 100 510 - - 610 668 53 Sustainability report Grant-in-aid 32,099 85,379 - - - 1,314 118,792 74,716 Wireless Telegraphy Acts 18,537 - - - - 544 19,081 - (WTA) receipts retention Accountability Report 58 Directors’ report Other income ------174 59 The Ofcom Board Accrued/(Deferred) income (21) (3,302) 439 (2,750) (391) 67 (5,958) 619 61 Governance statement Total revenue 50,615 82,077 42,004 23,733 3,322 1,925 203,676 140,235 74 Our employees Rental and other Income 338 - 280 158 22 13 811 231 79 Remuneration report Operating income 50,953 82,077 42,284 23,891 3,344 1,938 204,487 140,466 86 Certificate and report of the Interest receivable 31 - 26 14 2 1 74 58 Comptroller and Auditor General to the Houses of Parliament Total income 50,984 82,077 42,310 23,905 3,346 1,939 204,561 140,524 Onerous property and 87 2- 7 41 6 3 209 2,857 accrued rental income Financial Statements 88 Statement of comprehensive income Cash income 51,071 82,077 42,382 23,946 3,352 1,942 204,770 143,381 89 Statement of financial position Total costs (51,071) (82,077) (42,382) (23,946) (3,352) (1,942) (204,770) (143,381) 90 Statement of changes in equity 91 Statement of cash flows Surplus on cash cost basis ------92 Notes to the accounts Comparative costs by sector Year ending 31 March 2018 (51,071) (82,077) (42,382) (23,946) (3,352) (1,942) (204,770) - Annex Year ending 31 March 2017 (49,540) (24,685) (43,138) (20,384) (3,944) (1,690) (143,381) 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 99 Contents

Other regulatory In accordance with Ofcom’s Where in the current year there activities comprise: accounting policies, as set out in is an excess of income over note 1(b) to these accounts, grant- expenditure, the surplus will be • grant-in-aid relating to Performance Report in-aid and WTA retention receipts rebated to the relevant stakeholders, expenditure in respect of duties 2 Our powers and duties are allocated and matched to costs in accordance with Ofcom’s for competition enquiries, public in the year to which it relates. Statement of Charging Principles. 5 Chairman’s message interest test activity, nuisance 7 Chief Executive’s report calls and consumer protection; The above table is prepared on Where in the current year there and from December 2017, an adjusted cash basis, which is an excess of expenditure over 11 Progress on delivering against our WTA receipts used to fund includes capital expenditure income, the deficit will be collected Annual Plan priorities these cost categories in line and actual contributions to from the relevant stakeholders, 33 Principal risks and uncertainties with our new funding model; pension schemes, but excludes in accordance with Ofcom’s 35 Work in the nations and our depreciation and amortisation. Statement of Charging Principles. international engagement • adjudicator income; Ofcom’s licence and administrative Broadcasting includes the charge to 39 Who we work with and how we work • commercial activities including fees are based on an estimate of the BBC in relation to the new BBC 45 Financial review spectrum interference work; and cash costs in accordance with its regulatory responsibilities from 3 51 Corporate responsibility • rental income from sub-letting Statement of Charging Principles. April 2017. 53 Sustainability report surplus properties’ space.

Accountability Report Reconciliation from operating expenditure to final operating costs out-turn 58 Directors’ report Notes 2017/18 2016/17 59 The Ofcom Board £’000 £’000 61 Governance statement Operating expenditure – 74 Our employees 202,111 138,874 Statement of Comprehensive Income 79 Remuneration report Adjustments in respect of pension asset and liability (581) 421 86 Certificate and report of the Surplus property costs 15 - 576 Comptroller and Auditor General to the Houses of Parliament Capital expenditure less depreciation and amortisation 8, 9 2,235 (790) Actual rent payments less expenditure 910 2,255 Financial Statements Other adjustments 95 2,045 88 Statement of comprehensive income Cash operating expenditure 204,770 143,381 89 Statement of financial position Spectrum clearance (82,077) (24,685) 90 Statement of changes in equity Non-operating income (1,094) (3,320) 91 Statement of cash flows

Final operating costs out-turn 121,599 115,376 92 Notes to the accounts

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 100 Contents

3 Income

Ofcom Spectrum Total Ofcom Spectrum Total Performance Report Clearance 2017/18 Clearance 2016/17 & Awards & Awards 2 Our powers and duties £’000 £’000 £’000 £’000 £’000 £’000 5 Chairman’s message 7 Chief Executive’s report Grant-in-aid DCMS 11 Progress on delivering against our Spectrum management 32,099 - 32,099 48,226 - 48,226 Annual Plan priorities Spectrum clearance - 82,077 82,077 - 24,685 24,685 33 Principal risks and uncertainties 35 Work in the nations and our Competition law enforcement 296 - 296 678 - 678 international engagement Public interest test 781 - 154 - 154 781 39 Who we work with and how we work Nuisance calls 215 - 215 613 - 613 45 Financial review Consumer protection 21 - 21 30 - 30 51 Corporate responsibility 53 Sustainability report Total government grant-in-aid 33,412 82,077 115,489 49,701 24,685 74,386

Wireless Telegraphic Act (WTA) Receipts Retention Accountability Report Spectrum management 18,516 - 18,516 - - - 58 Directors’ report Competition law enforcement 511 - 511 - - - 59 The Ofcom Board 61 Governance statement Nuisance calls 90 - 90 - - - 74 Our employees Consumer protection 10 - 10 - - - 79 Remuneration report Total WTA receipts retention 19,127 - 19,127 - - - 86 Certificate and report of the Comptroller and Auditor General to Stakeholder income the Houses of Parliament Networks & services administrative 42,004 - 42,004 41,993 - 41,993 and application fees Financial Statements Broadcasting Act licence 23,732 - 23,732 19,843 - 19,843 88 Statement of comprehensive income and application fees 89 Statement of financial position Regulation of postal services 3,323 - 3,323 3,839 - 3,839 90 Statement of changes in equity Other income 812 - 812 405 - 405 91 Statement of cash flows Total stakeholder income 69,871 - 69,871 66,080 - 66,080 92 Notes to the accounts

Total income 122,410 82,077 204,487 115,781 24,685 140,466 Annex Broadcasting includes the charge to the BBC in relation to the new BBC regulatory responsibilities from 3 April 2017. 120 Ofcom Boards, Panels and Committees

Spectrum Clearance and Awards income has been presented separately from core Ofcom income in order to provide a 123 Regulatory statements more meaningful comparison between the years. 128 Investigations programme 129 Broadcasting complaints, From December 2017, WTA receipts retention is the result of the Digital Economy Act 2017 which introduced legislative cases and sanctions amendments that permit Ofcom to retain sums received in connection with its functions under the WTA. Ofcom may retain such sums in order to fund its general spectrum management functions, as well to meet the costs of undertaking 133 Spectrum engineering and enforcement its other functions for which it cannot levy fees and charges. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 101 Contents

4 Staff costs

Ofcom Spectrum Total Ofcom Spectrum Total Performance Report Clearance 2017/18 Clearance 2016/17 & Awards & Awards 2 Our powers and duties £’000 £’000 £’000 £’000 £’000 £’000 5 Chairman’s message 7 Chief Executive’s report Staff costs, including fees paid to Board Members, were: 11 Progress on delivering against our Salaries & benefits 57,587 442 58,029 55,498 379 55,877 Annual Plan priorities National Insurance costs 6,987 42 7,029 6,325 41 6,366 33 Principal risks and uncertainties 35 Work in the nations and our Pension costs 5,984 39 6,023 5,590 30 5,620 international engagement Restructuring costs 1,453 - 1,453 1,046 - 1,046 39 Who we work with and how we work Total staff costs 72,011 523 72,534 68,459 450 68,909 45 Financial review 51 Corporate responsibility The restructuring costs in 2017/18 relate to restructuring activities completed in the year and includes an accrual for 53 Sustainability report those costs unpaid at year end relating to five (2016/17: 19) employees.

More detailed information in respect of the remuneration and pension entitlements of the directors and senior executives is shown in the remuneration report on pages 79-85. Accountability Report 58 Directors’ report During the year, sixteen (2016/17: 11) employees were seconded to other organisations and thus this credit is included 59 The Ofcom Board within the staff costs line in the table above. 61 Governance statement Spectrum Clearance and Awards costs have been presented separately from core Ofcom staff costs in order to provide a 74 Our employees more meaningful comparison between the years. 79 Remuneration report 86 Certificate and report of the Comptroller and Auditor General to 5 Employee numbers the Houses of Parliament

2017/18 2016/17 Financial Statements The average number of employees (full time equivalents) 868 828 88 Statement of comprehensive income 89 Statement of financial position As at 31 March 2018, Ofcom had 893 employees (full time equivalents) (2016/17: 864). 90 Statement of changes in equity 91 Statement of cash flows Non-Executive Members of the Ofcom Board, Content Board, Advisory Committees and employees seconded to Ofcom are excluded from employee numbers. 92 Notes to the accounts

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 102 Contents

6 Other operating costs

Ofcom Spectrum Total Ofcom Spectrum Total Performance Report Clearance 2017/18 Clearance 2016/17 & Awards & Awards 2 Our powers and duties £’000 £’000 £’000 £’000 £’000 £’000 5 Chairman’s message 7 Chief Executive’s report Auditors remuneration – 76 - 76 76 - 76 statutory audit fees 11 Progress on delivering against our Annual Plan priorities Auditors remuneration – Section 400 13 - 13 13 - 13 33 Principal risks and uncertainties Professional fees 4,404 424 4,828 4,824 368 5,192 35 Work in the nations and our international engagement Outsourced services 7,739 - 7,739 9,317 - 9,317 39 Who we work with and how we work Audience and consumer research 5,416 - 5,416 5,196 19 5,215 45 Financial review Technological research and 327 - 327 611 - 611 51 Corporate responsibility spectrum efficiency projects 53 Sustainability report Spectrum clearance scheme - 81,065 81,065 - 23,614 23,614 Temporary staff and recruitment 3,051 46 3,097 3,577 172 3,749 Accountability Report Travel and subsistence 1,218 9 1,227 1,207 22 1,229 58 Directors’ report

Premises costs 10,310 - 10,310 5,632 - 5,632 59 The Ofcom Board 61 Governance statement Administration and office expenses 6,952 6 6,958 5,891 38 5,929 74 Our employees Loss/(Profit) on disposal of non capital - - - (88) - (88) 79 Remuneration report Information and technology costs 5,024 4 5,028 5,742 2 5,744 86 Certificate and report of the Vehicles 271 - 271 254 - 254 Comptroller and Auditor General to the Houses of Parliament Bad and doubtful debt 173 - 173 61 - 61

Amortisation 1,023 - 1,023 1,244 - 1,244 Financial Statements Depreciation 1,961 1 1,962 2,171 9 2,180 88 Statement of comprehensive income Loss/(Profit) on disposal of 89 Statement of financial position 64 - 64 (7) - (7) non-current assets 90 Statement of changes in equity Total other operating costs 48,022 81,555 129,577 45,721 24,244 69,965 91 Statement of cash flows

The costs, above, include: 92 Notes to the accounts

Operating leases – land and buildings 6,401 - 6,401 5,638 - 5,638 Annex Operating leases – vehicles 127 - 127 121 - 121 120 Ofcom Boards, Panels and Committees Operating leases – other 107 - 100 - 100 107 123 Regulatory statements 128 Investigations programme Spectrum Clearance and Awards costs have been presented separately from core Ofcom operating costs in order to aid transparency and provide a more meaningful comparison between the years. 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 103 Contents

7 Taxation

2017/18 2016/17 Performance Report £’000 £’000 2 Our powers and duties

Tax (charge)/credit for the year 5 Chairman’s message 7 Chief Executive’s report Deferred tax charge - - 11 Progress on delivering against our Taxation - - Annual Plan priorities 33 Principal risks and uncertainties Reconciliation of tax charge 2017/18 2016/17 35 Work in the nations and our £’000 £’000 international engagement Surplus before tax 2,908 1,552 39 Who we work with and how we work Tax on profit at the UK standard rate of Corporation Tax of 20% (2016/17: 20%) 582 310 45 Financial review 51 Corporate responsibility Tax effect of: 53 Sustainability report Income not subject to tax (40,774) (28,085)

Expenses not subject to tax 40,346 27,684 Accountability Report (Decrease)/Increase to brought forward tax losses (154) 91 58 Directors’ report Tax charge - - 59 The Ofcom Board 61 Governance statement At the reporting date, Ofcom had unutilised tax losses available for offset against future taxable income of £11,788k 74 Our employees (2016/17: £12,556k). No deferred tax asset is recognised in respect of these losses as it is not probable that sufficient 79 Remuneration report taxable income will arise against which the losses can be utilised. 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 104 Contents

8 Property, plant and equipment

Leasehold Fixtures Office & field Computer Motor Assets under Total Performance Report improvements & fittings equipment hardware vehicles construction 2 Our powers and duties

£’000 £’000 £’000 £’000 £’000 £’000 £’000 5 Chairman’s message 7 Chief Executive’s report Cost 11 Progress on delivering against our At 1 April 2016 14,146 1,006 14,126 7,347 557 - 37,182 Annual Plan priorities Additions during year 298 66 1,002 497 44 596 2,503 33 Principal risks and uncertainties 35 Work in the nations and our Disposals (202) - (2,115) (3,821) (59) - (6,197) international engagement Transfers - - (19) - 19 - - 39 Who we work with and how we work At 31 March 2017 14,242 1,072 12,994 4,023 561 596 33,488 45 Financial review

Additions during year 1,510 217 547 42 175 2,668 5,159 51 Corporate responsibility 53 Sustainability report Disposals (397) (124) (432) (123) (84) - (1,160)

Transfers - 46 4 408 99 (557) - Accountability Report Cost at 31 March 2018 15,355 1,211 13,113 4,350 751 2,707 37,487 58 Directors’ report The Ofcom Board Depreciation 59 61 Governance statement At 1 April 2016 12,210 628 11,088 6,840 250 - 31,016 74 Our employees Charge for the year 692 84 994 314 96 - 2,180 79 Remuneration report Disposals (182) - (2,097) (3,821) (37) - (6,137) 86 Certificate and report of the Comptroller and Auditor General to Transfers - - (8) - 8 - - the Houses of Parliament At 31 March 2017 12,720 712 9,977 3,333 317 - 27,059 Charge for the year 591 80 722 480 90 - 1,963 Financial Statements Disposals (354) (108) (414) (123) (60) - (1,059) 88 Statement of comprehensive income 89 Statement of financial position Transfers ------90 Statement of changes in equity Accumulated 91 Statement of cash flows depreciation at 12,957 684 10,285 3,690 347 - 27,963 31 March 2018 92 Notes to the accounts

NBV 31 March 2018 2,398 527 2,828 660 404 2,707 9,524 Annex NBV 31 March 2017 1,522 360 3,017 690 244 596 6,429 120 Ofcom Boards, Panels and Committees 123 Regulatory statements Equipment purchased for the Spectrum Clearance and Awards program has been included in Ofcom’s asset registers Investigations programme under Field Equipment. 128 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 105 Contents

9 Intangible assets

Software Information Systems under Total Performance Report licences technology development 2 Our powers and duties 5 Chairman’s message £’000 £’000 £’000 £’000 7 Chief Executive’s report Cost 11 Progress on delivering against our At 1 April 2016 7,162 24,290 1,132 32,584 Annual Plan priorities

Additions during year - - 131 131 33 Principal risks and uncertainties 35 Work in the nations and our Disposals (936) (5,026) - (5,962) international engagement Transfers - 524 (524) - 39 Who we work with and how we work At 31 March 2017 6,226 19,788 739 26,753 45 Financial review 51 Corporate responsibility Additions during year - - 63 63 53 Sustainability report Disposals - - - -

Transfers 56 291 (347) - Accountability Report Cost at 31 March 2018 6,282 20,079 455 26,816 58 Directors’ report 59 The Ofcom Board Amortisation 61 Governance statement At 1 April 2016 5,362 23,932 - 29,294 74 Our employees Charge for the year 782 462 - 1,244 79 Remuneration report Disposals (936) (5,026) - (5,962) 86 Certificate and report of the Comptroller and Auditor General to Transfers - - - - the Houses of Parliament At 31 March 2017 5,208 19,368 - 24,576 Charge for the year 713 310 - 1,023 Financial Statements Disposals - - - - 88 Statement of comprehensive income 89 Statement of financial position Transfers 56 (56) - - 90 Statement of changes in equity Accumulated amortisation 5,977 19,622 - 25,599 91 Statement of cash flows at 31 March 2018 92 Notes to the accounts NBV 31 March 2018 305 457 455 1,217 NBV 31 March 2017 1,018 420 739 2,177 Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 106 Contents

10 Trade and other receivables: current assets

As at 31 March 2018 As at 31 March 2017 Performance Report £’000 £’000 2 Our powers and duties Trade receivables 2,397 1,18 8 5 Chairman’s message 7 Chief Executive’s report Other receivables 395 57 11 Progress on delivering against our Value added tax receivable 163 - Annual Plan priorities Prepayments 5,628 6,258 33 Principal risks and uncertainties

Staff loans and advances 230 215 35 Work in the nations and our international engagement Accrued income 694 6,419 39 Who we work with and how we work Accrued income (Grant-in-aid DCMS) - 733 45 Financial review Accrued Income (WTA Receipts) 68 - 51 Corporate responsibility 53 Sustainability report Total trade and other receivables: current assets 9,575 14,870

Staff loans relate to 139 (2016/17:151) season ticket loans to colleagues repayable over 12 months. Accountability Report 58 Directors’ report 11 Trade and other receivables: non-current assets 59 The Ofcom Board 61 Governance statement As at 31 March 2018 As at 31 March 2017 74 Our employees £’000 £’000 79 Remuneration report Accrued income 902 687 86 Certificate and report of the Comptroller and Auditor General to Total trade and other receivables: non-current assets 902 687 the Houses of Parliament

12 Cash and cash equivalents Financial Statements 88 Statement of comprehensive income As at 31 March 2018 As at 31 March 2017 89 Statement of financial position £’000 £’000 90 Statement of changes in equity Commercial banks and cash in hand 25,233 10,097 91 Statement of cash flows Total cash and cash equivalents 25,233 10,097 92 Notes to the accounts

All activities and cash balances relating to Licence Fees and Penalties are separated from the Ofcom accounts and are Annex disclosed in the Section 400 accounts. 120 Ofcom Boards, Panels and Committees Cash balance as at 31 March 2018 reflects additional funding relating to the clearance of 700MHz spectrum. 123 Regulatory statements

128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 107 Contents

13 Trade and other payables: current liabilities

As at 31 March 2018 As at 31 March 2017 Performance Report £’000 £’000 2 Our powers and duties Trade payables 7,566 2,035 5 Chairman’s message 7 Chief Executive’s report Other payables 4,187 5,942 11 Progress on delivering against our Value added tax payable - 61 Annual Plan priorities Grant-in-aid DCMS 3,311 1,072 33 Principal risks and uncertainties

Accruals 15,930 9,814 35 Work in the nations and our international engagement Lease incentive accrual 25 910 39 Who we work with and how we work Deferred income 2,816 5,514 45 Financial review Deferred income (WTA Receipts) 22 - 51 Corporate responsibility 53 Sustainability report Total trade and other payables: current liabilities 33,857 25,348

The Government’s target for payments to suppliers is five days for 80 per cent of undisputed invoices. In addition to small and Accountability Report medium suppliers, Ofcom also includes large suppliers in this scheme to encourage them to pay their small business suppliers 58 Directors’ report within the shorter timeframe. 59 The Ofcom Board For 2017/18 Ofcom achieved on average a performance of 95.75 per cent against these targets (2016/17: 95.46 per cent). 61 Governance statement Other payables include funds received from a landlord regarding the refurbishment of the landlord’s property and equipment. 74 Our employees 79 Remuneration report 86 Certificate and report of the 14 Trade and other payables: non-current liabilities Comptroller and Auditor General to the Houses of Parliament

As at 31 March 2018 As at 31 March 2017 £’000 £’000 Financial Statements Lease incentive accrual 79 104 88 Statement of comprehensive income 89 Statement of financial position Deferred income 985 195 90 Statement of changes in equity Total trade and other payables: non-current liabilities 1,064 299 91 Statement of cash flows 92 Notes to the accounts

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 108 Contents

15 Provisions for liabilities and charges

Early retirement Surplus property Legal Total Performance Report £’000 £’000 £’000 £’000 2 Our powers and duties At 1 April 2016 241 101 - 342 5 Chairman’s message 7 Chief Executive’s report Discount unwound and changes in rate 22 - - 22 11 Progress on delivering against our Utilised in year (28) (576) - (604) Annual Plan priorities Provision increased - 551 - 551 33 Principal risks and uncertainties

At 31 March 2017 235 76 - 311 35 Work in the nations and our international engagement Discount unwound and changes in rate 8 - - 8 39 Who we work with and how we work Utilised in year (30) - - (30) 45 Financial review Provision decreased - (76) - (76) 51 Corporate responsibility 53 Sustainability report Total provisions as at 31 March 2018 213 - - 213

Provisions are calculated in accordance with the requirements of IAS 37. Provisions for early retirement are discounted Accountability Report by 0.10 per cent (2016/17: 0.24 per cent) per annum in accordance with HM Treasury direction; all other provisions with 58 Directors’ report a time boundary of O to 5 years are discounted by the short term discount rate of 0.54 per cent (2016/17: 0.29 per cent) The Ofcom Board and for provisions with a time boundary of 5 to 10 years the medium term rate of 1.13 per cent (2016/17: 1.12 per cent). 59 No provision provided for surplus property (2016/17: two) this financial year, as we have now surrendered the excess 61 Governance statement space at Otcom’s main office. 74 Our employees 79 Remuneration report Analysis of expected timing Early retirement Surplus property Legal Total 86 Certificate and report of the of cashflows £’000 £’000 £’000 £’000 Comptroller and Auditor General to the Houses of Parliament Current

Not later than one year 30 - - 30 Financial Statements Total current 30 - - 30 88 Statement of comprehensive income

Non–current 89 Statement of financial position 90 Statement of changes in equity Later than one year and not later than five years 66 - - 66 91 Statement of cash flows Later than five years 117 - - 117 92 Notes to the accounts Total non-current 183 - - 183 Total provisions as at 31 March 2018 213 - - 213 Annex 120 Ofcom Boards, Panels and Committees The provision for early retirement of £213k (2016/17: £235k) is for Annual Compensation Payments (ACP). The ACP 123 Regulatory statements is part of the severance package for some colleagues who transferred to Ofcom on their old Civil Service terms and conditions of employment. 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 109 Contents

16 Commitments under operating leases

As at As at Performance Report 31 March 31 March 2 Our powers and duties 2018 2017 5 Chairman’s message Buildings Vehicles Other Total Buildings Vehicles Other Total 7 Chief Executive’s report £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 11 Progress on delivering against our The future aggregate minimum lease payments under operating leases are as follows: Annual Plan priorities 33 Principal risks and uncertainties Not later than 6,175 50 71 6,296 6,810 37 93 6,940 one year 35 Work in the nations and our international engagement Later than one 39 Who we work with and how we work year and not later 22,618 - - 22,618 22,707 - 65 22,772 than five years 45 Financial review 51 Corporate responsibility Later than five years 45,522 - - 45,522 51,446 - - 51,446 53 Sustainability report Total commitments under operating 74,315 50 71 74,436 80,963 37 158 81,158 leases Accountability Report 58 Directors’ report A new lease agreement for Ofcom’s main office was signed in May 2016 which changed the lease end date from 59 The Ofcom Board September 2018 to September 2030 under new terms. In addition Ofcom entered leases in April 2016 for a new office 61 Governance statement in Warrington which has a lease end date of July 2026 and in June 2016 for a new office in Edinburgh with a lease end date of May 2021. 74 Our employees 79 Remuneration report 86 Certificate and report of the 17 Amounts receivable under operating leases Comptroller and Auditor General to the Houses of Parliament As at 31 March 2018 As at 31 March 2017 Buildings Buildings £’000 £’000 Financial Statements 88 Statement of comprehensive income The future minimum lease payments receivable under non– cancellable operating leases are as follows: 89 Statement of financial position 90 Statement of changes in equity Not later than one year 67 872 91 Statement of cash flows Later than one year and not later than five years 8 193 92 Notes to the accounts Later than five years - - Total amounts receivable under operating leases 75 1,065 Annex 120 Ofcom Boards, Panels and Committees Ofcom has entered into sub-lease contracts with regards to surplus office space within several of its office buildings 123 Regulatory statements and reduced its office space in its main office from June 2017. Remaining operating leases have break options or lease ending in 2018/19. 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 110 Contents

18 M G Alba However, this is now closed and no Pensions Act funding valuations with further contributions are being made an effective date of 31 March 2015 In accordance with Section 210 of to this arrangement. were completed for both defined Performance Report the Communications Act 2003 and benefit plans and, unlike under 2 Our powers and duties Section 183 of the Broadcasting b) D efined benefit pension plans IFRS, showed a combined surplus of Act 1990, the Scottish Ministers £1,345k. The next funding valuation 5 Chairman’s message paid £13,500k (2016/17: £12,865k) Ofcom operates two defined benefit will have an effective date of 31 7 Chief Executive’s report to Ofcom. These sums have not pension plans, although both closed to March 2018. 11 Progress on delivering against our been reflected in these accounts future accrual on 1 June 2011: Annual Plan priorities but have been paid by Ofcom to the Contribution schedules were agreed • The Ofcom Defined Benefit Gaelic Broadcasting Fund under the with the Trustee of both plans as 33 Principal risks and uncertainties Pension Plan was established on management of the Seirbheis nam a result of these valuations. Under 35 Work in the nations and our 29 December 2003. The employer Meadhanan Gàidhlig (MG Alba). MG the existing schedules Ofcom would international engagement contribution made to the Ofcom Alba prepares separate reports and be expecting to contribute £540k Defined Benefit Pension Plan 39 Who we work with and how we work accounts to 31 March each year. to the two defined benefit plans for the year ending 31 March 45 Financial review These are sent by Ofcom to the over the next 12 months to cover 2018 was £6k in relation to Secretary of State for Scotland and Plan expenses. These contributions 51 Corporate responsibility Plan expenses (2016/17: £9k). Scottish Ministers to be laid before are payable from the Feeder Trust. 53 Sustainability report Employer contributions of £360k the Scottish Parliament. Ofcom has also agreed to pay other were transferred from the Feeder levies directly. This compares to Trust account to the Plan in the £556k over the year to 31 March Accountability Report 19 Retirement year ending 31 March 2018 2018 (including the contribution paid 58 Directors’ report benefit obligations (2016/17: £360k); and from the Feeder Trust). 59 The Ofcom Board • The Ofcom (Former ITC) Ofcom has a range of pension Ofcom operates a Feeder Trust 61 Governance statement schemes which include a defined Pension Plan which Ofcom account, which is incorporated within 74 Our employees contributions plan, defined benefits jointly participates in with three the Pension Scheme Assets. Funds 79 Remuneration report plans and unfunded plans. other organisations, S4C, S4C transferred to and held in the trust Masnachol and the Advertising 86 Certificate and report of the a) D efined contribution plan – account can only be paid into one of Standards Authority. The employer Comptroller and Auditor General to stakeholder pension plan the two Defined Benefit Pension Plans contribution made to the Ofcom and are not able to be used for any the Houses of Parliament Ofcom’s primary means of providing (Former ITC) Pension Plan for other purpose. pension benefits to its colleagues is by the year ending 31 March 2018 contributing to a stakeholder pension was £10k in relation to Plan There is no contribution from Ofcom Financial Statements plan. Employer contributions of expenses (2016/17: £9k). Employer into the Feeder Trust for year ended 88 Statement of comprehensive income 31 March 2018 (2016/17: £1,000k). £5,426k were made in the year ended contributions of £180k were 89 Statement of financial position transferred from the Feeder Trust The balance of the Feeder Trust 31 March 2018 (2016/17: £5,023k). 90 Statement of changes in equity There is also a defined contribution account to the Ofcom (Former ITC) as at 31 March 2018 was £8,313k 91 Statement of cash flows section in the Ofcom Defined Benefits Pension Plan in the year ending 31 (2016/17: £8,842k). March 2018 (2016/17: £180k). 92 Notes to the accounts Pension Plan. Ofcom is also responsible for Both of these Plans are managed meeting the unfunded pension by a Board of Trustees that is liabilities for former Chairmen of the Annex independent of Ofcom. Independent Television Commission, 120 Ofcom Boards, Panels and Committees the Radio Authority and Postcomm Ofcom’s cash contributions to as well as former Directors General 123 Regulatory statements these two plans are determined in of Telecommunications. The pension 128 Investigations programme accordance with the Pensions Act provision is unfunded, with the 129 Broadcasting complaints, 2004. This requires a significantly benefits being paid as they fall due cases and sanctions more prudent measure of the and guaranteed by Ofcom. There is 133 Spectrum engineering and enforcement liabilities than IFRS. no fund, and therefore no surplus or deficit. Actuarial advice has been 134 Spectrum licensing sought to ensure that the provision is 139 Sustainability set at a realistic level. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 111 Contents

Summary of Ofcom’s defined benefit pension obligations

The amounts recognised in the Statement of Financial Position are as follows: Performance Report Defined Unfunded Total Defined Unfunded Total 2 Our powers and duties benefit pensions retirement benefit pensions retirement 5 Chairman’s message pensions liability benefits pensions liability benefits 7 Chief Executive’s report funded funded 11 Progress on delivering against our 31 March 31 March 31 March 31 March 31 March 31 March Annual Plan priorities 2018 2018 2018 2017 2017 2017 33 Principal risks and uncertainties £’000 £’000 £’000 £’000 £’000 £’000 35 Work in the nations and our Funded status, end of year international engagement

– Benefit obligation in (90,596) - (90,596) (92,044) - (92,044) 39 Who we work with and how we work respect of deferred 45 Financial review members 51 Corporate responsibility – Benefit obligation in (174,962) (1,142) (176,104) (182,833) (1,214) (184,047) 53 Sustainability report respect of pensioner members Accountability Report Total benefit obligations (265,558) (1,142) (266,700) (274,877) (1,214) (276,091) 58 Directors’ report Fair value of plan assets 283,727 - 283,727 291,907 - 291,907 59 The Ofcom Board

Funded status 18,169 (1,142) 17,027 17,030 (1,214) 15,816 61 Governance statement 74 Our employees IAS19 requires that, where a scheme is in surplus according to IAS19 assumptions, the surplus can only be recognised 79 Remuneration report on Ofcom’s Statement of Financial Position if an economic benefit is available to Ofcom as a result. All of the surplus is 86 Certificate and report of the attributed to the DB Plan and Feeder Account which has economic value as it can be recovered by Ofcom. Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 112 Contents

Changes over the year to 31 March 2018

Defined Assets Funded Unfunded Total Performance Report benefit pension pensions pension 2 Our powers and duties obligation scheme 5 Chairman’s message £’000 £’000 £’000 £’000 £’000 7 Chief Executive’s report Opening value as at 1 April 2017 (274,877) 291,907 17,030 (1,214) 15,816 11 Progress on delivering against our Annual Plan priorities Administration expenses - (597) (597) - (597) 33 Principal risks and uncertainties Interest income/(cost) (6,730) 7,149 419 (29) 390 35 Work in the nations and our international engagement Employer contributions - 16 16 - 16 39 Who we work with and how we work 45 Financial review Benefits paid from scheme assets 11,430 (11,430) - - - 51 Corporate responsibility Benefits paid directly by Ofcom - - - 84 84 53 Sustainability report Benefits paid total 11,430 (11,430) - 84 84

Re-measurements Accountability Report 58 Directors’ report Actuarial gains/(losses) 4,619 (3,318) 1,301 17 1,318 59 The Ofcom Board Closing value as at 31 March 2018 (265,558) 283,727 18,169 (1,142) 17,027 61 Governance statement 74 Our employees 79 Remuneration report Changes over the year to 31 March 2017 86 Certificate and report of the Comptroller and Auditor General to Defined Assets Funded Unfunded Total benefit pension pensions pension the Houses of Parliament obligation scheme £’000 £’000 £’000 £’000 £’000 Financial Statements 88 Statement of comprehensive income Opening value as at 1 April 2016 (242,617) 257,987 15,370 (1,148) 14,222 89 Statement of financial position Administration expenses - (597) (597) - (597) 90 Statement of changes in equity 91 Statement of cash flows Interest income/(cost) (8,042) 8,555 513 (38) 475 92 Notes to the accounts Employer contributions - 1,018 1,018 - 1,018 Annex Benefits paid from scheme assets 12,278 (12,278) - - - 120 Ofcom Boards, Panels and Committees Benefits paid directly by Ofcom - - - 83 83 123 Regulatory statements Benefits paid total 12,278 (12,278) - 83 83 128 Investigations programme Remeasurements 129 Broadcasting complaints, cases and sanctions Actuarial gains/(losses) (36,496) 37,222 726 (111) 615 133 Spectrum engineering and enforcement Closing value as at 31 March 2017 (274,877) 291,907 17,030 (1,214) 15,816 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 113 Contents

31 March 2018 Funded Unfunded Total pension pension pensions £’000 £’000 £’000 Performance Report 2 Our powers and duties The amounts recognised in the Statement of Comprehensive Income are as follows: 5 Chairman’s message Service cost - - - 7 Chief Executive’s report Interest income/(cost) 419 (29) 390 11 Progress on delivering against our Defined benefit credit/(cost) recognised in comprehensive income 419 (29) 390 Annual Plan priorities 33 Principal risks and uncertainties Administration expenses (597) - (597) 35 Work in the nations and our Net income/(cost) recognised in comprehensive income (178) (29) (207) international engagement 39 Who we work with and how we work 45 Financial review 31 March 2018 Funded Unfunded Total 51 Corporate responsibility pension pension pensions 53 Sustainability report £’000 £’000 £’000

The amounts recognised as Other Comprehensive Income are as follows: Accountability Report Gains/(losses) on benefit obligations due to 5,832 17 5,849 58 Directors’ report changes in financial assumptions 59 The Ofcom Board Gains/(losses) on benefit obligations due to - - - 61 Governance statement changes in demographic assumptions 74 Our employees Gains/(losses) on benefit obligations as a (1,213) - (1,213) 79 Remuneration report result of member experience 86 Certificate and report of the Total gains/(losses) arising on benefit obligations 4,619 17 4,636 Comptroller and Auditor General to the Houses of Parliament Gains/(losses) on plan assets (3,318) - (3,318)

Net gains/(losses) 1,301 17 1,318 Financial Statements

Ofcom and the Plans’ Trustees have implemented a number of steps to provide protection against events that causes a 88 Statement of comprehensive income deterioration in the funding positions. In particular, annuity policies meet the benefit payments of pensioner members in 89 Statement of financial position both Plans and all non-pensioner members in the ITC Plan. However, movements in market conditions can still have an 90 Statement of changes in equity impact on the funding positions particularly on the DB Plan. 91 Statement of cash flows 92 Notes to the accounts

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 114 Contents

31 March 2017 Funded Unfunded Total pension pension pensions £’000 £’000 £’000 Performance Report 2 Our powers and duties The amounts recognised in the Statement of Comprehensive Income are as follows: 5 Chairman’s message Service cost - - - 7 Chief Executive’s report Interest income/(cost) 513 (38) 475 11 Progress on delivering against our Defined benefit credit/(cost) recognised in comprehensive income 513 (38) 475 Annual Plan priorities 33 Principal risks and uncertainties Administration expenses (597) - (597) 35 Work in the nations and our Net income/(cost) recognised in comprehensive income (84) (38) (122) international engagement 39 Who we work with and how we work 45 Financial review 31 March 2017 Funded Unfunded Total 51 Corporate responsibility pension pension pensions 53 Sustainability report £’000 £’000 £’000

The amounts recognised as Other Comprehensive Income are as follows: Accountability Report Gains/(losses) on benefit obligations due to (38,088) (111) (38,199) 58 Directors’ report changes in financial assumptions 59 The Ofcom Board Gains/(losses) on benefit obligations due to (220) - (220) 61 Governance statement changes in demographic assumptions 74 Our employees Gains/(losses) on benefit obligations as a 1,812 - 1,812 79 Remuneration report result of member experience 86 Certificate and report of the Total gains/(losses) arising on benefit obligations (36,496) (111) (36,607) Comptroller and Auditor General to the Houses of Parliament Gains/(losses) on plan assets 37,222 - 37,222

Net gains/(losses) 726 (111) 615 Financial Statements

Performance Report

Overview ofcom.org.uk 115 Contents

The major categories of plan assets as a percentage of total plan assets are as follows:

31 March 2018 31 March 2017 Performance Report (%) (%) 2 Our powers and duties Total Total 5 Chairman’s message Global equities (not currency hedged) 4 4 7 Chief Executive’s report Global equities (currency hedged) 4 4 11 Progress on delivering against our Annual Plan priorities Corporate bonds 3 3 33 Principal risks and uncertainties Index-linked government bonds 4 4 35 Work in the nations and our Liability driven investment portfolio 6 6 international engagement 39 Who we work with and how we work Annuities 76 76 45 Financial review Cash and cash equivalents 3 3 51 Corporate responsibility Total 100 100 53 Sustainability report

Ofcom and the Plans’ Trustees have implemented a number of steps to reduce the level of investment risk. In particular, both main defined benefit plans hold annuity policies that largely eliminate risk in respect of most members and the Accountability Report Ofcom Defined Benefit Pension Plan has a strategy in place that will increase the allocation to lower risk assets that 58 Directors’ report better match liabilities, such as gilts and bonds, when it is affordable to do so. 59 The Ofcom Board 61 Governance statement Principal economic assumptions at the date of the Statement of Financial Position: 74 Our employees 79 Remuneration report 31 March 2018 31 March 2017 86 Certificate and report of the (%) (%) Comptroller and Auditor General to Total Total the Houses of Parliament Discount rate 2.55 2.50

Retail Price Inflation 3.10 3.20 Financial Statements 88 Statement of comprehensive income - Future pension increases (RPI) 3.10 3.20 89 Statement of financial position - Future pension increases (CPI max 3%) 1.90 1.95 90 Statement of changes in equity 91 Statement of cash flows

The Ofcom pension plan is composed of two separate plans and the Principal demographic assumptions at the date 92 Notes to the accounts of the Statement of Financial Position are as follows: Annex DB Plan DB Plan ITC Plan ITC Plan 120 Ofcom Boards, Panels and Committees Expected lifetime of a member aged 60 who is… Currently Currently Currently Currently 123 Regulatory statements aged 40 aged 60 aged 40 aged 60 128 Investigations programme - Male 29 28 31 29 129 Broadcasting complaints, cases and sanctions - Female 32 30 33 31 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 116 Contents

Sensitivity to changes in principal assumptions used:

Change in Impact on Performance Report assumption DB Plan ITC Plan 2 Our powers and duties 5 Chairman’s message Defined Assets Funded Defined Assets Funded benefit status benefit status 7 Chief Executive’s report obligations surplus obligations surplus 11 Progress on delivering against our £’000 £’000 £’000 £’000 £’000 £’000 Annual Plan priorities Principal risks and uncertainties Discount rate 33 35 Work in the nations and our Increases decrease by decrease by increase by decrease by decrease by increase by international engagement by 0.50% £6,854 £6,458 £396 £12,191 £12,185 £6 39 Who we work with and how we work Falls by 0.50% increase by increase by decrease by increase by increase by decrease by 45 Financial review £7,680 £7,210 £470 £13,052 £13,046 £6 51 Corporate responsibility Retail Price Inflation 53 Sustainability report Increases increase by increase by decrease by increase by increase by decrease by by 0.50% £7,442 £6,672 £770 £10,571 £10,566 £5 Accountability Report Falls by 0.50% decrease by decrease by increase by decrease by decrease by increase by 58 Directors’ report £6,725 £6,035 £690 £10,085 £10,080 £5 59 The Ofcom Board Expected lifetime of a member aged 60 61 Governance statement Increases increase by increase by decrease by increase by increase by decrease by 74 Our employees by 1 year £2,375 £503 £1,872 £6,863 £6,859 £4 79 Remuneration report Decreases decrease by decrease by increase by decrease by decrease by increase by 86 Certificate and report of the by 1 year £2,350 £708 £1,642 £6,795 £6,791 £4 Comptroller and Auditor General to the Houses of Parliament

Financial Statements

Liability profile of defined benefit plans 88 Statement of comprehensive income 89 Statement of financial position The charts below illustrates the expected benefits payable by the respective Plans at the most recent actuarial 90 Statement of changes in equity valuation (March 2015) over the next 80 years. 91 Statement of cash flows The expected future benefit payments are calculated based on a number of assumptions including future inflation, 92 Notes to the accounts retirement ages, benefit options chosen and life expectancy and are therefore inherently uncertain.

The actual benefit payments in a given year may be higher or lower, for example if members retire sooner or later than assumed, or take a greater or lesser cash lump sum at retirement. Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 117 Contents

Ofcom Defined Benefit Pension Plan Pensioner & dependants The duration (average term to payment) of the Plan’s liabilities is 21 years Deferred 3.5 Performance Report 2 Our powers and duties 3.0 5 Chairman’s message 7 Chief Executive’s report 2.5 11 Progress on delivering against our Annual Plan priorities 2.0 33 Principal risks and uncertainties 1.5 35 Work in the nations and our international engagement 1.0 39 Who we work with and how we work

Annual benefit payments (£m) Annual benefit payments 45 Financial review 0.5 51 Corporate responsibility 53 Sustainability report 0.0 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 91 101 Years Accountability Report 58 Directors’ report Ofcom (Former ITC) Pension Plan Pensioner & dependants 59 The Ofcom Board The duration (average term to payment) of the Plan’s liabilities is 13 years Deferred 61 Governance statement 12 74 Our employees 79 Remuneration report 10 86 Certificate and report of the 8 Comptroller and Auditor General to the Houses of Parliament

6 Financial Statements 4 88 Statement of comprehensive income Annual benefit payments (£m) Annual benefit payments 89 Statement of financial position 2 90 Statement of changes in equity 0 91 Statement of cash flows 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 91 101 92 Notes to the accounts Years

20 F inancial instruments not exposed to the degree of financial There is no material difference at Annex risk faced by business entities. the reporting date between the 120 Ofcom Boards, Panels and Committees Ofcom has no significant exposure fair value and the carrying value Moreover, financial instruments play to liquidity, interest rate or currency of financial assets and liabilities. 123 Regulatory statements a limited role in creating or changing risks. IAS 32, Financial Instruments: 128 Investigations programme Presentation requires disclosure of risk as compared to listed companies As permitted by IAS 32, receivables 129 Broadcasting complaints, the role which financial instruments to which IAS 32 mainly applies. Ofcom and payables which mature or cases and sanctions have had during the year in creating has very limited powers to borrow or become payable within 12 months of or changing the risks an entity faces invest surplus funds. Financial assets the reporting date have been omitted 133 Spectrum engineering and enforcement in undertaking its activities. Because and liabilities that are generated by from this assessment. 134 Spectrum licensing day-to-day operational activities do of the nature of its activities and the 139 Sustainability way in which Ofcom is financed, it is not change the risks facing Ofcom 700 MHz clearance in undertaking its activities. 143 145 Glossary

Financial Statements

Notes to the accounts Ofcom Annual Report & Accounts 2017/18 118 Contents

21 R elated parties No other related party transactions of September of 2015 which was were entered into during the quashed by the Court of Appeal in Ofcom does not consider that financial year. November 2017. This had the legal Performance Report its regulatory and licensing role effect that those 2015 regulations 2 Our powers and duties creates the relationship of a 22 C apital commitments were never in force, and the pre- related party between itself and existing licence fees as set out 5 Chairman’s message licence holders as defined by IAS At 31 March 2018, there were capital in regulations last made in 2011 7 Chief Executive’s report 24, Related Party Disclosures. commitments of £4,718k, mainly in continued to be in force throughout, 11 Progress on delivering against our relation to refurbishment work at Members of the Board have not and remain in force today. The mobile Annual Plan priorities Ofcom’s main office (2016/17: Nil). operators have issued proceedings declared any interests prejudicial 33 Principal risks and uncertainties to seek repayment of the difference to their functions as a Member of Of this commitment, £2,269k relates between the amounts paid under the 35 Work in the nations and our Ofcom. There were no transactions to the landlord’s funded capital 2015 regulations and the amounts international engagement between Ofcom and its Members commitment for the refurbishment that would have been payable under 39 Who we work with and how we work other than remuneration as disclosed work related to their owned property. separately in the remuneration report. the 2011 regulations, plus interest. 45 Financial review The legal proceedings will determine 23 Receipts transferred to/ 51 Corporate responsibility The Secretaries of State for the from the Consolidated Fund the basis on which any restitution Department for Business, Energy (repayment) should be calculated, 53 Sustainability report and Industrial Strategy (BEIS) and In accordance with Section 400 of the and depending on the outcome the Department for Digital, Culture, Communications Act 2003, Ofcom further analysis may be required Accountability Report Media and Sport (DCMS) are regarded remitted £57,032k (2016/17: £9,370k) to calculate the quantum, if any, of as the controlling related parties of of Broadcasting Act Additional such restitution. Until the courts 58 Directors’ report Ofcom under the terms of the Office Payments, Geographical Numbering have determined the outcome, and 59 The Ofcom Board of Communications Act 2002. and Fines to the Consolidated Fund. any further necessary analysis on 61 Governance statement quantum has been undertaken, it is Details of all grant-in-aid income from In accordance with Section 401 of 74 Our employees not possible to estimate the financial DCMS are provided in Notes 2, 3, 10 the Communications Act 2003, from 79 Remuneration report effect nor the likelihood of any and 13 of these financial statements. December 2017, Ofcom retained repayment, which would in any event 86 Certificate and report of the £19,081k (2016/17: Nil) of WTA receipts A defined contribution pension have to be funded by Government Comptroller and Auditor General to to fund its relevant expenditure which scheme and two defined benefit through grant-in aid that would pass the Houses of Parliament include Spectrum Management. pension schemes are operated. One through Ofcom. of the two defined benefit schemes The balance of £252,253k (2016/17: Financial Statements (both closed to future accruals) £367,329k) of WT Act licence fees was 25 E vents after the has a related party of S4C. Refer 88 Statement of comprehensive income remitted to DCMS for transfer to the reporting period to Note 19 for further disclosure. Consolidated Fund. 89 Statement of financial position There were no reportable events At 31 March 2018, the following 90 Statement of changes in equity between the reporting date and the payables were held in respect of 24 Contingent liabilities 91 Statement of cash flows date when the accounts were certified. grant-in-aid provided by DCMS: Ofcom may be subject to appeal The financial statements do not reflect 92 Notes to the accounts • Spectrum clearance and awards – of decisions made in carrying out events after this date. £3,302k (2016/17: £833k); its functions as regulator of the communications sector. Appeals against In accordance with the requirements Annex • Other sectors (including functions Ofcom’s decisions could give rise to of IAS 10 Events after the Reporting 120 Ofcom Boards, Panels and Committees which cannot be funded through liabilities for legal costs. Ofcom will make Period, post year end events are 123 Regulatory statements fees and charges set under the considered up to the date on which a provision in the financial statements 128 Investigations programme Communications Act 2003) – Nil for costs to the extent that they are the accounts are authorised for 129 Broadcasting complaints, (2016/17: £126k) probable and quantifiable. issue. This is interpreted as the date cases and sanctions At 31 March 2018, the following of the Certificate and Report of the However, there is a contingent receivable was held in respect of Comptroller and Auditor General. 133 Spectrum engineering and enforcement liability in relation to the claim by grant-in-aid due by DCMS: 134 Spectrum licensing the mobile operators for restitution Sustainability • Spectrum management – Nil of annual licence fees paid by them 139 (2016/17: £629k); on the basis of Ofcom’s decision 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 119 Contents

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing Annex 139 Sustainability 143 700 MHz clearance 145 Glossary

Annex

XXXXXXX Ofcom Annual Report & Accounts 2017/18 120 Contents Ofcom Boards, Performance Report Panels and Committees 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our The Content Board Community Radio Fund Panel Annual Plan priorities 33 Principal risks and uncertainties Further details regarding the Section 359 of the Communications Content Board are on page 65. Act makes it possible for a fund for 35 Work in the nations and our community radio operators to be international engagement Members set up, and for Ofcom to administer 39 Who we work with and how we work it and “make such grants as they 45 Financial review Nick Pollard (Chairman) consider appropriate” to community 51 Corporate responsibility radio licensees. Professor Philip Schlesinger 53 Sustainability report The Panel meets as required to Dr. Aled Eirug examine applications and make awards from the Fund. Accountability Report Tony Close1 58 Directors’ report It is independent of the Broadcast Zahera Harb Licensing Committee, which awards 59 The Ofcom Board community radio licences. 61 Governance statement Janey Walker 74 Our employees Members Robin Foster Election Committee 79 Remuneration report

Kevin Bakhurst1 Wendy Pilmer (Chairman) Section 333 of the Communications 86 Certificate and report of the Act requires Ofcom to ensure that Comptroller and Auditor General to Tim Suter2 Richard Hilton party political broadcasts (including the Houses of Parliament party election broadcasts) and 2 Fiona Lennox Jonathan Baker referendum campaign broadcasts are included in the UK regional Financial Statements Monisha Shah2 ITV, Channel 4, Five, Classic FM, 88 Statement of comprehensive income Dr David Levy3 talkSPORT and Virgin 1215 services. 89 Statement of financial position Unresolved disputes between any 90 Statement of changes in equity Andrew Chitty4 licensee and any political party, as to 91 Statement of cash flows 4 the length, frequency, allocation or Andrew Colman 92 Notes to the accounts scheduling of broadcasts, are brought Mary-Ann Sieghart4 to Ofcom for resolution. The Ofcom Board has delegated the adjudication Annex Dame Lynne Brindley DBE4 on such disputes to a committee 120 Ofcom Boards, Panels and Committees known as the Election Committee. 123 Regulatory statements The Committee meets as and when 1 Tony Close and Kevin Bakhurst are Executive 128 Investigations programme members to the Content Board required and consists of members 129 Broadcasting complaints, 2 drawn from the Ofcom Board, Tim Suter, Jonathan Baker and Monisha Shah were cases and sanctions appointed to the Content Board on 2 October 2017 Content Board and Ofcom Executive. 3 Dr David Levy retired from the Content Board on 133 Spectrum engineering and enforcement 30 April 2017 134 Spectrum licensing 4 Andrew Chitty, Andrew Colman, Mary-Ann Sieghart and Lynne Brindley retired from the 139 Sustainability Content Board on 31 August 2017 143 700 MHz clearance 145 Glossary

Annex

Ofcom Boards, Panels and Committees ofcom.org.uk 121 Contents

Nations Advisory Committee members

England Scotland Wales Northern Ireland Performance Report Chairman John Varney Laura Alexander2 Glyn Mathias Maureen Edmondson OBE 2 Our powers and duties 5 Chairman’s message 2 2 2 2 Members Barnie Choudhury Peter Peacock CBE Nerys Evans Fiona Boyle 7 Chief Executive’s report 11 Progress on delivering against our Graham Creelman OBE Liz Leonard Karen Lewis Fiona MacMillan Annual Plan priorities Andrew Chitty2 Ian McKay Huw Roberts2 Brendan Mulgrew 33 Principal risks and uncertainties 35 Work in the nations and our Becky Hogge2 John Trower Hywel Wiliam Sharon O’Connor2 international engagement 39 Who we work with and how we work Emma Davison Amanda Bryan2 Aled Eirug Paul Wilson 45 Financial review Caroline Roberts-Cherry Phillip Schlesinger Rhys Evans2 Andrew Colman2 51 Corporate responsibility 53 Sustainability report Chris Holland Amanda Britain1 Andrew Board1 Rick Hill

Alan Nunn1 Carmel Teusner1 Robert Andrews1 Alan Meban1 Accountability Report 58 Directors’ report Mark Smith1 David Connolly1 Ruth McElroy1 John Ellison1 59 The Ofcom Board

Monisha Shah1 Laura Anderson1 Kathy Graham1 61 Governance statement 74 Our employees 79 Remuneration report Nations Committee The Advisory Committees 86 Certificate and report of the for the Nations Comptroller and Auditor General to The Nations Committee is a direct 1 the Houses of Parliament Alan Nunn and Mark Smith were appointed Committee of the Ofcom Board. Section 20 of the Communications to the Advisory Committee for England on 1 February 2018 and Monisha Shah was appointed Its role includes: understanding Act requires Ofcom to establish as an observer to the Advisory Committee for the political dynamics in each Advisory Committees for each Financial Statements England on 14 February 2018. Amanda Britain was appointed to the Advisory Committee for nation of the UK and advising on of the UK nations. The function 88 Statement of comprehensive income Scotland on 1 August 2017, Carmel Teusner, David Ofcom’s engagement in each nation; of each Committee is to provide Connolly and Laura Anderson were appointed 89 Statement of financial position to the Advisory Committee for Scotland on 1 agreeing appropriate processes for advice to Ofcom about the February 2018. Andrew Board, Robert Andrews Ofcom’s engagement with each interests and opinions, in relation 90 Statement of changes in equity and Ruth McElroy were appointed to the Advisory National Advisory Committee; 91 Statement of cash flows Committee for Wales on 1 November 2017. Alan to communications and postal Meban, John Ellison and Kathy Graham were monitoring stakeholder events in matters, of people living in the part 92 Notes to the accounts appointed to the Advisory Committee for Northern each nation; and monitoring the of the UK for which the Committee Ireland on 1 September 2017. involvement and engagement of the has been established. 2 Barnie Choudhury and Andrew Chitty retired Ofcom Board and Content Board in Annex from the Advisory Committee for England on 31 In addition to the appointed August 2017 and Becky Hogge retired from the each nation. 120 Ofcom Boards, Panels and Committees Advisory Committee for England on 15 February members of the National Advisory 2018. Amanda Bryan retired as an observer to Its membership comprises two Non- Committees, the Content Board 123 Regulatory statements the Advisory Committee for Scotland on 30 June 2017, Peter Peacock CBE retired from the Advisory Executive Members of the Ofcom member and the Communications 128 Investigations programme Committee for Scotland on 31 October 2017 Board and the Chairmen of the Consumer Panel member for the and Laura Alexander retired from the Advisory 129 Broadcasting complaints, National Advisory Committees. The Committee for Scotland on 31 March 2018. Huw respective nations are invited to cases and sanctions Roberts and Nerys Evans retired from the Advisory Executive Directors of each nation, attend the Advisory Committee Committee for Wales on 31 October 2017 and 133 Spectrum engineering and enforcement Rhys Evans retired as an observer to the Advisory together with other senior Ofcom meetings as observers. Committee for Wales on 31 December 2017. executives, are invited to attend 134 Spectrum licensing Andrew Colman, Fiona Boyle and Sharon O’Connor Nations Committee meetings. retired from the Advisory Committee for Northern 139 Sustainability Ireland on 31 August 2017. 143 700 MHz clearance 145 Glossary

Annex

Ofcom Boards, Panels and Committees Ofcom Annual Report & Accounts 2017/18 122 Contents

The Communications The Advisory Committee on The Ofcom Spectrum Consumer Panel Older and Disabled People Advisory Board Performance Report Section 16 of the Communications Section 21(1) of the Communications The Ofcom Spectrum Advisory Act requires Ofcom to establish a Act 2003 requires Ofcom to establish Board (OSAB) was established in 2 Our powers and duties Consumer Panel. The Panel acts to a Committee to advise Ofcom on 2004 to provide independent advice 5 Chairman’s message provide advice that is robust and issues in the communications sector to Ofcom on strategic spectrum 7 Chief Executive’s report independent, but at the same time that particularly affect older and management issues. 11 Progress on delivering against our pragmatic and constructive. disabled people. Further information can be Annual Plan priorities Independent of Ofcom, the To take advantage of the synergy found on the OSAB website at 33 Principal risks and uncertainties Panel is made up of independent between the Communications www.osab.org.uk 35 Work in the nations and our experts, including representatives Consumer Panel and the Advisory international engagement from Scotland, Wales, Northern Committee on Older and Disabled Members Ireland and England, with People, and to avoid potential 39 Who we work with and how we work experience in many different duplication, cross-membership of David Meyer (Chairman) 45 Financial review fields. Further information on the two bodies was established 51 Corporate responsibility the Panel can be found at www. in 2012. The remits of the bodies Professor Linda Doyle 53 Sustainability report communicationsconsumerpanel.org.uk remain unchanged. Professor Mischa Dohler

John Fuller (DCMS) (ex officio) Accountability Report Members Members 58 Directors’ report Wassim Chourbaj 59 The Ofcom Board Jo Connell OBE, DL (Chair) Jo Connell OBE, DL (Chair) Mike Walker 61 Governance statement 1 Amanda Britain Jaya Chakrabarti MBE 74 Our employees Gavin Young Jaya Chakrabarti MBE Rhys Evans 79 Remuneration report David Harrison (ex officio) 86 Certificate and report of the 2 Rhys Evans Rick Hill MBE Comptroller and Auditor General to Niall Murphy the Houses of Parliament Rick Hill MBE Chris Holland Peter Pitsch Chris Holland Craig Tillotson Greg Bensberg Financial Statements Craig Tillotson Bob Twitchin MBE 88 Statement of comprehensive income 89 Statement of financial position Richard Williams 3 90 Statement of changes in equity 4 Bob Twitchin MBE 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 1 Amanda Britain was appointed to the Communications Consumer 128 Investigations programme Panel on 1 August 2017. 129 Broadcasting complaints, 2 Rhys Evans retired from the Panel cases and sanctions on 31 December 2017

3 Richard Williams was appointed 133 Spectrum engineering and enforcement to the Communications Consumer 134 Spectrum licensing Panel on 18 January 2018

4 Bob Twitchin retired from the 139 Sustainability Panel on 31 August 2017 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 123 Contents Regulatory statements Performance Report 2 Our powers and duties 5 Chairman’s message List of statements published in 2017/18, 7 Chief Executive’s report including regulatory impact on stakeholders. 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties

Promote competition and ensure that markets work effectively for consumers 35 Work in the nations and our international engagement Enabling competing operators to invest in super- and ultra-fast fixed-line networks 39 Who we work with and how we work Wholesale local access market review 45 Financial review 51 Corporate responsibility Monitoring the effectiveness of the regulatory framework for post 53 Sustainability report Consumer Protection Condition 2: Postal Common Operational Procedures

Further projects to promote choice and ensure that markets work effectively Accountability Report 58 Directors’ report Non-domestic rates and the price for regulated Dark Fibre 59 The Ofcom Board Promoting competition in fixed-line services by strengthening Openreach 61 Governance statement strategic and operational independence from BT 74 Our employees Delivering a more independent Openreach 79 Remuneration report 86 Certificate and report of the Further projects to promote competition and ensure markets work effectively Comptroller and Auditor General to Narrowband Market Review: draft statement the Houses of Parliament

Competition enforcement Financial Statements Holding the BBC to account for delivering for audiences 88 Statement of comprehensive income 89 Statement of financial position Protect consumers from harm 90 Statement of changes in equity Further projects to protect consumers from harm 91 Statement of cash flows

Statement: Review of the General Conditions of Entitlement 92 Notes to the accounts

On demand programme services Annex Regulatory fees for on-demand programme services 120 Ofcom Boards, Panels and Committees 123 Regulatory statements Accessibility of on demand programme services 128 Investigations programme Improving outcomes for landline only customers 129 Broadcasting complaints, cases and sanctions Review of the market for standalone landline telephone services 133 Spectrum engineering and enforcement Complaints handling 134 Spectrum licensing Review of alternative dispute resolution schemes 139 Sustainability 143 700 MHz clearance 145 Glossary

Annex

Regulatory statements Ofcom Annual Report & Accounts 2017/18 124 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties

Secure standards and improve quality 35 Work in the nations and our international engagement Ensuring that broadcasting represents and accurately portrays UK society 39 Who we work with and how we work Statement: Definition of New Music on Radio 1 and Radio 2 45 Financial review 51 Corporate responsibility Securing quality in public service broadcasting 53 Sustainability report The BBC’s trading activities: Statement on requirements and guidance

Statement on procedures for enforcement of BBC competition requirements Accountability Report 58 Directors’ report Further projects to secure standards and improve quality 59 The Ofcom Board Strategic Review of UHF Band 1 and Band 2 - 410 MHz to 470 MHz 61 Governance statement 74 Our employees Review of regulatory financial reporting for Royal Mail 79 Remuneration report Statement on the making of the regulations for the award of the 2.3 GHz and 3.4 GHz spectrum 86 Certificate and report of the Comptroller and Auditor General to Award of 2.3 and 3.4 GHz spectrum by auction the Houses of Parliament Statement: Review of mobile donor conveyance charges for the period 2018 to 2021

Mobile call termination market review 2018-21 Financial Statements 88 Statement of comprehensive income Statement and consultation on spectrum access in the 3.6 - 3.8 GHz band 89 Statement of financial position Improving consumer access to mobile services at 3.6 GHz to 3.8 GHz 90 Statement of changes in equity 91 Statement of cash flows Decision to make Wireless Telegraphy Exemption Regulations 2017 92 Notes to the accounts Improving quality of service in fixed and mobile telecommunications services for consumers and businesses

Automatic compensation Annex 120 Ofcom Boards, Panels and Committees Statement: Quality of service for WLR, MPF and GEA 123 Regulatory statements Electronic Communications Code 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing Increased/new regulation Streamlined/co-regulatory 139 Sustainability Mixed/no-change/ongoing Reduced regulation 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 125 Contents

Secure standards and improve quality

Network security and resilience Performance Report 2 Our powers and duties Review of Security Guidance 5 Chairman’s message Spectrum authorisation 7 Chief Executive’s report 11 Progress on delivering against our Improving access to 5.8 GHz spectrum for broadband fixed wireless access Annual Plan priorities Decision to make the Wireless Telegraphy (Mobile Communication Services on Aircraft) 33 Principal risks and uncertainties (Exemption) Regulations 2017: Implementing a European Commission Decision 35 Work in the nations and our Commercial multi-user gateway review international engagement 39 Who we work with and how we work Decision to make the Wireless Telegraphy (Mobile Communication Services on Ships) (Exemption) Regulations 2017 45 Financial review Implementing the Commission Decision on Short Range Devices and Ofcom's Decision on mobile phone repeaters 51 Corporate responsibility Sustainability report Radio and TV broadcast licenses 53

Community Radio: future licensing and technical policy Accountability Report Improving the coverage of fixed and mobile communications services to 58 Directors’ report meet the needs of consumers and business across the UK 59 The Ofcom Board Use of the 700 MHz guard band for PMSE 61 Governance statement Our employees Mobile phone repeaters 74 79 Remuneration report Other work across our goals 86 Certificate and report of the Comptroller and Auditor General to Statement: Annual Plan 2018-19 the Houses of Parliament Statement and further consultation: Recovering postal regulation and consumer advocacy costs

Statement: Ofcom Diversity and Inclusion Programme 2018-2022 Financial Statements 88 Statement of comprehensive income Ofcom's approach to enforcement: Revising the Enforcement Guidelines and related documents 89 Statement of financial position Enforcement guidelines for regulatory investigations: Guidelines 90 Statement of changes in equity 91 Statement of cash flows Enforcement guidelines for Competition Act investigations: Guidelines 92 Notes to the accounts Procedures for investigating breaches of competition-related conditions in Broadcasting Act licences: Guidelines

Advice for complainants: Guidance on submitting a complaint to Ofcom Annex 120 Ofcom Boards, Panels and Committees Authorisation of terrestrial mobile networks complementary to 2 GHz Mobile Satellite Service (MSS): Statement on 123 Regulatory statements the technical conditions and fees for 2 GHz MSS Complementary Ground Component (CGC) for aeronautical use 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing Increased/new regulation Streamlined/co-regulatory 139 Sustainability Mixed/no-change/ongoing Reduced regulation 143 700 MHz clearance 145 Glossary

Annex

Regulatory statements Ofcom Annual Report & Accounts 2017/18 126 Contents

Ofcom statements published in 2017/18 where the earlier consultation included an impact assessment Performance Report Authorisation of terrestrial mobile networks complementary to 2 GHz Mobile Satellite Service (MSS): Statement on 2 Our powers and duties the technical conditions and fees for 2 GHz MSS Complementary Ground Component (CGC) for aeronautical use 5 Chairman’s message

Regulatory fees for on-demand programme services 7 Chief Executive’s report 11 Progress on delivering against our Accessibility of on demand programme services Annual Plan priorities 33 Principal risks and uncertainties Community Radio: future licensing and technical policy 35 Work in the nations and our international engagement Award of 2.3 and 3.4 GHz spectrum by auction 39 Who we work with and how we work 45 Financial review Narrowband Market Review: draft statement 51 Corporate responsibility 53 Sustainability report Strategic Review of UHF Band 1 and Band 2 410 MHz to 470 MHz

Ofcom’s approach to enforcement: Revising the Enforcement Guidelines and related documents Accountability Report 58 Directors’ report Enforcement guidelines for regulatory investigations: Guidelines 59 The Ofcom Board 61 Governance statement Enforcement guidelines for Competition Act investigations: Guidelines 74 Our employees 79 Remuneration report Review of the market for standalone landline telephone services 86 Certificate and report of the Decision to make Wireless Telegraphy Exemption Regulations 2017 Comptroller and Auditor General to the Houses of Parliament

Automatic compensation Financial Statements Holding the BBC to account for delivering for audiences 88 Statement of comprehensive income 89 Statement of financial position Wholesale local access market review 90 Statement of changes in equity

Review of alternative dispute resolution schemes 91 Statement of cash flows 92 Notes to the accounts Statement: Quality of service for WLR, MPF and GEA Annex Review of regulatory financial reporting for Royal Mail 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 127 Contents

Ofcom consultations published in 2017/18 which included an impact assessment and where no final statement had been published by 31 March 2018 Performance Report PMSE clearing the 700 MHz band: Support for PMSE equipment owners 2 Our powers and duties 5 Chairman’s message Coexistence of new services in the 700 MHz band with digital terrestrial television 7 Chief Executive’s report 11 Progress on delivering against our Wholesale Broadband Access Market Review: Consultation on market Annual Plan priorities definition, market power determinations and remedies 33 Principal risks and uncertainties Wholesale Local Access and Wholesale Broadband Access Market Reviews: Review of competition in the Hull Area 35 Work in the nations and our international engagement Guidelines for Calling Line Identification Facilities 39 Who we work with and how we work 45 Financial review Clarifying how mobile numbers can be used by Communications Providers 51 Corporate responsibility

Ofcom review of proposed BBC Scotland television channel 53 Sustainability report

EPG Accessibility Accountability Report 58 Directors’ report Personal numbering - Review of the 070 number range 59 The Ofcom Board 61 Governance statement Fixed wireless spectrum strategy: Consultation on proposed next steps to enable future uses of fixed wireless links 74 Our employees Consultation: Improving mobile coverage - Proposals for coverage 79 Remuneration report obligations in the award of the 700 MHz spectrum band 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex

Regulatory statements Ofcom Annual Report & Accounts 2017/18 128 Contents Investigations programme Performance Report 2 Our powers and duties 5 Chairman’s message Ofcom’s investigations programme More details of individual cases The data in the table below covers deals with complaints about anti- being investigated under the both the Competition Group 7 Chief Executive’s report competitive behaviour, breaches of investigations programme are set Investigations Team and the 11 Progress on delivering against our certain regulatory rules and regulatory out in Ofcom’s Competition and Consumer Enforcement Team. Annual Plan priorities disputes. The following table shows Enforcement Bulletin available at: 33 Principal risks and uncertainties Ofcom’s activities in conducting initial https://www.ofcom.org.uk/ 35 Work in the nations and our assessments and investigations about-ofcom/latest/bulletins/ international engagement during 2017/18. This reflects the competition-bulletins picture as at 31 March 2018. 39 Who we work with and how we work 45 Financial review 51 Corporate responsibility

Activity Type Number Ongoing activity 53 Sustainability report (as at 31/3/2018)

Tool handled Total Total not Accountability Report accepted for accepted for 58 Directors’ report investigation investigation 59 The Ofcom Board Disputes 0 0 0 0 61 Governance statement

Competition law 0 0 0 0 74 Our employees 79 Remuneration report Complaints 2 2 0 0 86 Certificate and report of the

Initial AssesmentInitial Own-initiative 16 10 3 3 Comptroller and Auditor General to the Houses of Parliament Tool handled Total opened Total ongoing Total closed from previous reporting Financial Statements period 88 Statement of comprehensive income Disputes 0 0 0 0 0 89 Statement of financial position 90 Statement of changes in equity Competition Law 1 0 1 0 1 91 Statement of cash flows 92 Notes to the accounts Other investigations 22 14 0 15 7

Other enforcement 7 3 4 1 6 Annex programmes 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Annex

Investigations programme ofcom.org.uk 129 Contents Broadcasting complaints, Performance Report cases and sanctions 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Ofcom has a statutory duty under the Communications Annual Plan priorities Act 2003 to establish procedures for the handling and 33 Principal risks and uncertainties resolution of complaints from listeners and viewers about 35 Work in the nations and our international engagement radio and television programmes broadcast on services 39 Who we work with and how we work licensed by us, and also S4C 45 Financial review 51 Corporate responsibility Ofcom has a statutory duty As well as launching investigations Initial assessment 53 Sustainability report under the Communications Act following the assessment of of complaints 2003 to establish procedures complaints, we can also do so on our for the handling and resolution own initiative. We handle complaint- Based on an initial assessment of Accountability Report the complaint, and a consideration of complaints from listeners and led and self-initiated investigations 58 Directors’ report viewers about radio and television under the same procedures. of the related television or radio 59 The Ofcom Board programmes broadcast on services content, Ofcom will consider whether Individual complaints received licensed by us, and also S4C. We there may have been a breach of the 61 Governance statement by Ofcom are assigned to cases. also have a duty under the BBC Broadcasting Code (or other Ofcom 74 Our employees A case is opened when Ofcom is Charter and Agreement to set codes). If not, Ofcom will decide not assessing a specific programme 79 Remuneration report procedures to handle and resolve to investigate further and publishes or issue and may consist of one or 86 Certificate and report of the complaints referred to us about this decision in its Broadcast and On more complaints. A total of 5,965 3 Comptroller and Auditor General to the BBC’s television, radio and on- Demand Bulletin. cases (which comprised 15,484 the Houses of Parliament demand programmes (see page 132 complaints) were closed in the A total of 5,774 cases (15,293 for more information about Ofcom’s period under review. complaints) were assessed in this way handling of BBC complaints). during the reporting period. Ofcom Financial Statements found that: All complaints are important Content standards 88 Statement of comprehensive income to Ofcom, as they help us to • 169 cases (2,053 complaints) raised 89 Statement of financial position Complaints about content standards understand whether a broadcaster substantive issues that warranted are handled under Ofcom’s 90 Statement of changes in equity may be failing to comply with rules further investigation; and in the Broadcasting Code1 or other Procedures for investigating breaches 91 Statement of cash flows Ofcom codes. of content standards for television and • 5,605 cases (13,240 complaints) did 92 Notes to the accounts radio. Complaints about BBC content not require further investigation or standards are handled under fell outside Ofcom’s remit. Ofcom’s Procedures for investigating Annex Ofcom aims to make an initial breaches of content standards on BBC 120 Ofcom Boards, Panels and Committees assessment of all complaints within broadcasting services and BBC on- 15 working days. In the period 123 Regulatory statements demand programme services2 . between 1 April 2017 and 31 March 128 Investigations programme 2018, Ofcom assessed complaints on 129 Broadcasting complaints, average within 7.9 working days. cases and sanctions 133 Spectrum engineering and enforcement

2 All relevant procedural documents are 134 Spectrum licensing 1 Available at: https://www.ofcom. available at: https://www.ofcom.org.uk/ org.uk/tv-radio-and-on-demand/ tv-radio-and-on-demand/information- 3 Available at: https://www.ofcom.org.uk/about- 139 Sustainability broadcast-codes/broadcast-code for-industry/guidance/procedures ofcom/latest/bulletins/broadcast-bulletins 143 700 MHz clearance 145 Glossary

Annex

Broadcasting complaints, cases and sanctions Ofcom Annual Report & Accounts 2017/18 130 Contents

Assessment and Entertainment Performance Report Ofcom assesses every Fairness and Privacy complaint it receives 2 Our powers and duties to decide whether to entertain 5 Chairman’s message the complaint. This assessment is 7 Chief Executive’s report based on whether: the complainant 11 Progress on delivering against our is the “person affected” and able Annual Plan priorities to make the complaint; the matter complained of is the subject of 33 Principal risks and uncertainties proceedings in a court of law in the 35 Work in the nations and our UK; or the complaint is frivolous. international engagement

Investigations Fairness and Privacy A total of 191 Fairness and Privacy 39 Who we work with and how we work If a case raises potentially Fairness and Privacy complaints complaints were assessed in the 45 Financial review substantive issues, we will are complaints about unjust or period between 1 April 2017 and 31 51 Corporate responsibility March 2018. Of these: investigate the matter further unfair treatment in programmes, or 53 Sustainability report to decide whether a breach of about unwarranted infringements • 38 complaints were the Broadcasting Code (or other of privacy in programmes (or in entertained; and Ofcom codes) has occurred. An connection with the obtaining of Accountability Report investigation may consist of one or material included in them). These • 153 complaints were not 58 Directors’ report more related cases involving the complaints are made by individuals entertained or discontinued 59 The Ofcom Board same broadcaster. or organisations participating in before entertainment. Governance statement or otherwise directly affected by 61 A total of 179 investigation cases Ofcom aims to assess and decide programmes as broadcast, or in the 74 Our employees were completed in the period whether to entertain Fairness making of programmes. 79 Remuneration report between 1 April 2017 and 31 March and Privacy complaints within 2018. Ofcom found that: Complaints about fairness and 25 working days of receipt of 86 Certificate and report of the privacy are handled under Ofcom’s the complaint and any further Comptroller and Auditor General to • 110 investigated cases Procedures for the consideration and information requested from the the Houses of Parliament resulted in breaches of the adjudication of Fairness & Privacy complainant. In the period between Broadcasting Code (or other complaints.1 Fairness and privacy 1 April 2017 and 31 March 2018, Ofcom codes) being recorded; complaints about BBC television, Ofcom assessed and decided Financial Statements • 11 investigated cases radio and on demand programmes whether to entertain Fairness and 88 Statement of comprehensive income were resolved; and are handled under Ofcom’s Privacy complaints on average 89 Statement of financial position within 19.9 working days. Procedures for the consideration and 90 Statement of changes in equity • 58 investigated cases were adjudication of Fairness and Privacy 91 Statement of cash flows not in breach of the codes complaints on BBC broadcasting or were discontinued. services and BBC on demand 92 Notes to the accounts We aim to complete those cases programme services.2 we take forward for investigation A total of 191 complaints relating to Annex within 50 working days. In the Fairness and Privacy were closed. 120 Ofcom Boards, Panels and Committees period between 1 April 2017 and 31 March 2018, Ofcom completed 123 Regulatory statements investigations on average within 128 Investigations programme 48.8 working days. 129 Broadcasting complaints,

1 Available at: https://www.ofcom.org.uk/ cases and sanctions tv-radio-and-on-demand/information- for-industry/guidance/procedures 133 Spectrum engineering and enforcement

2 Available at: https://www.ofcom.org.uk/__data/ 134 Spectrum licensing assets/pdf_file/0003/100101/Procedures- for-the-consideration-and-adjudication- 139 Sustainability of-Fairness-and-Privacy-complaints.pdf 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 131 Contents

Performance Report 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our international engagement 39 Who we work with and how we work 45 Financial review Adjudications A significant number of these During the period between 1 April have involved some very complex 2017 and 31 March 2018, we imposed 51 Corporate responsibility If a Fairness and Privacy complaint legal and procedural issues. the following statutory sanctions: 53 Sustainability report is entertained by Ofcom, then we Unfortunately, this has resulted • Iman Media UK Limited in will investigate the matter further in us taking longer than usual to respect of its service Iman to decide whether a breach of the complete our adjudications. Accountability Report Broadcasting Code has occurred. We FM – licence revoked; 58 Directors’ report will then make our final adjudication. • Ariana Television and Radio Sanctions 59 The Ofcom Board A total of 38 complaints were Network in respect of its Where Ofcom decides that a 61 Governance statement adjudicated upon in the period under service Ariana International – broadcaster has breached the 74 Our employees review. Of these: financial penalty of £200,000 Broadcasting Code or other Ofcom and a direction to broadcast a 79 Remuneration report • nine complaints were upheld; code, and it considers the breach statement of Ofcom’s findings; 86 Certificate and report of the to be serious, deliberate, repeated • 26 complaints were not upheld; • Kanshi Radio Limited in respect Comptroller and Auditor General to and/or reckless, we may consider of its service Kanshi radio - the Houses of Parliament • one complaint was resolved whether to impose a statutory financial penalty of £17,500 (following appropriate action sanction on the broadcaster. and a direction to broadcast a taken by the broadcaster); and Ofcom has a range of sanctions statement of Ofcom’s findings; Financial Statements • two complaints were discontinued available, including to: issue a 88 Statement of comprehensive income • Al Arabiya News Channel FZ- after entertainment. direction not to repeat a programme LLC in respect of its service Al 89 Statement of financial position or advertisement; issue a direction Arabiya News - financial penalty 90 Statement of changes in equity Ofcom aims to complete the to broadcast a correction or a of £120,000 and a direction consideration and adjudication of statement of Ofcom’s findings; 91 Statement of cash flows to broadcast a statement of Fairness and Privacy complaints impose a financial penalty1; shorten 92 Notes to the accounts Ofcom’s findings and a direction within 90 working days of the or suspend a licence; and revoke a not to repeat the material complaint being entertained. In the licence (not applicable to the BBC, found in breach again; period between 1 April 2017 and S4C or Channel 4). Annex 31 March 2018, we completed the • Karimia Limited in respect of its 120 Ofcom Boards, Panels and Committees consideration and adjudication of service Radio Dawn - financial 123 Regulatory statements Fairness and Privacy complaints on penalty of £2,000 and a direction 128 Investigations programme average within 98.4 working days. to broadcast a statement of Ofcom’s findings; and 129 Broadcasting complaints, The past year has seen a high 1 All financial penalties imposed by Ofcom are held cases and sanctions volume of Fairness and Privacy in an account with Government Banking Services • Channel Four Television Corporation cases being assessed and (GBS) for the benefit of the Exchequer. Funds 133 Spectrum engineering and enforcement are transferred to the HM Treasury GBS account in respect of its service Channel investigated by our team. for direct use by the Exchequer, or distributed 4 News – direction to broadcast 134 Spectrum licensing to relevant Consolidated Funds. Ofcom neither receives financial benefits from nor makes use of a statement of Ofcom’s finding. 139 Sustainability any financial penalties received. 143 700 MHz clearance 145 Glossary

Annex

Broadcasting complaints, cases and sanctions Ofcom Annual Report & Accounts 2017/18 132 Contents

BBC content standards In these instances we redirected BBC online material complaints and investigations the complainant to the BBC. These Last year, Ofcom took on a new complaints are published separately Performance Report Complaints about BBC programmes under ‘BBC First’ in our Broadcast role relating to complaints about 2 Our powers and duties are considered under a ‘BBC and On Demand Bulletin. the BBC’s online material. Under First’ complaints framework. This the BBC’s Charter and Agreement, 5 Chairman’s message This year, Ofcom carried out means that if a viewer or listener set by Government and Parliament, 7 Chief Executive’s report has a complaint about something its first investigation of a BBC the BBC is responsible for the 11 Progress on delivering against our they have seen or heard in a BBC programme under the new Charter editorial standards of its online Annual Plan priorities television, radio or on-demamd and Agreement. In August 2017, material. Ofcom has a responsibility programme, they must normally an edition of Today on BBC Radio to consider and give an opinion on 33 Principal risks and uncertainties complain to the BBC in the first 4 featured an interview with Lord whether the BBC has observed 35 Work in the nations and our instance. The complainant can refer Lawson, former Chancellor of relevant editorial guidelines in its international engagement the Exchequer and head of the their complaint to Ofcom if they are online material. Online material 39 Who we work with and how we work dissatisfied with the BBC’s response Global Warming Policy Foundation. means content on the BBC’s 45 Financial review or if the BBC fails to respond in a The BBC Executive Complaints website and apps, such as articles, timely manner. A complaint can Unit partially upheld complaints images and videos. It does not 51 Corporate responsibility also be referred if the complainant about this interview and two include programmes on the BBC 53 Sustainability report considers that the imposition by complainants subsequently referred iPlayer which must comply with Ofcom of a sanction against the BBC their complaints to Ofcom. Ofcom Ofcom’s Broadcasting Code rules. may be appropriate. concluded that two statements Accountability Report We handle complaints about the made in the programme by 58 Directors’ report Of the total 15,291 standards BBC’s online material under Ofcom’s Lord Lawson on the science of 59 The Ofcom Board complaints received in the period the subject of climate change procedures for handling complaints 61 Governance statement between 1 April 2017, and 31 March were not correct and were not relating to BBC online material. 2018, 139 complaints were about 74 Our employees sufficiently challenged during the Ofcom began considering BBC programmes. interview or subsequently during complaints about the BBC’s online 79 Remuneration report We also received an additional 1,490 the programme. As a result, we material when the Digital Economy 86 Certificate and report of the complaints about BBC programmes found the programme was not duly Act came into effect on 27 April Comptroller and Auditor General to where, on initial assessment, we accurate, in breach of Rule 5.1 of the 2017. Between this date and 31 the Houses of Parliament found the complainant had not Broadcasting Code. March 2018 we closed a total of 195 completed the BBC’s complaints complaints about the BBC’s online system before submitting material. We did not need to issue Financial Statements their complaint to Ofcom. an opinion in relation to any of the 88 Statement of comprehensive income complaints closed in this reporting 89 Statement of financial position period. A further 89 complaints 90 Statement of changes in equity were redirected to the BBC under the ‘BBC First’ approach. 91 Statement of cash flows 92 Notes to the accounts Ofcom aims to make an initial assessment of these complaints within 15 working days. In the period Annex between 27 April 2017 and 31 March 120 Ofcom Boards, Panels and Committees 2018, Ofcom assessed complaints on average within 20.1 working days. 123 Regulatory statements We took longer to assess these 128 Investigations programme complaints than we aim to, given 129 Broadcasting complaints, that this was the first year of our cases and sanctions new duty in this area. 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 133 Contents Spectrum engineering Performance Report and enforcement 2 Our powers and duties 5 Chairman’s message 7 Chief Executive’s report 11 Progress on delivering against our Key performance indicators Annual Plan priorities 33 Principal risks and uncertainties 35 Work in the nations and our Main activities international engagement

Work programme activity / incident April 17 - March 18 April 16 - March 17 39 Who we work with and how we work 45 Financial review Complaints of interference received1 1,983 1,637 51 Corporate responsibility Checking radio system licence compliance2 2,273 3,663 53 Sustainability report

Fixed penalty notices Issued3 22 29 Accountability Report Prosecutions for criminal spectrum activity4 10 7 58 Directors’ report 59 The Ofcom Board Quality of service targets for complaints of interference received 61 Governance statement Key performance indicator Case Target Target achieved 74 Our employees priority April 17 - March 18 April 16 - March 17 79 Remuneration report Time to first visit: 1 8 hours - 100% 86 Certificate and report of the Comptroller and Auditor General to The time take from reporting a complaint of 2 18 hours 100% 100% the Houses of Parliament interference to the time our engineer arrives on site to diagnose the problem (for those 3 2 working days 100% 96% cases where a field visit is required). 4 5 working days 96% 94% Financial Statements 88 Statement of comprehensive income 5 15 working days 100% 100% 89 Statement of financial position 6 No target - - 90 Statement of changes in equity Resolution: 1 2 calendar days - 100% 91 Statement of cash flows The time taken from reporting a complaint 2 3 calendar days 100% 100% 92 Notes to the accounts of interference to the time the customer is advised that the case is resolved. 3 6 working days 98% 97% Annex 4 20 working days 96% 92% 120 Ofcom Boards, Panels and Committees 5 40 working days 97% 97% 123 Regulatory statements 6 60 working days 97% 99% 128 Investigations programme 129 Broadcasting complaints, cases and sanctions 1 Cases of interference reported by the public and businesses 133 Spectrum engineering and enforcement 2 Work carried out by Ofcom to ensure licence conditions are adhered to or unlicensed use is not taking place 134 Spectrum licensing 3 Fixed Penalty Notices (FPN) are usually issued if an initial warning by Ofcom is subsequently ignored. Failure to pay a FPN can lead to legal action 139 Sustainability 4 Prosecutions in relation to “Pirate Radio” or failure to pay FPNs 143 700 MHz clearance 145 Glossary

Annex

Spectrum engineering and enforcement Ofcom Annual Report & Accounts 2017/18 134 Contents Spectrum licensing Performance Report 2 Our powers and duties 5 Chairman’s message Category A 7 Chief Executive’s report 11 Progress on delivering against our Licences that involve no frequency Licences issued Licences issued Total on issue as at Total on issue as at Annual Plan priorities assignment, site clearance or April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 33 Principal risks and uncertainties international co-ordination 35 Work in the nations and our Business Radio Light – international engagement 1,931 2,165 13,799 12,281 Simple UK (no base station) 39 Who we work with and how we work 45 Financial review Business Radio Simple Site 1,235 1,100 9,087 8,110 51 Corporate responsibility Business Radio Suppliers Light 337 121 1,162 875 53 Sustainability report

Fixed Wireless Access (5.8 GHz) 65 55 414 427 Accountability Report GNSS Repeater 21 33 260 239 58 Directors’ report Police and Fire 58 4 124 124 59 The Ofcom Board

Subtotal for Business Radio products 3,647 3,478 24,846 22,056 61 Governance statement 74 Our employees Radar Level Gauge 0 0 124 124 79 Remuneration report Amateur & Maritime 26,515 25,096 249,723 240,538 86 Certificate and report of the Comptroller and Auditor General to Total for Category A 30,162 28,574 274,693 262,718 the Houses of Parliament

KPI for Category A (100% in 7 days) 100% 100% - -

KPI for Category A (Amateur & Financial Statements 100% 100% - - Maritime) (100% in 10 days 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex

Spectrum licensing ofcom.org.uk 135 Contents

Category B

Licences that involve frequency Licences issued Licences issued Total on issue as at Total on issue as at Performance Report assignment, but no site clearance April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 2 Our powers and duties or international co-ordination 5 Chairman’s message Automatic Identification System 20 27 291 276 7 Chief Executive’s report 11 Progress on delivering against our Coastal Station Radio (International) 17 21 407 412 Annual Plan priorities 33 Principal risks and uncertainties Coastal Station Radio (UK) 17 15 358 368 35 Work in the nations and our Coastal Station Radio (Marina) 23 13 409 412 international engagement 39 Who we work with and how we work Coastal Station Radio 59 15 414 361 45 Financial review (Training School) 51 Corporate responsibility Maritime Radio (Suppliers 21 1 84 80 53 Sustainability report & Demonstration)

Maritime Navaids and Radar 4 7 122 138 Accountability Report Differential Global 58 Directors’ report 0 0 5 5 Positioning System 59 The Ofcom Board

Subtotal for Deregulation & 61 Governance statement 161 99 2,090 2,052 Contracting-Out products 74 Our employees 79 Remuneration report Business Radio 2,656 2,611 25,905 26,966 Technically Assigned 86 Certificate and report of the Comptroller and Auditor General to Business Radio Area Assigned 34 42 293 286 the Houses of Parliament

Coastal Station radio 4 1 8 3 (UK) Area Defined Financial Statements Coastal Station radio 88 Statement of comprehensive income 2 0 7 8 (International) Area Defined 89 Statement of financial position 90 Statement of changes in equity Ground Probing Radar 24 40 224 215 91 Statement of cash flows Scanning Telemetry 0 4 33 34 92 Notes to the accounts

Self co-ordinated links 33 30 143 128 Annex Subtotal for Business 2,753 2,728 26,613 27,640 120 Ofcom Boards, Panels and Committees Radio products 123 Regulatory statements Total for Category B 2,914 2,827 28,703 29,692 128 Investigations programme 129 Broadcasting complaints, 90% in 21 days 79% 98% - cases and sanctions KPI for Category B 133 Spectrum engineering and enforcement 100% in 42 days 99% 99% - 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Annex

Spectrum licensing Ofcom Annual Report & Accounts 2017/18 136 Contents

Category C

Licences that require frequency Licences issued Licences issued Total on issue as at Total on issue as at Performance Report assignment, and site clearance April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 2 Our powers and duties and/or international co-ordination 5 Chairman’s message Fixed Links 2,428 2,734 26,902 29,848 7 Chief Executive’s report 11 Progress on delivering against our Satellite (Permanent 38 23 155 152 Annual Plan priorities Earth Station) 33 Principal risks and uncertainties Satellite (Transportable 103 102 109 110 35 Work in the nations and our Earth Station) international engagement

Satellite (Earth Station Network) 9 5 59 62 39 Who we work with and how we work 45 Financial review Satellite (Non-Fixed Earth Station) 7 1 4 51 Corporate responsibility 53 Sustainability report Total for Category C 2,585 2,865 27,225 30,176

90% in 42 days 100% 99% Accountability Report KPI for Category C 58 Directors’ report 100% in 60 days 100% 100% 59 The Ofcom Board 61 Governance statement Programme Making and Special Events (PMSE) 74 Our employees 79 Remuneration report Licences and authorisations Licences issued Licences issued Total on issue as at Total on issue as at 86 Certificate and report of the for outside broadcasts April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 Comptroller and Auditor General to and programme-making the Houses of Parliament and special events

PMSE Licences 58,009 35,236 7,679 3,305 Financial Statements 88 Statement of comprehensive income Total for PMSE 58,009 35,236 7,679 3,305 89 Statement of financial position KPI for PMSE (100% in 7 days) 100% 100% - - 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Performance Report

Overview ofcom.org.uk 137 Contents

Mobile and wireless broadband licences1

Licences issued through spectrum Licences issued Licences issued Total on issue as at Total on issue as at Performance Report auction or award processes April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 2 Our powers and duties 5 Chairman’s message Public Wireless Networks: 4 4 900, 1800 MHz 7 Chief Executive’s report 11 Progress on delivering against our Spectrum Access: 2100 MHz 4 4 Annual Plan priorities 33 Principal risks and uncertainties Spectrum Access: Channel Tunnel2 2 2 35 Work in the nations and our Spectrum Access: 800 international engagement 5 5 MHz, 2.6 GHz 39 Who we work with and how we work Spectrum Access: 412 – 414 MHz 1 1 45 Financial review 51 Corporate responsibility Spectrum Access: 2 2 53 Sustainability report 1452 – 1492 MHz

Concurrent Spectrum 12 12 Access: 1781-1785 MHz Accountability Report 58 Directors’ report Spectrum Access: 1785 1 1 59 The Ofcom Board MHz, Northern Ireland 61 Governance statement Spectrum Access: 3.5, 3.6, 13 20 20 74 Our employees 10, 28, 32, 40 GHz 79 Remuneration report Spectrum Access Offshore 6 7 6 86 Certificate and report of the Comptroller and Auditor General to Total for Mobile and the Houses of Parliament 0 7 58 57 Wireless Broadband Financial Statements 88 Statement of comprehensive income 89 Statement of financial position 90 Statement of changes in equity 91 Statement of cash flows 92 Notes to the accounts

Annex 120 Ofcom Boards, Panels and Committees 123 Regulatory statements 128 Investigations programme

1 Licences varied and/or re-issued, or fully 129 Broadcasting complaints, traded from one company to another, cases and sanctions are not included in these figures

2 Separate licence for the out bound 133 Spectrum engineering and enforcement (UK-France direction) tunnel 134 Spectrum licensing 3 Partial spectrum trades of 28 GHz spectrum resulting in a new licence 139 Sustainability covering 6 geographic locations 143 700 MHz clearance 145 Glossary

Annex

Spectrum licensing Ofcom Annual Report & Accounts 2017/18 138 Contents

Channel Islands and Isle of Man licences

Licence applications made via Licences issued Licences issued Total on issue as at Total on issue as at Performance Report local Regulators April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 2 Our powers and duties 5 Chairman’s message 3G Cellular Telephones, 1 1 Channel Islands 7 Chief Executive’s report 11 Progress on delivering against our Public Wireless Network: 800, Annual Plan priorities 900, 1800, 2100, 2600 MHz, 32 32 Channel Islands and Isle of Man 33 Principal risks and uncertainties 35 Work in the nations and our Spectrum / Wireless Access: international engagement 3.4, 3.6, 10, 28 GHz, Channel 9 9 Islands and Isle of Man 39 Who we work with and how we work 45 Financial review Total for Channel Islands 0 0 42 42 51 Corporate responsibility and Isle of Man 53 Sustainability report

Digital dividend spectrum licences Accountability Report Spectrum freed up for new uses as a result of digital switchover 58 Directors’ report 59 The Ofcom Board DDR GI Licences issued through Licences issued Licences issued Total on issue as at Total on issue as at Governance statement spectrum award processes April 17 - March 18 April 16 - March 17 31 March 18 31 March 17 61 74 Our employees Spectrum Access 541 – 1 1 79 Remuneration report 550 MHz (Cardiff) 86 Certificate and report of the Spectrum Access 758 – Comptroller and Auditor General to 1 1 766 MHz (Manchester) the Houses of Parliament

Total for Digital Dividend licences 0 0 2 2 Financial Statements 88 Statement of comprehensive income Statement of financial position Non-discretionary spectrum licences 89 90 Statement of changes in equity The Civil Aviation Authority (CAA) issues aircraft licences 91 Statement of cash flows DDR GI Licences issued through Licences issued Licences issued Total on issue as at Total on issue as at 92 Notes to the accounts spectrum award processes April 17 - March 18 April 16 - March 17 31 March 18 31 March 17

CAA issues Licences 13,555 6,035 16,290 13,427 Annex for Aeronautical 120 Ofcom Boards, Panels and Committees Total for Partner’s Activity 13,555 6,035 16,290 13,427 123 Regulatory statements 128 Investigations programme KPI for CAA (100% in 7 days) 83% 86% 129 Broadcasting complaints, cases and sanctions Total 13,555 6,035 16,290 13,427 133 Spectrum engineering and enforcement 134 Spectrum licensing Total number of Licences – 107,927 76,240 355,145 339,891 All categories 139 Sustainability 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 139 Contents Sustainability Performance Report 2 Our powers and duties 5 Chairman’s message This section presents sustainability data and financial costs in more detail. 7 Chief Executive’s report Greenhouse gas emissions 11 Progress on delivering against our Annual Plan priorities 2013/14 2014/15 2015/16 2016/17 2017/18 33 Principal risks and uncertainties Non-Financial Scope 1 Gas 142 135 158 161 187 35 Work in the nations and our Indicators Oil 18 14 18 19 22 international engagement (tonnes CO2e) Fleet Fuel 210 200 180 185 192 39 Who we work with and how we work Scope 2 Electricity 1,129 1,299 1,214 1,090 809 45 Financial review Scope 3 Business Travel 346 290 250 312 519 51 Corporate responsibility Air 241 182 144 188 410 53 Sustainability report Domestic 100 63 47 76 156 Short haul 83 71 30 79 164 Accountability Report Long haul 57 48 67 34 91 58 Directors’ report Rail/bus/tube 61 59 59 78 66 59 The Ofcom Board Car/Motorbike/Cycle 41 46 44 43 41 61 Governance statement Taxis 2 3 3 3 2 74 Our employees Related Scope 1 Gas (kWh) 772,668 730,047 855,056 874,478 1,014,202 79 Remuneration report consumption Gas per FTE (kWh) 975 932 1,070 1,012 1,136 data 86 Certificate and report of the Oil (litres) 7,000 5,697 7,001 7,500 8,500 Comptroller and Auditor General to the Houses of Parliament Fleet Fuel (litres) 80,558 76,898 69,596 71,024 73,659 Scope 2 Electricity (kWh) 2,334,436 2,416,678 2,425,743 2,426,666 2,103,652 Electricity per FTE (kWh) 2,945 3,086 3,036 2,808 2,356 Financial Statements 88 Statement of comprehensive income Financial Scope 1 Gas (kWh) £33,060 £34,677 £27,786 £22,293 £19,465 Indicators Oil £5,317 £3,500 £3,504 £2,128 £5,530 89 Statement of financial position Statement of changes in equity Fleet Fuel £113,397 £102,026 £78,996 £87,398 £93,911 90 91 Statement of cash flows Scope 2 Electricity £290,452 £334,932 £334,677 £293,991 £340,333 92 Notes to the accounts Scope 3 Business Travel £628,340 £596,116 £569,099 £663,705 £705,602 Air £301,014 £257,364 £197,408 £253,733 £333,723 Rail/bus/tube £226,171 £227,260 £264,211 £299,929 £266,725 Annex Car/Motorbike/Cycle £58,458 £66,876 £67,721 £65,077 £64,329 120 Ofcom Boards, Panels and Committees Regulatory statements Taxis £42,696 £44,615 £39,759 £44,966 £40,826 123 128 Investigations programme We released two floors in our London offices from the end of June 2017. Our two new offices in Edinburgh and 129 Broadcasting complaints, Warrington have been included during 2016/17. Cost and consumption data for Glasgow has been included. This office cases and sanctions was sub-let in June 2016. Cost and consumption data for Project Park have been included. This office was closed in 133 Spectrum engineering and enforcement March 2015. 134 Spectrum licensing We have re-stated our gas and electricity consumption data for 2012/13, and our electricity consumption for 2015/16 139 Sustainability following clarification of the allocation of consumption across our estate. 143 700 MHz clearance 145 Glossary

Annex

Sustainability Ofcom Annual Report & Accounts 2017/18 140 Contents

Accountability Report 58 Directors’ report 59 The Ofcom Board 61 Governance statement 74 Our employees 79 Remuneration report 86 Certificate and report of the Scope 1 Scope 2 Scope 3 Comptroller and Auditor General to This covers direct consumption of This covers electricity supplies to Business travel financial data the Houses of Parliament gas and oil, and fuel consumption Ofcom’s offices. Electricity data have been obtained from our SAP from Ofcom’s fleet cars. across all years cover Ofcom’s main reporting system and include office in London, Baldock, Belfast, travel by all colleagues regardless Gas consumption data across all Financial Statements Birmingham, Cardiff, Edinburgh, of where they are located. We years cover Ofcom’s main office 88 Statement of comprehensive income Glasgow, Haydock, Warrington and have converted taxi and rail travel in London, Belfast, Birmingham, 89 Statement of financial position some remote monitoring direction- financial data into distances using Haydock and Livingston. Gas finding sites around the UK. guidance from the Carbon Trust 90 Statement of changes in equity charges for Edinburgh and Standard, and car travel financial 91 Statement of cash flows Warrington offices are included For 2012/13 it also includes cost data into distances using data from in the service charge and data from an office in Bristol. For 92 Notes to the accounts expense claims for mileage. therefore cannot be analysed. the period 2012/13 to 2014/15 Gas consumption is dependent on it also includes consumption Air travel data have been obtained Annex weather conditions. from our Project Park office in directly from our business travel London. Electricity consumption is provider, and categorised into 120 Ofcom Boards, Panels and Committees Oil consumption data relate only to dependent on weather conditions. domestic, short-haul and-long 123 Regulatory statements Ofcom’s office in Baldock. haul flights as per Defra flight 128 Investigations programme distance guidance. Ofcom pays for diesel fuel for its 129 Broadcasting complaints, fleet cars using fuel cards, and cases and sanctions consumption is recorded and 133 Spectrum engineering and enforcement monitored on a monthly basis. Fuel consumption from our fleet cars is 134 Spectrum licensing largely dependent on demand for 139 Sustainability our enforcement services. 143 700 MHz clearance 145 Glossary

ofcom.org.uk 141 Contents

Waste minimisation Accurate waste consumption data Ofcom operates on a ‘zero waste to Accountability Report and management is not available for other Ofcom landfill’ basis, and all waste is recycled offices, but the associated waste or incinerated with energy recovery. 58 Directors’ report Waste consumption data for all disposal costs have been included. 59 The Ofcom Board years relate to Ofcom’s main office in London, and for the period 2012/13 Ofcom pays an overall waste 61 Governance statement to 2014/15 also includes data from management fee which cannot 74 Our employees our Project Park office in London. be attributed to individual 79 Remuneration report waste categories. 86 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament 2013/14 2014/15 2015/16 2016/17 2017/18

Non-Financial Total waste 173 166 173 172 76 Financial Statements Indicators (tonnes) 88 Statement of comprehensive income Waste sent to landfill 0 0 0 0 0 89 Statement of financial position ICT waste recycled/re-used 9 4 7 4 0 90 Statement of changes in equity 91 Statement of cash flows Waste recycled/re-used 98 94 111 91 52 92 Notes to the accounts Waste composted 14 14 13 14 4

Waste incinerated with Annex 51 53 41 63 20 energy recovery 120 Ofcom Boards, Panels and Committees Waste incinerated without 123 Regulatory statements 0 0 0 0 0 energy recovery 128 Investigations programme 129 Broadcasting complaints, Total waste per FTE 0.218 0.212 0.216 0.199 0.086 cases and sanctions Financial Indicators Total waste £60,796 £45,500 £32,023 £37,984 £7,004 133 Spectrum engineering and enforcement 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Annex

Sustainability Ofcom Annual Report & Accounts 2017/18 142 Contents

Finite resource consumption For the period 2012/13 to 2014/15 it Costs In 2017/18 include credit notes also includes consumption from our from suppliers due to overcharged Accountability Report Water data across all years cover Project Park office in London. Water bills in previous years. Water 58 Directors’ report Ofcom’s main office in London, charges for other offices are included consumption is limited to operational 59 The Ofcom Board Baldock, Birmingham, Glasgow in the service charge and therefore use, including a catering facility in and Haydock. 61 Governance statement cannot be analysed. Ofcom’s main office in London. 74 Our employees 79 Remuneration report 2013/14 2014/15 2015/16 2016/17 2017/18 86 Certificate and report of the Comptroller and Auditor General to Non-Financial Water consumption (m3) 13,694 14,213 10,767 11,282 9,379 the Houses of Parliament Indicators (tonnes) Water consumption per FTE 17.27 18.15 13.48 13.06 10.50 Financial Statements Paper reams 7,721 5,993 7,545 6,317 3,915 88 Statement of comprehensive income 89 Statement of financial position A3 reams 156 103 80 92 50 90 Statement of changes in equity A4 reams 7,565 5,890 7,465 6,225 3,865 91 Statement of cash flows 92 Notes to the accounts A5 reams 0 0 0 0 0

Financial Indicators Water £20,107 £24,931 £16,784 £22,248 £6,929 Annex 120 Ofcom Boards, Panels and Committees

1. The above tables have been prepared in 5. We report energy and water consumption only 9. Scope 2 electricity emissions have been 123 Regulatory statements accordance with guidelines laid down by the in buildings where we are directly billed and restated for all years to account for material 128 Investigations programme Treasury: https://www.gov.uk/government/ responsible for the payment. changes to the conversion factors provided publications/public-sector-annual-reports- by Defra. This conforms to the 2013/14 6. We report our waste consumption only in 129 Broadcasting complaints, sustainability-reporting-guidance-2017- sustainability reporting guidance. buildings where we receive data from a waste to-2018 cases and sanctions management company. 10. Quantity of paper purchased is a new reporting 2. All information conforms to the normal public requirement introduced in the 2013/14 Spectrum engineering and enforcement 7. Where utility bills had not yet been received, 133 sector financial year of 1 April to 31 March. sustainability reporting guidance. We have only cost and consumption data were estimated reported on paper purchased directly through 134 Spectrum licensing 3. Defra conversion factors have been used to based on previous years’ data. our stationery suppliers; this information is calculate carbon emissions figures. 8. Certain prior-year figures have been restated in available only for selected offices. 139 Sustainability 4. Emissions are not weather-corrected. 2013/14 due to revised guidance from HMT. 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 143 Contents 700 MHz clearance Performance Report 2 Our powers and duties 5 Chairman’s message Programme objectives Most DTT viewers are familiar with 7 Chief Executive’s report retuning and do so from time- 11 Progress on delivering against our • to clear and release the to-time to update their channel Annual Plan priorities 700 MHz band as soon as line-up, where TV equipment does practicably possible; 33 Principal risks and uncertainties not do this automatically. In some 35 Work in the nations and our • to deliver value for money in cases, more than one retune may be international engagement the use of public funds; required where clearance takes place in multiple stages. 39 Who we work with and how we work • to avoid undue disruption 45 Financial review to viewers; and When is clearance happening? 51 Corporate responsibility • to safeguard the ongoing 53 Sustainability report delivery of the benefits DTT Clearance of the 700 MHz band and PMSE provides. commenced in phased geographical releases in 2017 and will continue Accountability Report through to April 2020. There has What is 700 MHz clearance? How will clearance affect viewers 58 Directors’ report and channel providers? been a significant upscaling of 59 The Ofcom Board In November 2014 Ofcom clearance events between January Initial forecast estimations announced the decision to reallocate 2018 and March 2018. This rate will 61 Governance statement suggest that: frequencies between 694 MHz continue throughout the remainder 74 Our employees of the year and into 2019 with and 790 MHz (the ‘700 MHz band’) • 14-20 million homes will 79 Remuneration report the programme on track for 2020 used by Digital Terrestrial Television need to retune their TV clearance completion. 86 Certificate and report of the (DTT), audio Programme Making equipment when this change Comptroller and Auditor General to and Special Events (PMSE) services takes place in their area; the Houses of Parliament and White Space Devices (WSDs) for Ofcom Grant Scheme mobile data under a Government- • 100,000 -160,000 homes may need to replace their aerial; funded programme. A similar To make the clearance of the 700 Financial Statements MHz band possible, Ofcom is process is being carried out across • 40,000 - 110,000 may need to making grants available for DTT 88 Statement of comprehensive income Europe, as spectrum is reassigned have their aerial realigned; and to meet a predicted increase in infrastructure replacement under a 89 Statement of financial position demand for mobile data. • A small number of households standing consent framework agreed 90 Statement of changes in equity may need to change TV platform. by HM Treasury. Statement of cash flows The decision will result in significant 91 changes to the DTT network as In the preceding weeks prior to There is a defined grant application 92 Notes to the accounts some DTT channels will need to each clearance event there is an process which is agreed and move to new frequencies. It will also extensive communication plan of adhered to by all parties. During require that PMSE users replace press adverts and on TV screen financial year 2017/18 61 grants Annex some equipment. This programme is captions that appear notifying were received, 56 grants awarded, 120 Ofcom Boards, Panels and Committees known as 700 MHz clearance. viewers of the need to re-tune their and total grants awarded amounted 123 Regulatory statements TVs on a specific date. to £63.7m. Total value of grants 128 Investigations programme awarded to date on the programme: Additionally, comprehensive support £195.5m. Total amount paid in 129 Broadcasting complaints, for viewers and advice on retuning financial year 2017/18: £81.1m. cases and sanctions will be available during clearance 133 Spectrum engineering and enforcement events from the Freeview Advice Line and the Freeview website. 134 Spectrum licensing 139 Sustainability 143 700 MHz clearance 145 Glossary

Annex

700 MHz Clearance Ofcom Annual Report & Accounts 2017/18 144

8 Contents

Key: Clearance Rollout Plan 1 Angus - Q4 2018 Simplified Overview 2 Beacon Hill - Q1 2019 Performance Report 3 Belmont - Q4 2019 27 September 2017 2 Our powers and duties 4 Bilsdale - Q4 2019 5 Black Hill - Q3 2018 This map shows the start date 5 Chairman’s message for 700 MHz clearance events at 6 Blaenplwyf - Q4 2018 7 Chief Executive’s report 7 Bluebell Hill - Q3 2018 affected transmitter groups across 20 41 11 Progress on delivering against our 8 Bressay - Q3 2017 the UK. Further events may take Annual Plan priorities 9 Brougher Mountain - Q3 2019 place at each group until Q2 2020. 33 Principal risks and uncertainties 10 Caldbeck - Q3 2019 All dates are subject to change. 11 Caradon Hill - Q2 2019 35 Work in the nations and our 28 12 Carmel - Q3 2019 international engagement 39 13 Chatton - Q4 2019 19 39 Who we work with and how we work 14 Craigkelly - Q4 2018 45 Financial review 15 Crystal Palace - Q1 2018 51 Corporate responsibility 16 Darvel - Q3 2018 1 17 Divis - Q3 2019 53 Sustainability report 18 Dover - Q1 2018 49 19 Durris - Q3 2018 5 20 Eitshal - Q3 2017 14 Accountability Report 21 Emley Moor - Q4 2019 43 13 58 Directors’ report 22 22 Fremont Point - Q1 2019 16 59 The Ofcom Board 23 Hannington - Q2 2018 35 61 Governance statement 24 Heathfield - Q3 2018 25 Huntshaw Cross - Q2 2019 10 74 Our employees 29 Isle of Man - Q2 2020 26 4 79 Remuneration report 17 27 Keelylang Hill - Q3 2017 86 Certificate and report of the 9 28 Knockmore - Q3 2017 26 Comptroller and Auditor General to 29 Limavady - Q3 2019 21 the Houses of Parliament 30 Llanddona - Q4 2018 52 31 Mendip - Q1 2018 3 32 Midhurst Q1 2018 Financial Statements 33 Moel Y Parc - Q1 2019 30 33 50 88 Statement of comprehensive income 34 Oxford - Q1 2018 47 89 Statement of financial position 35 Pontop Pike - Q4 2019 48 36 Preseli - Q4 2017 6 90 Statement of changes in equity 46 42 37 Redruth - Q2 2019 45 91 Statement of cash flows 38 38 Ridge Hill - Q1 2018 92 Notes to the accounts 39 Rosemarkie - Q3 2017 34 36 12 40 Rowridge - Q1 2018 51 15 7 18 41 Rumster Forest - Q3 2017 31 23 Annex 42 Sandy Heath - Q2 2018 32 24 120 Ofcom Boards, Panels and Committees 43 Selkirk - Q1 2017 40 25 123 Regulatory statements 44 Stockland Hill - Q1 2018 44 45 Sudbury - Q1 2018 128 Investigations programme 11 46 Sutton Coldfield - Q1 2018 2 129 Broadcasting complaints, 47 Tacolneston Q1 2018 cases and sanctions 48 The Wrekin - Q12018 37 Q1/Q2 2017 Q1/Q2 2019 133 Spectrum engineering and enforcement 49 Torosay - Q4 2017 Q3/Q4 2017 Q3/Q4 2019 50 Waltham - Q1 2018 134 Spectrum licensing 51 Wenove - Q2 2019 Q1/Q2 2018 Q1/Q2 2020 139 Sustainability 52 Winter Hill - Q1 2018 Q3/Q4 2018 143 700 MHz clearance 145 Glossary

Performance Report

Overview ofcom.org.uk 145 Contents Glossary Performance Report 2 Our powers and duties 5 Chairman’s message 3G: Third generation of mobile End-to-end competition: Where Multiplex: Digital terrestrial 7 Chief Executive’s report systems. Provides high-speed commercial postal operators collect, television services are transmitted 11 Progress on delivering against our data transmission and supports process and deliver mail directly to using a ‘multiplex’ structure, Annual Plan priorities multimedia applications such as full- the recipient without using Royal with each multiplex containing a 33 Principal risks and uncertainties motion video, video-conferencing Mail’s network. number of concurrent TV services, and internet access, alongside as well as radio stations and text 35 Work in the nations and our Gaining provider led (GPL): conventional voice services. services. These services are digitally international engagement A process in which the customer’s combined into a single signal to form 39 Who we work with and how we work 4G: Fourth generation of mobile new service provider (the gaining the transmitted multiplex. phone technology, which follows provider) takes the lead on switching 45 Financial review on from 2G and 3G. It allows faster the service. Next generation core networks 51 Corporate responsibility data transmission and download (NGN): Internet protocol-based core IPTV (internet protocol television: 53 Sustainability report speeds than 3G networks. networks that support a variety of Television services delivered through existing and new services, typically 5G: Fifth generation the internet rather than traditional replacing multiple, single-service means such as terrestrial, satellite Accountability Report BDUK: Broadband Delivery UK, legacy networks. or cable. 58 Directors’ report responsible for delivering the Rural Next generation access networks Broadband Programme. ISP: Internet service provider. 59 The Ofcom Board (NGA): New or upgraded access A company that provides access to 61 Governance statement BEIS: Department for Business, networks that allow substantial the internet. Energy & Industrial Strategy. improvements in broadband speeds 74 Our employees Leased line: A transmission and quality of service. They can be 79 Remuneration report Bit-rates: The rate at which digital facility leased by an end user based on a number of technologies information is carried within a 86 Certificate and report of the from a public carrier and including cable, fixed wireless and specified communication channel. Comptroller and Auditor General to dedicated to that user’s traffic. mobile. Most often used to refer to Broadband speeds are commonly the Houses of Parliament networks using fibre optic technology. measured in Mbit/s. Linear broadcasting: Traditional scheduled TV broadcasting Service provider: A provider of Bill shock: A negative reaction that transmitted to a TV set. electronic communications services Financial Statements a person can have if their bill is to third parties, whether over its 88 Statement of comprehensive income unexpectedly high LLU (local loop unbundling): own network or otherwise. The process whereby the incumbent 89 Statement of financial position Community radio: Radio stations operators (BT and Kingston Silent call: An incoming telephone that typically cover a small 90 Statement of changes in equity Communications) make their call where there is no-one on the geographical area with a coverage 91 Statement of cash flows local network (the lines that run other end of the line. radius of up to 5km and are run on a from customers’ premises to the 92 Notes to the accounts not-for-profit basis. Superfast broadband: Broadband telephone exchange) available to services allowing speeds of DCMS: Department for Digital, other communications providers. 30Mbit/s and above. Culture, Media & Sport. Annex Mobile broadband: Various types Text relay: A service that allows 120 Ofcom Boards, Panels and Committees DTT: Digital terrestrial television. of wireless high-speed internet people with hearing and speech 123 Regulatory statements The television technology that access through a portable modem, impairments to communicate carries the Freeview service. telephone or other device. 128 Investigations programme with others through telephone or EU5: France, Germany, Italy, textphone equipment. 129 Broadcasting complaints, Spain, the UK cases and sanctions VoD (video on demand): A service 133 Spectrum engineering and enforcement or technology that enables TV viewers to watch programmes or 134 Spectrum licensing films whenever they choose to, 139 Sustainability unrestricted by a linear schedule. 143 700 MHz clearance 145 Glossary

Annex Annex

Glossary XXXXXXX Ofcom Annual Report & Accountsofcom.org.uk 2017/18 Ofcom Scotland: Office of Communications 125 Princes Street Riverside House Edinburgh EH2 4AD 2a Southwark Bridge Road Tel: 0131 220 7300 London SE1 9HA Switchboard: Wales: +44 (0)300 123 3000 or 2 Caspian Point +44 (0)20 7981 3000 Caspian Way Cardiff CF10 4DQ Facsimile: +44 (0)20 7981 3333 Tel: 029 2046 7200 Textphone: Fax: 029 2046 7233 +44 (0)20 7981 3043 Northern Ireland: Ofcom Customer Contact Team: Landmark House +44 (0)300 123 3333 or The Gasworks +44 (0)20 7981 3040 Ormeau Road,

Belfast BT7 2JD

Tel: 028 9041 7500 ofcom.org.uk Fax: 028 9041 7533

CCS0318319686 978-1-5286-0283-9 Of 583 (July 2018)