THE OFFICE of COMMUNICATIONS Annual Report and Accounts for the Period 1 April 2015 to 31 March 2016

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THE OFFICE OF Annual Report and Accounts COMMUNICATIONS For the period 1 April 2015 to 31 March 2016 THE OFFICE OF COMMUNICATIONS Annual Report and Accounts For the period 1 April 2015 to 31 March 2016

Presented to Parliament pursuant to Paragraphs 11 and 12 of Schedule 1 of the Office of Communications Act 2002. HC 220 Ordered by the House of Commons to be printed 6 July 2016. © Ofcom copyright 2016 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 https://www.gov.uk/government/publications Print ISBN 9781474131971 Web ISBN 9781474131988 ID P002807378 06/16 Printed on paper containing 75% recycled fibre content minimum. Printed in the UK on behalf of the Controller of Her Majesty’s Stationery Office. CONTENTS A C OVERVIEW ACCOUNTABILITY

4 Who we are REPORT

6 Chairman’s message 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and B Auditor General to the E Houses of Parliament PERFORMANCE ANNEX

REPORT 102 Ofcom Boards and Committees 8 Chief Executive’s report 105 Regulatory statements 12 Overview of the D communications sector 110 Investigations programme 14 Progress on delivering FINANCIAL 111 Broadcasting standards against our annual STATEMENTS 112 Spectrum engineering plan priorities and enforcement 30 Work in the nations and our 70 Statement of income 114 Spectrum licensing international engagement and expenditure 118 Sustainability 32 Other work to support 71 Statement of financial our goals position 120 Glossary 37 How we work and who we 72 Statement of changes work with in equity 42 Financial review 73 Statement of cash flows 47 Our employees 74 Notes to the accounts 48 Corporate responsibility 50 Sustainability report A OVERVIEW 4 Who we are 6 Chairman’s message

B PERFORMANCE REPORT 8 Chief Executive’s report 12 Overview of the communications sector 14 Progress on delivering against our annual plan priorities 30 Work in the nations and our international engagement 32 Other work to supportour goals 37 How we work and who we work with 42 Financial review WHO WE ARE 47 Our employees 48 Corporate responsibility Ofcom regulates fixed-line and mobile telecoms, 50 Sustainability report A TV, radio, video-on-demand services, post, and C ACCOUNTABILITY REPORT the airwaves used by wireless devices. 52 Directors’ report 55 Governance statement OVERVIEW We help UK businesses in some cases we act as a formal 64 Remuneration report representative of government (for and individuals get the 68 Certificate and report of the example, in international negotiations Comptroller and Auditor General best from communications on spectrum). to the Houses of Parliament services, and protect them from sharp practices. Our principal duty is to further citizen and consumer interests D FINANCIAL STATEMENTS Where appropriate, we Ofcom was established under support competition as the 70 Statement of income the Office of Communications and expenditure basis for delivering good Act 2002, and operates under a 71 Statement of financial position consumer outcomes. number of Acts of Parliament1. The Communications Act 2003 states 72 Statement of changes in equity We act independently from that our principal duty is to further 73 Statement of cash flows governments and commercial interests the interests of citizens in relation 74 Notes to the accounts to deliver our duties. However, we to communications matters and to are accountable to Parliament, and to further the interests of consumers in perform our role effectively we need relevant markets, where appropriate E ANNEX to engage openly and constructively by promoting competition. In 102 Ofcom Boards and Committees with governments. We provide postal services, our duty is to carry 105 Regulatory statements technical advice to governments out our functions in a way that we (for example, our regular reviews consider will secure provision of a 110 Investigations programme of public service broadcasting) and universal postal service in the UK. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

4 A Ofcom Annual Report & Accounts 2015/16 OVERVIEW

A OVERVIEW 4 Who we are 6 Chairman’s message

C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement

We implement and enforce • people are protected from harmful 1 These include the Communications Act 2003, the Wireless 64 Remuneration report communications, competition and or offensive material, unfair Telegraphy Act 2006, the Broadcasting Acts 1990 and 1996, the Digital Economy Act 2010 and the Postal 68 Certificate and report of the consumer protection laws. treatment and invasion of privacy Services Act 2011. Comptroller and Auditor General on the television and radio; and to the Houses of Parliament Our main legal duties guide the • the universal service obligation on direction of our work postal services is secured in the UK. Our main legal duties are to D FINANCIAL STATEMENTS Ofcom can enforce consumer law on ensure that: 70 Statement of income behalf of consumers. For telecoms and expenditure • the UK has a wide range of and postal services, unlike in TV electronic communications services; and radio, we do not have power 71 Statement of financial position • radio spectrum is used in the most to resolve individual consumer 72 Statement of changes in equity effective way; complaints. Instead, we provide 73 Statement of cash flows advice to telecoms and postal 74 Notes to the accounts • high-quality television and radio complainants, and refer them to the programmes are provided by a alternative dispute resolution (ADR) range of different organisations, schemes that we have approved. E ANNEX appealing to a range of tastes and interests; 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

5 CHAIRMAN’S MESSAGE

CHAIRMAN’S MESSAGE A OVERVIEW 4 Who we are Patricia Hodgson, Chairman 6 Chairman’s message

The sector is changing at an Ofcom’s Strategic Review B PERFORMANCE REPORT of Digital Communications, extraordinary pace, but our central duty remains the same: to 8 Chief Executive’s report published in February, sets serve citizens and consumers. 12 Overview of the the framework for digital Our main tool to achieve this communications sector services and broadband endures: promoting competition. A 14 Progress on delivering against in the UK for the next dynamic, competitive market, rather our annual plan priorities decade and beyond. than one relying on regulation, 30 Work in the nations and our brings most benefits for consumers international engagement At its heart is the quality of service and businesses. But if the market 32 Other work to supportour goals consumers may expect. It seeks fails in some way, Ofcom must be to rebalance competition and ready to step in with actions rooted 37 How we work and who we work with investment incentives in telecoms in independent and evidence-based to help deliver fibre to the home, decision making. These ingredients 42 Financial review ensuring the UK can meet the are vital both for companies to 47 Our employees growing demands people and invest, innovate and compete, and 48 Corporate responsibility businesses rightly place on their for consumers to be protected. 50 Sustainability report communications services. And it sets Progress in our sectors has been new standards for customer service. good to date, with availability and C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

6 A Ofcom Annual Report & Accounts 2015/16 OVERVIEW

low prices setting standards when Meanwhile, we took the regulation compared to similar countries in of video-on-demand programmes in- A OVERVIEW Europe. But there are significant house during the year. This yielded 4 Who we are challenges ahead if everyone operational efficiencies and allows across the UK, including in our video-on-demand content to sit 6 Chairman’s message rural communities, is to enjoy the alongside our existing regulation of benefits of digital communications. broadcasting. I’d like to thank our co- B PERFORMANCE REPORT regulator, the Authority for Television A new framework for the BBC on Demand, for its support over the 8 Chief Executive’s report has also been a focus of debate years and during the transition. 12 Overview of the throughout the year. In May 2016, communications sector the Government published a White Ofcom is a national organisation, Paper proposing a strong integrated operating within a European 14 Progress on delivering against our annual plan priorities board for the BBC with all regulation competition framework, and our passing to Ofcom. This echoed Sir main base is in London. But we 30 Work in the nations and our David Clementi’s review, published in need to understand and serve international engagement March, which recommended a clear very different parts of the United 32 Other work to supportour goals division between governance and Kingdom. We have offices in 37 How we work and who regulation in the future management each of the nations and we are we work with of the BBC, with regulation clearly opening a new base in Edinburgh 42 Financial review outside the BBC and independent in the coming months. We will also MAKING from it. open the doors to a new office in COMMUNICATIONS 47 Our employees the north west of England. Our WORK FOR EVERYONE 48 Corporate responsibility We are aware that these new duties consumer-facing contact centre and present a substantial undertaking. 50 Sustainability report spectrum licensing teams are moving In that context, Ofcom’s 12-year • Promoting choice to Warrington. This underlines record of setting and regulating our commitment to reflect the full C ACCOUNTABILITY REPORT standards across UK broadcasting, • Securing standards breadth of the nations we serve, without fear or favour, and ensuring 52 Directors’ report while also improving our efficiency. • Preventing harm fair competition at the heart of 55 Governance statement the converging communications We welcomed two high-calibre 64 Remuneration report market, is important. Under the new appointments to the Board in arrangements, Ofcom will seek to Ben Verwaayen and Bill Emmott 68 Certificate and report of the Comptroller and Auditor General draw on that experience to ensure during the year. They are already to the Houses of Parliament service providers and audiences can bringing their broad experience and trust in our independence. judgement to the Board, which is greatly benefiting Ofcom and helping FINANCIAL STATEMENTS This year we carried out our periodic D to build on our strong reputation. health check on public service 70 Statement of income broadcasting, finding the sector in Ben and Bill replaced two of our and expenditure good shape with growing revenues, longstanding Board members – Mike 71 Statement of financial position but we raised concerns about a McTighe and Tim Gardam – who 72 Statement of changes in equity downward trend over a number of stepped down having each served years in investment in original UK two terms. Meanwhile, Stephen Hill 73 Statement of cash flows production, notably drama, comedy, resigned from the Board to pursue 74 Notes to the accounts the arts and children’s television. other opportunities. Tim, Mike and Stephen have made significant ANNEX contributions to Ofcom’s work over E the years; I am extremely grateful for 102 Ofcom Boards and Committees their support and wish them well for 105 Regulatory statements the future. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

7 A OVERVIEW 4 Who we are 6 Chairman’s message

B PERFORMANCE REPORT 8 Chief Executive’s report 12 Overview of the communications sector 14 Progress on delivering against our annual plan priorities 30 Work in the nations and our international engagement 32 Other work to supportour goals 37 How we work and who we work with 42 Financial review CHIEF EXECUTIVE’S 47 Our employees 48 Corporate responsibility B REPORT 50 Sustainability report Sharon White, Chief Executive C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement PERFORMANCE Rural Lancashire might not 64 Remuneration report REPORT be the first place you would 68 Certificate and report of the expect to find one of the Comptroller and Auditor General to the Houses of Parliament UK’s pioneers in ultrafast broadband. But local D FINANCIAL STATEMENTS residents in the Lune valley benefit from broadband 70 Statement of income and expenditure speeds of 1 Gbit/s – that’s 71 Statement of financial position 35 times faster than the 72 Statement of changes in equity current national average. 73 Statement of cash flows What’s more impressive than the This was a fundamental part of 74 Notes to the accounts speed is the determination of the our Strategic Review of Digital residents, many of whom do not Communications, a wide-ranging even have mains water or gas. They review to ensure that people get the E ANNEX have worked together tirelessly to dig communications services they need 102 Ofcom Boards and Committees the trenches and lay the fibre-optic to live and work in the 21st century. 105 Regulatory statements cables needed for this state-of-the-art This will be achieved through more broadband network. competition among fibre networks and 110 Investigations programme reform of Openreach, the division of BT I visited this project, Broadband 111 Broadcasting standards that maintains the UK’s largest phone for the Rural North (B4RN), earlier 112 Spectrum engineering and broadband network on behalf of this year. It reinforced my view that and enforcement providers. We are now working hard to supporting the roll-out of fibre 114 Spectrum licensing implement plans, which I believe will broadband directly to homes and make a real difference for phone and 118 Sustainability offices is vital if the UK is to remain broadband users. 120 Glossary a world-leading digital economy.

8 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

A OVERVIEW 4 Who we are 6 Chairman’s message

C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement We announced our review against The coming year will involve Promote competition 64 Remuneration report the backdrop of consolidation and significant planning to be ready 68 Certificate and report of the convergence in the market, and rising for what represents the most and ensure markets work effectively for Comptroller and Auditor General consumer expectations about their substantial extension to Ofcom’s to the Houses of Parliament phones, TV and internet services. responsibilities since it was created. consumers With the right resources in place, we The convergence we have talked are confident we can regulate the FINANCIAL STATEMENTS about for many years is now a Making it easier for people to D BBC professionally and effectively. reality. This is why I understand change provider 70 Statement of income Ofcom always puts consumers the logic of having a common We are making it easier for people and expenditure and citizens first in the sectors we regulator of broadcasting standards, to change provider. Simple, swift regulate. Similarly, our regulation 71 Statement of financial position which was proposed in the May switching is vital if consumers are of the BBC would promote the 72 Statement of changes in equity 2016 Government White Paper on to take advantage of competition needs of audiences, drawing the future of the BBC. This means in the market. 73 Statement of cash flows on our significant experience of that regulation of the BBC will 74 Notes to the accounts broadcasting and media at Executive So in June 2015, we introduced a ‘one pass wholly to us, building on our and Board levels. touch’ process for people changing existing oversight of commercial broadband or landline provider on E ANNEX broadcasters and some areas of We have an extensive programme the Openreach telecoms network – BBC programmes. While we will of work and made significant strides including customers of BT, EE, Sky, 102 Ofcom Boards and Committees have a bigger role in regulating the against the priorities we set for TalkTalk and Vodafone. This has 105 Regulatory statements BBC, a new BBC Unitary Board will 2015/16. Here’s what we have done. greatly reduced the hassle of changing 110 Investigations programme be responsible for governance. provider for millions of people. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

9 CHIEF EXECUTIVE’S REPORT

Better information to navigate Working with other regulators We laid the groundwork to release OVERVIEW the market During the year, we provided expert more airwaves for mobile providers, A and make the 700MHz spectrum Alongside simpler switching, people advice to the relevant competition 4 Who we are band available for use across the UK and businesses also need clear authorities on the mergers in our 6 Chairman’s message information to help them navigate sector. The takeover of EE by BT was by 2022 at the latest – and earlier the market. We made progress this approved in January. We advised the if we can. This was made possible year and launched advanced mobile Competition and Markets Authority by a detailed programme to start B PERFORMANCE REPORT on the deal, outlining some concerns clearing spectrum to meet people’s and broadband coverage maps. 8 Chief Executive’s report These allow people to check what but explaining that measures from growing demand for data on the services are available in their area, our Business Connectivity Market move. Meanwhile, the auction of 12 Overview of the communications sector and whether they are receiving the Review can address competition spectrum at 2.3 and 3.4GHz bands service they should be. People have concerns that might arise. was paused until the outcome of the 14 Progress on delivering against visited these online maps more than proposed Three/O2 merger, which our annual plan priorities We also provided evidence to the three quarters of a million times in was prohibited by the European 30 Work in the nations and our European Commission towards the last year. Commission in May 2016. international engagement its assessment of the proposed In December, we produced our first takeover of O2 by mobile operator Supporting businesses 32 Other work to supportour goals Three. Here, we outlined significant 37 How we work and who ‘app’ for smartphone and tablet Our Connected Nations report concerns about how the proposed we work with computers, which allows people to revealed the challenges we face in deal would harm competition and check whether their Wi-Fi internet ensuring that small businesses, the 42 Financial review is working as it should. So far, over potentially lead to higher prices. growth engine of our economy, 47 Our employees In May 2016, the Commission 800,000 people have downloaded the receive the communications services prohibited the merger. 48 Corporate responsibility app, which provides helpful advice on they need. By June last year, 68% of 50 Sustainability report how to get the best out of wireless small and medium size enterprises internet. We don’t just use apps and Secure standards and (SMEs) had access to superfast the internet to help people. Ofcom’s improve quality broadband in the UK, compared with C ACCOUNTABILITY REPORT contact centre provided support and 85% of all premises. advice to almost 100,000 people and Looking after audiences 52 Directors’ report businesses who called and wrote to Supporting businesses remains a big It has been an important year in 55 Governance statement us during the year. focus for Ofcom. We announced a our work to protect audiences. We broadband speeds Code of Practice 64 Remuneration report One of my big concerns is the brought in-house the regulation of to protect businesses, with BT, 68 Certificate and report of the broadband ‘speeds gap’ – the video-on-demand services. We also TalkTalk and Virgin Media among Comptroller and Auditor General difference between the speeds produced our periodic review of those signing up. The Code comes to the Houses of Parliament people expect to receive and what public service broadcasting, which into force in September, after which they actually get. In 2015, we found the sector in good health, but businesses can leave a contract if D FINANCIAL STATEMENTS strengthened our Code of Practice we warned that minority groups felt speeds fall below what’s promised. on broadband speeds, which means under-represented. We also reported 70 Statement of income that residential customers can now emerging concerns about older This is supported by our improved, and expenditure walk away from their broadband tailored advice for businesses on people’s satisfaction with the sector. 71 Statement of financial position contract if speeds fall below the switching to a new provider, as levels promised by their provider. Improving availability well as information on negotiating 72 Statement of changes in equity contracts and resolving complaints. 73 Statement of cash flows We also worked with one co- This year we outlined plans to help the regulator, the Advertising Standards government implement its proposed We introduced tough new rules 74 Notes to the accounts Authority, to bring about changes new universal service obligation. This to ensure that Openreach installs will give every home and business a and repairs more quickly the to the way broadband and landline E ANNEX prices are advertised, so that legal right to a broadband connection high-capacity ‘leased lines’ used consumers are not misled about the of at least 10Mbit/s by the end of the by businesses. We also ruled that 102 Ofcom Boards and Committees true cost of deals. current Parliament. That’s enough to companies providing these leased 105 Regulatory statements stream TV, make video calls or work lines should be granted access to 110 Investigations programme from home. BT’s networks, through a process known as ‘dark fibre’. This involves 111 Broadcasting standards BT giving competitors physical access 112 Spectrum engineering to its fibre-optic cables, allowing and enforcement them to take direct control of the 114 Spectrum licensing connection, increasing competition 118 Sustainability and innovation. 120 Glossary

10 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Protect consumers Deregulating where experience of switching bundled services – landline, broadband and A OVERVIEW from harm possible pay-TV – between providers using 4 Who we are We are always mindful of not the Openreach, Virgin Media cable Taking action against bad placing unnecessary burdens on or Sky satellite networks. 6 Chairman’s message practices the companies we regulate. Where We want to continue closing the When companies break our rules, we possible, we will always seek to broadband ‘speeds gap’. For example, B PERFORMANCE REPORT can investigate and impose fines. In remove regulation. For example, we’re exploring new opportunities July 2015, we imposed a penalty of this year we removed an obligation 8 Chief Executive’s report to make more wireless spectrum £1m on mobile operator EE, having on Sky to wholesale some of its 12 Overview of the available to broadband routers, which found failures in its complaints main sports channels to other communications sector could improve the performance of handling processes. We have on-going broadcasters, having found that home Wi-Fi in future. 14 Progress on delivering against investigations into other providers. competition was now working well. our annual plan priorities Coverage must keep improving, so 0800 free from mobiles 30 Work in the nations and our Improving efficiency we’ll continue to advise Government international engagement On 1 July 2015, millions of people on the new universal broadband 32 Other work to supportour goals and businesses benefited from We have achieved our work with service. In mobile, we are on track freephone numbers (starting 080 a view to maximising the value for 98% of households to receive an 37 How we work and who and 116) becoming free from all for money of the resources that indoor 4G signal by the end of 2017. we work with phones – landline and mobile. We we spend – from Government and These measures will help ensure 42 Financial review through our industry fees. Ofcom’s also made the charges for some people do not get left behind. 47 Our employees premium rate numbers clearer, so budget for the next five years is Tackling consumer harm will 48 Corporate responsibility people know what they are paying. frozen in cash terms, and we will continue to play our part in meeting remain a priority for Ofcom. We’ll 50 Sustainability report continue to investigate and sanction Tackling nuisance calls the challenge facing public finances. companies who break our rules, and Tackling nuisance calls remains In particular, we will make keep working with the ICO to tackle C ACCOUNTABILITY REPORT a major priority for us. We know efficiencies by narrowing our nuisance calls. it remains a huge problem and footprint in London, lowering our 52 Directors’ report estimate that people in the UK ICT costs through a new contract, Our regulation must remain relevant 55 Governance statement and effective. So we are carrying receive around 4.8 billion nuisance and reducing procurement spending. 64 Remuneration report calls each year. Ofcom has delivered 11 consecutive out a major review of the General 68 Certificate and report of the years of like-for-like real-terms Conditions, the rules that all While Ofcom has specific Comptroller and Auditor General budget reductions, and we will telecoms companies have to meet responsibility for tackling silent to the Houses of Parliament continue to reduce our spending in order to operate in the UK. This and abandoned calls, we continued where we can. We have set our will seek to make Conditions clearer, our concerted fight against all budget at £114.3m, in line with reduce the cost of compliance, and D FINANCIAL STATEMENTS nuisance calls with the Information 2015/16, which represents a 1.5% deregulate carefully where rules are Commissioner’s Office (ICO), which 70 Statement of income real-terms reduction from 2015/16. no longer necessary. regulates marketing calls and and expenditure messages. We reached agreement This is a big year for Ofcom. 71 Statement of financial position Work programme for In particular, preparing for full with ten telecoms companies to 72 Statement of changes in equity introduce technical fixes that should 2016/17 regulation of the BBC will require 73 Statement of cash flows lead to a significant reduction in careful planning, as well as additional This year, we want to build on our these types of calls. We are already resources and expertise. As we carry 74 Notes to the accounts recent work to make communications seeing progress, and welcome out this important work, we will not work for everyone. efforts by TalkTalk and BT to block lose sight of our duties and priorities E ANNEX nuisance calls. We issued a £150,000 Having made switching easier for in the other sectors we regulate. penalty to XS Remarketing Ltd, broadband customers, we are now Our Annual Plan for 2016/17 102 Ofcom Boards and Committees trading as Debt Masters Direct, for focused on improving the process for provides more detail on our 105 Regulatory statements making silent and abandoned calls. mobile phone users. We published priorities and our work programme. 110 Investigations programme options for making this work in March. In the coming months, we 111 Broadcasting standards will outline plans to improve people’s 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

11 OVERVIEW OF THE COMMUNICATIONS SECTOR

OVERVIEW OF THE A OVERVIEW 4 Who we are COMMUNICATIONS SECTOR Internet 6 Chairman’s message Broadband take-up This research spans a wide range of Ofcom has a commitment (% of adults) B PERFORMANCE REPORT to conduct, and publish, metrics looking at take-up, use and satisfaction, which remain high in the 76% 75% 77% 80% 8 Chief Executive’s report consumer and market markets we regulate. 12 Overview of the research to inform our work. 2012 2013 2014 2015 Average fixed broadband speeds communications sector (Mbit/s) 14 Progress on delivering against our annual plan priorities 12 17.8 22.8 28.9 30 Work in the nations and our TV Mobile 2012 2013 2014 2015 international engagement Satisfaction with fixed broadband 32 Other work to supportour goals Mobile take-up service (% of households with fixed (Broadcast) TV viewing 37 How we work and who (minutes per person per day) (% of adults) broadband) we work with 241 232 220 216 92% 92% 93% 93% 87% 88% 88% 86% 42 Financial review

2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 47 Our employees Multi-channel take-up Smartphone take-up UK residential superfast broadband 48 Corporate responsibility (% of adults) take-up (30Mbit/s and above) (% of all households) 50 Sustainability report 96% 95% 93% 94% 39% 51% 61% 66% - - 21% 34% ACCOUNTABILITY REPORT 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 C Mobile use % of homes connected by lines (billion minutes) 52 Directors’ report that cannot receive broadband speeds above 10Mbit/s 55 Governance statement 132 134 137 143 64 Remuneration report - - - 8% Radio 2012 2013 2014 2015 68 Certificate and report of the Mobile data take-up 2012 2013 2014 2015 Comptroller and Auditor General Radio listening (% of adults) (per person per day in minutes) Coverage of superfast broadband to the Houses of Parliament (% premises) 39% 49% 57% 61% 190 184 183 183 D FINANCIAL STATEMENTS 2012 2013 2014 2015 - - 75% 83% 2012 2013 2014 2015 Outdoor 4G mobile coverage 2012 2013 2014 2015 70 Statement of income Digital radio take-up from all operators (% premises) and expenditure (% of adults) Take-up of superfast broadband - - 37% 46% (% premises) 71 Statement of financial position 42% 46% 49% 54% 72 Statement of changes in equity 2012 2013 2014 2015 - - 21% 34% 2012 2013 2014 2015 Outdoor 2G mobile coverage 73 Statement of cash flows 2012 2013 2014 2015 from all operators (% premises) 74 Notes to the accounts Coverage of broadband services - - 93% 93% with download speeds of 100Mbit/s (%) E ANNEX Landline 2012 2013 2014 2015 - - - 46% 102 Ofcom Boards and Committees Take-up (% of adults) 2012 2013 2014 2015 105 Regulatory statements 110 Investigations programme 84% 84% 84% 84% Post 111 Broadcasting standards 2012 2013 2014 2015 112 Spectrum engineering Use Use Customer satisfaction and enforcement (billion minutes) (volume of addressed letter items in billions) with the postal service (%) 114 Spectrum licensing 103 93 82 74 13.5 12.8 12.6 12.2 88% 89% 88% 89% 118 Sustainability

2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 120 Glossary

Note: As new information is received, previous years’ figures are restated and may not match those in earlier reports. 12 B Nations statistics 2015 PERFORMANCE REPORT

83 34 Coverage of superfast broadband OVERVIEW (% premises) A 4 Who we are Take-up of superfast broadband 46 UK 8 (% premises) 6 Chairman’s message % of homes connected by lines that cannot receive broadband speeds B PERFORMANCE REPORT above 10Mbit/s 46 93 8 Chief Executive’s report Outdoor 4G mobile coverage from all operators (% premises) 12 Overview of the communications sector Outdoor 2G mobile coverage from all operators (% premises) 14 Progress on delivering against our annual plan priorities 73 29 Coverage of broadband services with 30 Work in the nations and our download speeds of 100Mbit/s (%) international engagement 32 Other work to supportour goals 38 SCOTLAND 14 37 How we work and who we work with 42 Financial review 37 90 47 Our employees 48 Corporate responsibility 50 Sustainability report

C ACCOUNTABILITY REPORT 77 39 52 Directors’ report 55 Governance statement 64 Remuneration report NORTHERN 27 IRELAND 14 68 Certificate and report of the Comptroller and Auditor General 84 35 to the Houses of Parliament 0 83 D FINANCIAL STATEMENTS 49 ENGLAND 7 70 Statement of income and expenditure 71 Statement of financial position 79 26 50 94 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts 26 WALES 11 E ANNEX 20 84 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability

Source: Ofcom Connected Nations Data 120 Glossary

13 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

PROGRESS ON DELIVERING AGAINST A OVERVIEW 4 Who we are OUR ANNUAL PLAN PRIORITIES 6 Chairman’s message Ofcom exists to make communications markets work for everyone. B PERFORMANCE REPORT 8 Chief Executive’s report To achieve this, we have 12 Overview of the three fundamental long- communications sector term goals and a set of 14 Progress on delivering against annual priorities under our annual plan priorities 30 Work in the nations and our each of these goals. international engagement 32 Other work to supportour goals 37 How we work and who we work with 42 Financial review 47 Our employees Our goals 48 Corporate responsibility 50 Sustainability report • To promote competition and ensure that markets work effectively for consumers; C ACCOUNTABILITY REPORT • to secure standards and 52 Directors’ report improve quality; and 55 Governance statement • to protect consumers 64 Remuneration report from harm. 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure Promote competition We do this by ensuring that markets smartphones; high-definition; 71 Statement of financial position and ensure that markets can work effectively, through video streaming is commonplace; 72 Statement of changes in equity regulation where appropriate, so that and many people enjoy superfast 73 Statement of cash flows work effectively for consumers benefit from competition. broadband at home and high-speed 74 Notes to the accounts consumers 4G internet on the move. The market Our objective: to undertake a is evolving, as operators compete We want people and businesses strategic review of digital against one another to provide ANNEX to benefit from a range of E communications landline, mobile, broadband and TV communications products and 102 Ofcom Boards and Committees The telecoms market has been services over converging networks. services. We also want markets to transformed over the past decade. 105 Regulatory statements provide wide choice, fair prices, high Two-thirds of us now own 110 Investigations programme quality, investment and innovation. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

14 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

To help support the development We outlined five main strands of Outcome OVERVIEW of digital communications, Ofcom our strategy: Telecoms users across the UK A must continue to provide a clear • Promoting competition and have benefited from innovative 4 Who we are regulatory framework for the future. network investment, including products, wider choice and lower 6 Chairman’s message Our Strategic Review of Digital a strategic shift to encourage prices since our last strategic review Communications is designed to operators to connect large- in 2005. But while coverage and promote competition and support scale, competing fibre networks quality are improving, the pace B PERFORMANCE REPORT of change is not fast enough to continued investment and innovation. directly to homes and offices. 8 Chief Executive’s report As an overarching review of the UK’s This will provide an alternative meet the growing expectations 12 Overview of the digital communications, it takes to existing telecoms networks of people and businesses. communications sector into account the range of market which are partly based on copper, There is also growing interest developments, announcements and a much older technology; 14 Progress on delivering against in converged communications our annual plan priorities expected developments within the • A plan to reform the governance products, and we are seeing 30 Work in the nations and our sector over the coming decade. consolidation within the industry. of Openreach and strengthen international engagement The review aligns with Ofcom’s goal its independence from BT, with The conclusions of our strategic 32 Other work to supportour goals to ensure markets work effectively for greater independence in taking review are intended to deliver 37 How we work and who people and businesses through the its own decisions on budget, more competition and less reliance we work with promotion of competition, greater investment and strategy. This may on Openreach; a new structure availability and improvements to require Openreach to become for Openreach, with appropriate 42 Financial review quality of service. a ring-fenced, ‘wholly-owned independence; tougher quality 47 Our employees subsidiary’ of BT Group with its of service targets; and enhanced 48 Corporate responsibility What we have done own purpose and board members; broadband and mobile coverage. After outlining the scope of the or, if necessary, to be spun off as 50 Sustainability report These conclusions are in the review in March 2015, we engaged an entirely separate legal entity, early stages of consultation and with the public, consumer groups, with its own shareholders; ACCOUNTABILITY REPORT implementation. Engagement with C academic experts, public bodies and • A step-change in quality of service. industry, Government and consumers stakeholders, including companies we 52 Directors’ report This will include performance will remain a crucial aspect of regulate. We held a stakeholder forum 55 Governance statement tables, comparing service quality our work in the coming years. in May and a series of workshops. by operator; tougher minimum 64 Remuneration report We believe we have established a After gathering evidence, we standards for Openreach, and 68 Certificate and report of the framework to promote investment, concluded this first phase of the automatic compensation for Comptroller and Auditor General competition and improved service review with a discussion document consumers and small businesses to the Houses of Parliament levels. This is designed to ensure in July 2015. when things go wrong; that consumers and businesses get Building on the responses and • Empowering consumers, the phone, broadband and mobile D FINANCIAL STATEMENTS further detailed analysis, phase particularly making sure they have services they need over the next 70 Statement of income two of the review concluded in real power to exercise choice in decade, wherever they live and work. and expenditure February 2016 with publication of the market. This means providing our initial conclusions. Here we set clear, engaging information 71 Statement of financial position out our short and long-term plans to on the services available to 72 Statement of changes in equity promote the interests of consumers them, and the ways in which 73 Statement of cash flows and businesses. they can switch provider; and 74 Notes to the accounts • Deregulating and simplifying our rules, while protecting consumers by stepping back E ANNEX from regulation where people 102 Ofcom Boards and Committees and businesses no longer need 105 Regulatory statements it – such as where markets are sufficiently competitive. 110 Investigations programme 111 Broadcasting standards We are implementing the specific conclusions of the review through 112 Spectrum engineering separate work streams within Ofcom. and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

15 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

Communications services are also and transparent information on essential to the UK’s 5.2 million broadband speeds before they A OVERVIEW SMEs (small and medium-sized sign up to a contract. Signatories 4 Who we are enterprises with fewer than 250 to the Code commit to effectively employees). SMEs make up 99.9% managing any problems that 6 Chairman’s message of UK companies and are significant businesses have with broadband contributors to economic growth. speeds, and to allowing customers B PERFORMANCE REPORT We want to ensure the market to leave their contract if speeds fall delivers the coverage, quality and below a minimum guaranteed level. 8 Chief Executive’s report prices that small businesses need, 12 Overview of the Our research also found that SMEs as well as sufficient protection when communications sector are less well served by superfast things go wrong. broadband than residential users, 14 Progress on delivering against our annual plan priorities and that 84% of SME premises in What we have done rural areas do not have access to 30 Work in the nations and our We examined leased lines as part such a service. international engagement of our Business Connectivity Market 32 Other work to supportour goals Review (BCMR). Most of these lines We recommended to Government 37 How we work and who are owned and maintained on behalf that explicit targets should be set for we work with of competing providers by BT. We SMEs’ access to superfast broadband. concluded that BT should open up We also expanded our dedicated 42 Financial review its optical fibre network to providers online business portal, first launched 47 Our employees in 2014. This provides advice to SMEs of high-speed leased lines for 48 Corporate responsibility businesses. We believe this will allow on choosing and switching provider, 50 Sustainability report competitors to develop new high- navigating the market, negotiating capacity services for their customers. contracts and resolving complaints. C ACCOUNTABILITY REPORT We have also introduced new, Outcome minimum quality-of-service Over the coming years, our 52 Directors’ report performance requirements on decisions from the BCMR should 55 Governance statement Openreach for leased lines, and lead to lower prices, greater deregulated in some areas of the 64 Remuneration report innovation, faster installations and market where competition is 68 Certificate and report of the more competition in the provision now sufficient. Comptroller and Auditor General of high-speed business lines. to the Houses of Parliament Separately, we outlined a programme Our objective: Ensure effective Although 85% of SMEs feel their of work to help SMEs get the best competition in the provision business needs are well catered for out of their communications services. D FINANCIAL STATEMENTS of communications services for by the communications market, a businesses, particularly SMEs This followed a detailed study significant number have concerns 70 Statement of income Leased lines form a critical building of business broadband speeds, about broadband speeds, availability, and expenditure block in the UK’s infrastructure. availability, quality of service and quality of service and choice. 71 Statement of financial position These dedicated high-speed data the ability to choose and switch We are taking action, alongside 72 Statement of changes in equity links are used by large businesses between providers. Our research industry and Government, to address and mobile and broadband operators identified several areas to be 73 Statement of cash flows these concerns as a priority. We will to transfer data on their networks. addressed through a combination 74 Notes to the accounts continue to engage closely with They also provide vital high-speed of regulation, public policy and SMEs to help ensure their needs are links between schools, universities, action by broadband providers. being met. E ANNEX libraries and other public bodies. This work is under way, including 102 Ofcom Boards and Committees Effective competition in the introduction of a new business leased lines market helps foster broadband Code of Practice. 105 Regulatory statements investment, innovation and choice, Providers have agreed to give 110 Investigations programme and ultimately benefits consumers. businesses clearer, more accurate 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

16 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Our objective: Improve the process of switching providers A OVERVIEW for consumers 4 Who we are Consumers must be able to find the 6 Chairman’s message best deals and easily switch providers if they’re to take full advantage of PERFORMANCE REPORT competition in communications B markets. Difficulties changing 8 Chief Executive’s report provider can constrain consumer 12 Overview of the choice and harm competition and communications sector investment, while the increasing 14 Progress on delivering against practice of bundling services together our annual plan priorities can make switching harder still. 30 Work in the nations and our We believe that switching is easier international engagement when consumers can make informed 32 Other work to supportour goals decisions, and have confidence that the process will run smoothly. Our 37 How we work and who research has found that switching we work with can be much harder when consumers 42 Financial review have to contact their existing provider 47 Our employees as part of the process. 48 Corporate responsibility Our preferred option is to move Outcome What we have done 50 Sustainability report to a ‘gaining provider led’ system, We expect to conclude our work In June 2015 we made switching similar to that in place for voice and on the current mobile switching between broadband and landline broadband services. But we are also processes in autumn 2016. C ACCOUNTABILITY REPORT providers on the Openreach seeking views on simplifying the telecoms network much simpler. existing process by making it quicker Our strategic review identified 52 Directors’ report A new ‘one touch’ process now and easier to transfer a number to a a need to improve switching for 55 Governance statement places the responsibility for the new provider. bundled services. We plan to 64 Remuneration report switch entirely in the hands of the outline next steps, including any Separately, we are now reviewing 68 Certificate and report of the company to which the customer is proposals for change, as part consumers’ experiences of switching Comptroller and Auditor General moving. We also extended this to of a formal consultation in the ‘triple-play’ services (bundled to the Houses of Parliament the KCOM copper network in Hull. summer. We are also working with landline, broadband and pay-TV Government and the European In March 2016 we outlined options products) between providers using Commission on developing an D FINANCIAL STATEMENTS to make it easier for consumers to the Openreach, Virgin Media or Sky appropriate framework for the change their mobile phone provider. 70 Statement of income satellite networks. regulation of switching bundles. How this works today can vary, and expenditure Beyond switching, Ofcom is engaged depending on whether the customer Throughout our work on switching, 71 Statement of financial position in a number of projects to encourage wishes to keep their existing number. across both mobile and triple- 72 Statement of changes in equity competition between providers. play services, we are looking These include working to ensure to accommodate future market 73 Statement of cash flows consumers have greater awareness developments such as widespread 74 Notes to the accounts of when their contracts are coming take-up of ‘quad-play’ bundles to an end; initiatives to help involving landline, broadband, ANNEX consumers navigate the market; and pay-TV and mobile services. E an enforcement programme covering 102 Ofcom Boards and Committees the current arrangements for cancelling and terminating contracts, 105 Regulatory statements including an ongoing investigation 110 Investigations programme into Sky’s compliance with the rules 111 Broadcasting standards on cancellations and terminations. 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

17 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

Our objective: Secure the – that might affect the universal During the year we continued our continuing provision of the service. In particular, we outlined monitoring of the main aspects of A OVERVIEW universal postal service plans to examine how quickly the postal market that affect the 4 Who we are UK consumers and businesses Royal Mail should be able to universal service. Our fourth annual 6 Chairman’s message benefit from the universal postal increase its efficiency, as well as monitoring update, published service, which requires Royal Mail to developments in the parcels market. in November 2015, found that Royal Mail’s regulated business collect and deliver letters six days a Whistl, which had been Royal Mail’s B PERFORMANCE REPORT had increased its profit margin to week (and parcels five days a week), only major competitor in the delivery 5.6% in 2015/16. This is within the 8 Chief Executive’s report at the same price to every address in of letters, decided to cease that part range of 5%–10% which Ofcom 12 Overview of the the UK. of its operation in June 2015. In believes allows the universal service communications sector We have a duty to secure the the absence of direct competition to be financially sustainable. 14 Progress on delivering against provision of a universal postal in letters, we are concerned that our annual plan priorities Royal Mail may have less incentive service that is financially sustainable Outcome and efficient. This should help to improve its efficiency or constrain 30 Work in the nations and our Having considered a range of international engagement meet people’s needs across the prices. We subsequently announced factors that could affect the UK’s nations, and in rural areas. plans to expand our work by 32 Other work to supportour goals sustainability of the universal postal conducting a fundamental review of 37 How we work and who service, including changes in the What we have done postal regulation. This is designed we work with to ensure our regulation remains market, we plan to conclude our Our December 2014 review of 42 Financial review appropriate and sufficient to secure review of the postal regulatory competition in the postal sector the universal postal service. framework by the end of 2016. 47 Our employees concluded that the universal service 48 Corporate responsibility was not currently under threat. We sought initial evidence for Our goal remains to ensure postal the review in July 2015, and users benefit from a universal 50 Sustainability report However, we decided to broaden followed this up with a detailed service which delivers innovation our review to assess other factors and lower prices, while recognising consultation in April 2016. ACCOUNTABILITY REPORT – beyond competition in letters our duty to balance this against C the financial sustainability of the 52 Directors’ report company providing that service. 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS MAKING COMMUNICATIONS 70 Statement of income WORK FOR EVERYONE and expenditure 71 Statement of financial position • Promoting choice 72 Statement of changes in equity 73 Statement of cash flows • Securing standards 74 Notes to the accounts • Preventing harm E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

18 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Our objective: Represent the What we have done OVERVIEW UK’s position in international We undertook a full and wide- A negotiations to agree how best to ranging engagement programme 4 Who we are use spectrum effectively in the run-up to WRC-15, including 6 Chairman’s message Spectrum is a finite and valuable work with the Government and UK resource that underpins wireless stakeholders. Before the conference services ranging from TV to radio we published a consultation, an B PERFORMANCE REPORT communications and broadband. update and a final document 8 Chief Executive’s report Efficient use of the airwaves is vital setting out the UK’s positions. to enable the UK’s digital economy 12 Overview of the We also engaged extensively with to meet consumers’ needs. One communications sector stakeholders through consultation of our core roles is to carefully 14 Progress on delivering against and public working group meetings. manage this important resource. our annual plan priorities We then coordinated our position 30 Work in the nations and our We represent the UK in international with that of the UK’s geographic international engagement spectrum discussions, including neighbours in the CEPT3 (the the World Radiocommunications European Conference of Postal and 32 Other work to supportour goals Conference (WRC)2. This forum, held Telecommunications Administrations). 37 How we work and who approximately every four years, is used we work with We provided a strong voice for to review and revise the international the UK at WRC-15. Our proposals 42 Financial review treaty governing spectrum. aimed to support the UK’s interests, 47 Our employees This treaty acts as a framework for while recognising the importance 48 Corporate responsibility the global use of spectrum, helping of good collaboration within the 50 Sustainability report regulators avoid interference between CEPT group. For example, we countries and enabling operators or advocated use of the 1427–1518MHz equipment manufacturers to improve and 3,400–3,600MHz frequency Outcome C ACCOUNTABILITY REPORT economies of scale and interoperability. bands for mobile broadband; and Our proposals were largely agreed 52 Directors’ report These benefits flow through to we proposed a range of bands in CEPT and at WRC-15. We believe consumers in the form of lower prices for technical studies around ‘5G’, 55 Governance statement this represented a good result for and a wider choice of devices. the next generation of mobile 64 Remuneration report the UK. Changes endorsed at WRC broadband. We also proposed that The most recent conference was play a significant part in setting 68 Certificate and report of the CEPT endorse the position that held in November 2015 (WRC-15). future expectations and investment Comptroller and Auditor General digital TV spectrum, in the UHF to the Houses of Parliament It addressed spectrum issues in decisions for many sectors across band, should remain exclusively for sectors including mobile and mobile radio communications, such as broadband, aeronautical, satellite, broadcasting for the coming years. satellite, mobile, aviation and D FINANCIAL STATEMENTS scientific use and radio astronomy, From a UK perspective, we worked maritime. Over time, these translate maritime and amateur radio. to secure the retention of the ‘leap into greater choice and lower 70 Statement of income and expenditure second’ in universal coordinated time; prices for people and businesses. we defended the technical protection 71 Statement of financial position The results of WRC-15 will also of microwave fixed links used in the feed into, and inform, our longer- 72 Statement of changes in equity North Sea oil and gas industry; and we term reviews to ensure the 73 Statement of cash flows represented the UK satellite industry’s efficient use of spectrum in the interest in a number of discussions. 74 Notes to the accounts UK. These include our mobile data strategy4 and our strategic review of spectrum, used by the satellite E ANNEX 5 and space science industries . 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 2 http://www.itu.int/en/ITU-R/conferences 114 Spectrum licensing 3 http://cept.org 4 http://stakeholders.ofcom.org.uk/consultations/mobile-data-strategy/ 118 Sustainability 5 http://stakeholders.ofcom.org.uk/consultations/space-science-cfi/ 120 Glossary

19 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

Secure standards and A OVERVIEW improve quality 4 Who we are We want to ensure that good- quality communications services are 6 Chairman’s message accessible and affordable for everyone in the UK. B PERFORMANCE REPORT While competition is at the heart of 8 Chief Executive’s report our approach, it cannot do this alone. 12 Overview of the In some cases, we need to make communications sector targeted interventions. 14 Progress on delivering against Our objective: Promote our annual plan priorities audience safety and assurance 30 Work in the nations and our on traditional and online What we have done Ofcom is the chairing body of a international engagement environments social media working group within Following a wide-ranging review, we 32 Other work to supportour goals On traditional broadcasting the UK Council for Child Internet implemented changes to our process 37 How we work and who platforms, we license more channels for licensing broadcast services and Safety (UKCCIS). In this role we 6 we work with than ever before. Some of these enforcing standards. Our aim was to produced a UKCCIS guide for social 42 Financial review channels are from broadcasters ensure that licensees comply with media operators, offering advice without a long-standing presence our rules, and to enable us to detect and good practice in the field of 47 Our employees online child safety. The guide is or an established culture of breaches as effectively as possible. 48 Corporate responsibility regulatory compliance. This brings designed for technology start-ups 50 Sustainability report more opportunity for innovation, This work included expanding our and medium-sized companies that but increases the risk that harmful monitoring to detect potentially provide social media and interactive harmful content; conducting an content might be aired. services online, or on mobile C ACCOUNTABILITY REPORT audit of, and additional checks devices, for the under-18s. This might To address these challenges, we on, our licensees; taking robust include social networks, messaging 52 Directors’ report have carried out a range of work to enforcement action against licensees or interactive game providers. 55 Governance statement maintain and update the audience who breach licence conditions; and 64 Remuneration report protection and assurance framework helping new licensees to understand In December 2015, we delivered our for audio-visual content. Alongside their regulatory obligations. fourth report to the UK Government 68 Certificate and report of the this, we continue to promote the on internet safety measures to protect Comptroller and Auditor General safety of audiences who consume On 1 January 2016, Ofcom became children. This focused on parents’ to the Houses of Parliament content online, particularly children. the sole regulator for on-demand strategies to protect children online, programme services. This area and provided an update on measures D FINANCIAL STATEMENTS had previously been led by a co- taken by the UK’s four largest fixed-line regulator, the Authority for Television internet service providers7 to extend 70 Statement of income on Demand (ATVOD). Ofcom now their offer of family-friendly filtering and expenditure regulates editorial content in services to new and existing customers. 71 Statement of financial position on-demand programme services, 72 Statement of changes in equity alongside our existing broadcasting regulation. This creates efficiencies 73 Statement of cash flows that benefit both audiences and 74 Notes to the accounts industry. The Advertising Standards Authority (ASA) will continue to act ANNEX as our co-regulator for advertising E content in on-demand services. 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering

6 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/487973/ukccis_guide-final__3_.pdf and enforcement 7 BT, Sky, TalkTalk and Virgin Media. 114 Spectrum licensing 8 The AVMS Directive governs EU-wide co-ordination of national legislation on all audiovisual media; both traditional TV broadcasts and on-demand services. It does this through a minimum set of common rules. 118 Sustainability 120 Glossary

20 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Ofcom remains an active member of Our objective: Promote better What we have done OVERVIEW the European Regulators Group for coverage of fixed and mobile Driving up quality of service and A Audiovisual Media Services (ERGA). services for residential and coverage through better consumer 4 Who we are We have contributed significantly to business consumers information remains central to 6 Chairman’s message its sub-group on the protection of While the coverage of fixed and our plans. minors, which provided a collective mobile networks continues to We published two further research report from ERGA members to improve, there remain many areas B PERFORMANCE REPORT the European Commission on the of the UK where fast broadband reports examining the performance of 8 Chief Executive’s report application of the Audiovisual services do not exist, and where 3G and 4G services from the UK’s four Media Services Directive8, and on mobile coverage is poor – national mobile network operators 12 Overview of the matters relating to audio-visual particularly in more rural areas (MNOs): EE, O2, Three and Vodafone. communications sector media services more generally. across the nations and regions. We also launched a powerful online 14 Progress on delivering against tool which enables people to check our annual plan priorities Outcome For example, around 2.4 million homes and small businesses are the quality of mobile coverage 30 Work in the nations and our Audiences continue to expect high still unable to receive broadband down to 100 square metres. We international engagement standards of protection on television speeds above 10Mbit/s, while just believe this is the most accessible 32 Other work to supportour goals and radio. Our work to strengthen and comprehensive tool available 68% of SMEs have access to superfast 37 How we work and who our licensing and enforcement has to consumers and businesses for broadband, compared with 85% of we work with ensured we have an effective and all UK premises. And while 99% of assessing mobile coverage. In March targeted approach to protecting 42 Financial review urban areas enjoy voice coverage 2016 we further improved the tool by audiences. 47 Our employees from all four mobile networks, this adding broadband information so that people and businesses can now check In the digital world, we have an falls to 72% in rural areas, 42% on UK 48 Corporate responsibility their mobile and superfast broadband effective framework in place to roads, and 31% inside rural premises. 50 Sustainability report coverage, as well as average provide audiences with the right download speeds, all in one place. levels of protection and assurance ACCOUNTABILITY REPORT from potentially harmful audio- C visual content. 52 Directors’ report As the way people watch and listen 55 Governance statement to content continues to change, 64 Remuneration report Ofcom will ensure that regulation 68 Certificate and report of the keeps pace and promotes the best Comptroller and Auditor General interests of audiences. to the Houses of Parliament SMEs broadband access D FINANCIAL STATEMENTS 70 Statement of income and expenditure 68% 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements Just 68% of SMEs have 110 Investigations programme access to superfast 111 Broadcasting standards broadband, compared with 112 Spectrum engineering 85% of all UK premises. 85% and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

21 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

We are also working to remove barriers for smaller providers to A OVERVIEW Future invest in their own networks, which Current widespread 4 Who we are often serve areas with little or no availability availability existing coverage. Looking further 6 Chairman’s message ahead, we are engaging with industry and policymakers to consider how B PERFORMANCE REPORT to support the next generation of broadband networks. The next 8 Chief Executive’s report few years could see widespread 12 Overview of the availability of ‘ultrafast’ broadband communications sector (defined as speeds greater than 14 Progress on delivering against 2% 300Mbit/s), which is currently our annual plan priorities available to just 2% of homes. 30 Work in the nations and our international engagement Outcome 32 Other work to supportour goals Our research shows good progress 37 How we work and who on the availability and take-up of we work with communications over the past year. Ultrafast broadband However, there is still more to do. 42 Financial review Our challenge is to keep supporting 47 Our employees competition and innovation, while 48 Corporate responsibility also helping to improve coverage 50 Sustainability report across the country – particularly in hard-to-reach areas and for SMEs. ACCOUNTABILITY REPORT During the year we continued to or above, a level we have identified as Our work to make more mobile and C advise the Government on the the tipping point at which most users fixed broadband service information 52 Directors’ report technical aspects of a range of ways rate their broadband experience as available should help consumers make 55 Governance statement to help improve mobile coverage. This ‘good’. This figure increases to 48% more informed choices. It should included providing the Department of homes and businesses in rural also assist policymakers looking 64 Remuneration report for Transport (DfT) and Network Rail areas, while a similar proportion of to improve mobile coverage, and 68 Certificate and report of the with technical support for improving SMEs in areas like business parks incentivise communications providers Comptroller and Auditor General mobile services on railways. The DfT are unable to receive such speeds. to improve networks. At the same to the Houses of Parliament is set to invest more than £50m to time, our efforts with Government We are working closely with improve Wi-Fi access on trains. and industry should help further Government and industry to meet D FINANCIAL STATEMENTS extend the availability of broadband Also in March 2016, we published these challenges. We are providing and superfast broadband services to 70 Statement of income research on UK home broadband technical advice to Government and the homes and businesses currently and expenditure performance. The report focused will help implement its proposed new unable to receive good speeds. 71 Statement of financial position on three key measures relevant to universal service obligation (USO), consumers’ experience of broadband: which means every home and business Our digital review includes plans 72 Statement of changes in equity download speeds, upload speeds and will have a legal right to request a to assess how we can impose new 73 Statement of cash flows video streaming quality. broadband connection of 10Mbit/s obligations on operators bidding for 74 Notes to the accounts by the end of the current Parliament. wireless spectrum, in order to help There remain a number of challenges increase coverage in rural areas. The in improving the coverage and quality We aim to ensure that, wherever review also outlines plans to support E ANNEX of fixed broadband services across possible, people and businesses Government action to reduce the the UK. have a choice of provider, which 102 Ofcom Boards and Committees cost of mobile network investment, might involve both fixed and wireless Around 8% of UK homes and small including a review of the rules 105 Regulatory statements technologies, to deliver the USO. businesses are currently unable to governing the construction of 110 Investigations programme receive broadband speeds of 10Mbit/s new masts. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

22 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Our objective: Work towards the timely release and effective award A OVERVIEW of spectrum, including the 2.3GHz, 4 Who we are 3.4GHz and 700MHz bands 6 Chairman’s message Mobile service providers need access to more spectrum to support consumers’ growing demand for B PERFORMANCE REPORT internet services on the move, fuelled 8 Chief Executive’s report by smartphones and tablet devices. 12 Overview of the We need to manage the limited supply communications sector of spectrum, and balance the needs of 14 Progress on delivering against different users by ensuring they have our annual plan priorities access to an appropriate amount. 30 Work in the nations and our international engagement What we have done 32 Other work to supportour goals During the year we focused on three specific spectrum bands – 37 How we work and who all of interest to mobile network we work with operators and others involved with 42 Financial review mobile broadband. The 700MHz Ahead of this, we continue to work However, we are working to ensure 47 Our employees band is currently used for digital on the challenges associated with that there is minimal disruption 48 Corporate responsibility terrestrial television (DTT) and clearing the band and safeguarding to DTT viewers; the vast majority 50 Sustainability report ‘programme making and special the interests of existing DTT and will need only a simple retune events’ (PMSE). The 2.3GHz and PMSE users. of their existing equipment. 3.4GHz bands were formerly used C ACCOUNTABILITY REPORT by the Ministry of Defence, but form The past year has seen us continue We have also identified a number part of the Government’s plan to to engage on international spectrum of frequency bands that wireless 52 Directors’ report planning and harmonisation microphones can use. Working closely release 750MHz of public sector 55 Governance statement discussions. We have carried out with the PMSE community, we hope spectrum in bands under 10GHz by 64 Remuneration report 2022, of which 500MHz will be made further work with broadcasters to help to limit any problems associated with 68 Certificate and report of the available by 2020. plan for necessary DTT infrastructure the transition to these new bands. modifications, while co-ordinating Comptroller and Auditor General Following the European Commission’s For the 2.3 and 3.4GHz bands, we with the PMSE industry to ensure to the Houses of Parliament decision on the merger between published two statements (in May and it retains access to spectrum for its October 2015) outlining the planned Hutchison 3G UK and Telefónica services to thrive in the future. FINANCIAL STATEMENTS auction of 190MHz of spectrum across UK, we are now in a position to D proceed with the auction of the 2.3 the two bands. These confirmed Outcome 70 Statement of income the details of the auction format, and 3.4GHz bands. We will look to and expenditure Our decision to release the 700MHz bring the frequencies into use as design and reserve prices. The latter frequencies for mobile broadband will 71 Statement of financial position statement also examined potential soon as possible so that businesses inevitably affect current users of the and consumers benefit from lower 72 Statement of changes in equity competition concerns around the band. DTT continues to perform a vital award of the spectrum, concluding prices, improved quality of service 73 Statement of cash flows role in providing viewers with low- and faster network speeds. that the auction could proceed cost, near-universal access to public 74 Notes to the accounts without the application of specific service TV channels (such as Freeview). competition measures. E ANNEX In November 2014, we decided to 102 Ofcom Boards and Committees change the use of the 700MHz band to mobile data, aiming to make it 105 Regulatory statements available for such use by the start of 110 Investigations programme 2022 at the latest. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

23 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

Our objective: Monitor and ensure improved quality of service A OVERVIEW and customer service performance 4 Who we are Competition, innovation and 94% 6 Chairman’s message investment in telecommunications Minimum over the past decade has benefited customers in the form of lower standards 5hrs B PERFORMANCE REPORT prices. But while consumers have 8 Chief Executive’s report generally received good value for 12 Overview of the money, too often they have faced Result of objective communications sector poor quality of service. Some have 94% of faults must be suffered unacceptable delays with fixed within five hours. 14 Progress on delivering against installation or fault repair, or frequent our annual plan priorities incidents of dropped mobile calls. 30 Work in the nations and our international engagement We are identifying quality of service problems in our sectors, 32 Other work to supportour goals while developing policies and taking 37 How we work and who enforcement action to improve the Separately, we have introduced Our digital review identified other we work with level of service provided to customers. minimum quality of service ways to improve quality of service. We 42 Financial review performance requirements on plan to introduce rules to incentivise 47 Our employees What we have done Openreach for the installation of Openreach to go beyond minimum 48 Corporate responsibility As part of our 2014 Fixed Access leased lines. This follows concerns standards and deliver better service. Market Review, we introduced new that Openreach was taking too long When things do go wrong, we want 50 Sustainability report service quality requirements on to install such lines, and was too consumers and businesses to receive often changing the date on which automatic compensation for a loss of Openreach for fault repair and the C ACCOUNTABILITY REPORT installation of standard phone and it promised to deliver services. or reduction in service. 52 Directors’ report broadband lines. The new rules mean that by 2017 Today there is virtually no publicly- 55 Governance statement Over the course of the past year we Openreach will have to provide available information on telecoms have closely monitored Openreach’s a new Ethernet line (the most quality of service. We plan to 64 Remuneration report performance against its obligations, common type of leased line used by address this with an annual report 68 Certificate and report of the and conducted a detailed review of businesses) within 40 working days on service quality, naming the Comptroller and Auditor General its annual compliance statement. (down from 46 days today). It must best and worst performers – both to the Houses of Parliament also meet the original installation mobile and fixed operators – on a While the performance of date agreed with customers in 80% range of performance measures. Openreach has improved, we think of cases by 2016 (from around 50% D FINANCIAL STATEMENTS it can do better. We are currently Alongside this, we have been today), rising to 90% by 2018. 70 Statement of income reviewing the minimum standards working to address poor customer and expenditure we apply to Openreach as part We will establish minimum standards service by improving providers’ of the Wholesale Local Access in new areas, such as fault rates, to complaints handling and ensuring 71 Statement of financial position Review, due to conclude in 2017. complement existing requirements they comply with our rules. 72 Statement of changes in equity for improved repair times. For During the year we continued 73 Statement of cash flows Ethernet leased lines, we have to publish our regular telecoms imposed a rule that at least 94% of 74 Notes to the accounts complaints research and bulletins, faults must be fixed within five hours. and in January 2016 we published research into the quality of customer E ANNEX service by providers. This helps us 102 Ofcom Boards and Committees monitor consumer’s experiences and evaluate changes in customer service 105 Regulatory statements over time, by market and provider. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

24 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

A OVERVIEW 4 Who we are 6 Chairman’s message

C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement We reviewed the current arrangements We imposed a penalty of £1m on EE Outcome 64 Remuneration report for complaints handling and dispute in July 2015 after finding deficiencies Ultimately, quality of service is best 68 Certificate and report of the resolution in postal services, concluding in its complaints handling processes. improved through competition, not that there is no need to change An investigation into Vodafone’s Comptroller and Auditor General by regulation. By giving a full picture to the Houses of Parliament anything for now. During 2016 we complaints handling procedures of the quality offered by the main will be conducting a similar review for is still on-going. In September we providers, we not only empower telecommunications. announced an action plan to improve consumers to choose services that D FINANCIAL STATEMENTS how providers inform their customers We published two new advice guides better meet their needs; we also give about dispute resolution schemes. 70 Statement of income that set out how consumers can get providers an incentive to improve and expenditure their performance and enhance their service problems resolved, and Separately, we worked with 71 Statement of financial position how to seek appropriate redress. providers to ensure they offer their reputation among customers. 72 Statement of changes in equity appropriate redress for network We also continued to take action Our enforcement work backs this problems – such as price reduction, 73 Statement of cash flows when providers failed to deal with up, ensuring that consumers can be compensation, or the right to leave customer complaints in accordance confident their complaints will be 74 Notes to the accounts the contract where appropriate. with our rules. handled properly. E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

25 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

Protect consumers A OVERVIEW from harm 4 Who we are We want to ensure that people do not face sharp practices and that 6 Chairman’s message vulnerable people are protected from specific harms. B PERFORMANCE REPORT We do this by implementing 8 Chief Executive’s report additional measures where there is a 12 Overview of the risk of exposure to harmful behaviour communications sector by firms, or to harmful content on television and radio. 14 Progress on delivering against our annual plan priorities Our objective: Protect consumers What we have done We are also working to improve 30 Work in the nations and our from harm in a range of priority international engagement Ofcom takes enforcement action calling line identification (CLI). areas including nuisance calls against companies making silent This service allows people to see 32 Other work to supportour goals Nuisance calls take many forms, from or abandoned calls using its the number of the person calling 37 How we work and who unwanted sales calls and messages ‘persistent misuse’ powers under them, before they answer. we work with (both live and recorded), to silent the Communications Act 2003. We continued our engagement 42 Financial review and abandoned calls. We estimate with the global standards body, that UK consumers receive around In 2015/16 we issued three 47 Our employees the Internet Engineering Task 4.8 billion nuisance calls each year. enforcement notifications. One 48 Corporate responsibility of these resulted in a £150,000 Force (IETF), on standardising CLI 50 Sustainability report Our objective is to minimise penalty, while the other two authentication, in order to prevent consumer harm by encouraging investigations are on-going. During ‘number spoofing’, where the caller communications providers, wherever the calendar year 2015, we also deliberately presents a false number. C ACCOUNTABILITY REPORT feasible, to block or stop these opened 98 informal investigations, The aim is to make it easier for 52 Directors’ report calls; by empowering consumers to closing 80 after complaints people to determine who is calling make informed judgements about stopped or dropped significantly. them, and for regulators to trace calls. 55 Governance statement these calls; and by taking effective We intend to implement CLI 64 Remuneration report enforcement action against those In December 2015 we published authentication in the UK as quickly who make these calls unlawfully. a consultation on our ‘persistent 68 Certificate and report of the misuse’ policy. We proposed to make as possible. However, we recognise Comptroller and Auditor General our enforcement faster, tougher, that it will only be fully effective to the Houses of Parliament and more effective. The consultation when it is adopted on a global scale, which may take a number of years. closed in February 2016, and we are D FINANCIAL STATEMENTS progressing towards our statement. Ofcom has responsibility for tackling silent and abandoned calls, and 70 Statement of income In April 2015 we formed a working and expenditure group of ten communications for maintaining the Telephone 71 Statement of financial position providers to explore ways to reduce Preference Service (TPS) register. The nuisance calls on their networks. As UK Information Commissioner’s Office 72 Statement of changes in equity a result, the providers have agreed (ICO) is the primary enforcement 73 Statement of cash flows agency of the Privacy and Electronic to monitor traffic on their networks 74 Notes to the accounts and, wherever feasible, take steps Communications Regulation 2003, such as blocking or stopping calls which makes certain kinds of direct that meet agreed criteria. As part of marketing calls illegal. Ofcom and the E ANNEX ICO are working together to tackle this initiative, we will receive regular 102 Ofcom Boards and Committees reports on the volume of calls the problem. stopped and, wherever possible, 105 Regulatory statements the source of the calls. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

26 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

In July 2013 we adopted a joint action Our objective: Implement reform Broadcasters often use non- plan to combat nuisance calls, and of non-geographic numbering to geographic numbers so audiences A OVERVIEW together we update it regularly. ensure price transparency can interact with programmes; for 4 Who we are In 2015 we focused on sharing Every day, people use non-geographic example, by voting in a television 6 Chairman’s message intelligence and coordinated law numbers – those starting 08, 09 programme or participating in a enforcement, joining the ICO on and 118 – to find out information, radio phone-in show. In October an enforcement raid and providing contact a business or helpline, or for 2014, we consulted on how the UK B PERFORMANCE REPORT technical assistance. using competition, directory-enquiry, Calling changes should affect the Broadcasting Code. We published 8 Chief Executive’s report We have continued to coordinate entertainment and voting services. our statement on amendments to 12 Overview of the with international regulators, Ofcom research found that people the Code in April 2015, designed to communications sector sharing information and strategies were sometimes confused about the make the cost of non-geographic 14 Progress on delivering against about consumer empowerment and cost of calling these numbers and did numbers clearer and simpler for our annual plan priorities enforcement intelligence. not know who was setting the charges. viewers and listeners to understand. This created a lack of confidence in 30 Work in the nations and our Outcome international engagement these numbers, and at times meant Outcome Persistent enforcement work, co- people avoided using them. 32 Other work to supportour goals Our work on non-geographic ordination with UK and international 37 How we work and who We decided consumers needed calls is designed to make prices regulators, and measures being we work with access to better information. At the more transparent, help improve taken by providers will all help to end of 2013, we announced decisions competition, restore consumer 42 Financial review reduce the number of unwanted calls to make the cost of calling businesses confidence and lead to an increase 47 Our employees consumers receive. and services clearer for consumers in use of such numbers. 48 Corporate responsibility While there is no simple answer to from 2015. Consumers have benefited directly preventing nuisance calls, we will 50 Sustainability report in several ways. Freephone numbers continue to pursue all available What we have done are now free from mobile phones; solutions to ensure consumers are ACCOUNTABILITY REPORT On 1 July 2015, Freephone numbers the service charge for premium- C better protected. (starting 080 and 116) became rate (09) numbers has been 52 Directors’ report We face a number of challenges, but free from all consumer phones, capped; and the cost of calling 55 Governance statement believe we are deploying the right whether landline or mobile. 084 and 087 numbers is clearer. strategy and tactics to address the 64 Remuneration report For numbers starting 084, 087, 09 We commissioned research to problem. This remains a priority work 68 Certificate and report of the and 118, the cost now comes in two measure consumer awareness of area for Ofcom. parts, helping callers understand Comptroller and Auditor General the changes across the UK. This to the Houses of Parliament where their money is going: an found that, by the time it concluded ‘access charge’ to the phone in August 2015, UK Calling had company, and a ‘service charge’ generated awareness among more D FINANCIAL STATEMENTS set by the company being called. than half of the adult population. 70 Statement of income Before the changes came into force, More than nine in ten adults said and expenditure we worked with the UK telephone they were not concerned by the 71 Statement of financial position industry to launch a consumer changes, and more than half a information programme, explaining million individuals had visited the 72 Statement of changes in equity the biggest changes to calls in UK Calling website. 73 Statement of cash flows more than a decade. This six-month 74 Notes to the accounts national campaign launched under the banner UK Calling, and included a new website, ukcalling.info. E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

27 PROGRESS ON DELIVERING AGAINST OUR ANNUAL PLAN PRIORITIES

Principal risks and uncertainties A OVERVIEW The table below highlights some of the key risks and uncertainties that Ofcom is currently facing. Further information about how we manage risks can be found on page 55. 4 Who we are 6 Chairman’s message

Principal risks Key mitigating actions B PERFORMANCE REPORT Outcome of the Government’s review of the BBC’s Royal Charter 8 Chief Executive’s report The Government’s White Paper on the renewal of the BBC Royal • We will work with the Government and the BBC on the next 12 Overview of the Charter sets out significant new responsibilities for Ofcom. These steps, ensuring clear and transparent communications with communications sector include areas such as editorial standards, competition issues and the media, the public and industry. periodic reviews of BBC performance. There will be a debate 14 Progress on delivering against • We will be involved in the process of drafting the new Charter about the precise shape and scope of these new responsibilities, our annual plan priorities and Agreement insofar as they relate to Ofcom’s role. and we can expect considerable public interest. 30 Work in the nations and our • We have launched a structured organisational change process There is significant work required before Ofcom is ready to take to ensure we have the capacity and skills in place to meet any international engagement on its new responsibilities, and the final transition timetable will new responsibilities. need to reflect this. 32 Other work to supportour goals • Early engagement with DCMS and the BBC on funding While Ofcom has extensive experience of broadcast and 37 How we work and who arrangements for our new responsibilities. competition regulation, the new responsibilities will require we work with additional resources. 42 Financial review 47 Our employees Ensuring the digital communications markets continue to work for consumers and businesses 48 Corporate responsibility 50 Sustainability report The pace of change and innovation witnessed in the markets we • We published our initial work plan for implementing the regulate over the last ten years will continue in the future. recommendations made in our initial conclusions publication in our 2016/17 Annual Plan. In February, we published our initial conclusions of the Strategic C ACCOUNTABILITY REPORT Review of Digital Communications, which set out our approach to • We continue to work closely with industry, Government and regulating communications markets over the next decade. consumers. 52 Directors’ report Failure to implement our proposals may mean that we do not 55 Governance statement meet the needs of consumers and businesses and stifle new investment and innovation. 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General Securing positive outcomes for consumers to the Houses of Parliament

We have a challenging programme of work aimed at promoting • Our programme of work in this area is outlined in our 2016/17 choice, securing standards and preventing harm. This includes Annual Plan. D FINANCIAL STATEMENTS work in the following areas: • We will consult on a requirement for retail communications 70 Statement of income • Auto-compensation; providers to provide compensation automatically when they and expenditure • Switching; fail to provide a service to designated standards. • Nuisance calls; and 71 Statement of financial position • We’ve outlined options to make it easier for consumers • Quality of Service information. to change mobile suppliers and are reviewing consumers’ 72 Statement of changes in equity Failure to successfully deliver this broad programme of work may experiences of switching bundled services. 73 Statement of cash flows undermine benefits to consumers and lead to consumer harm. • We have a joint action plan with the ICO to tackle nuisance calls 74 Notes to the accounts and continue to work with industry on technical solutions. • We propose to establish a new annual report, covering a range of network and customer service quality measures for E ANNEX all providers in the communications sector. 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

28 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

A OVERVIEW 4 Who we are 6 Chairman’s message

Principal risks Key mitigating actions B PERFORMANCE REPORT Cyber security and data handling 8 Chief Executive’s report The protection of our IT systems and the data we hold, and We have an ongoing programme of work designed 12 Overview of the the processes and safeguards we have in place to ensure that to ensure that we have a robust set of defences communications sector we handle data securely, are critically important. A failure in and policies in place. These include: any of these areas could result in harm to our customers and 14 Progress on delivering against • independent tests of our network to ensure that we have stakeholders and cause Ofcom considerable reputational damage. our annual plan priorities appropriate defences against external threats; 30 Work in the nations and our • continued work to ensure, maintain and enhance our existing control framework; and international engagement • ongoing assurance as part of the internal audit plan. 32 Other work to supportour goals 37 How we work and who we work with Consolidation in the markets we regulate 42 Financial review In January 2016, BT completed its acquisition of mobile operator • We will continue to work closely with the European Commission 47 Our employees EE. In March 2015, the mobile operator Three announced plans and the Competition and Markets Authority in relation to 48 Corporate responsibility to acquire its competitor O2, although this acquisition has mergers. subsequently been blocked by the European Commission. 50 Sustainability report • As needed, we will consider alternative interventions that lead We are mindful that consolidation in the markets we regulate to better outcomes in the event of a merger. may have advantages, but could weaken competition and lead to increasing prices and lower quality in the wholesale and C ACCOUNTABILITY REPORT consumer markets. 52 Directors’ report 55 Governance statement Clearance of the 700MHz spectrum bands 64 Remuneration report

In November 2014 we published our decision to change the use We have implemented a robust assurance framework for the 68 Certificate and report of the of the 700MHz band from DTT and PMSE use to mobile data use. use of funds. This includes expert and financial review of grant Comptroller and Auditor General The Government announced in the 2015 budget that it would applications, non-executive scrutiny of decisions and independent to the Houses of Parliament provide up to £600 million to support the delivery of this change assurance, including oversight from the National Audit Office. of use of the spectrum. Ensuring value for money is a key priority. D FINANCIAL STATEMENTS

Ability to attract and retain high quality, diverse talent 70 Statement of income and expenditure Our colleagues are our most valuable asset. An upturn in the We have undertaken a comprehensive review of our 71 Statement of financial position external jobs market may undermine our ability to attract and colleague strategy which includes salary levels, terms and 72 Statement of changes in equity retain high quality, diverse talent. conditions, work content and job titles and continue to explore options to offer colleagues greater working flexibility. 73 Statement of cash flows 74 Notes to the accounts

29 WORK IN THE NATIONS AND OUR INTERNATIONAL ENGAGEMENT

WORK IN THE NATIONS AND OUR A OVERVIEW 4 Who we are INTERNATIONAL ENGAGEMENT 6 Chairman’s message

Our work in the nations B PERFORMANCE REPORT Improving the availability and 8 Chief Executive’s report 12 Overview of the quality of communications communications sector services for consumers and 14 Progress on delivering against citizens, wherever they live, our annual plan priorities remains at the forefront of 30 Work in the nations and our our work. international engagement 32 Other work to supportour goals This work must be informed by the views and interests of people across 37 How we work and who we work with the UK. We have offices in each of the nations, to ensure direct engagement 42 Financial review with national governments, elected 47 Our employees representatives and local stakeholders; 48 Corporate responsibility we have Advisory Committees 50 Sustainability report for each nation; and a Nations Committee that reports directly to the Ofcom Board. Our Content Board In Northern Ireland we have In Wales we have continued to work C ACCOUNTABILITY REPORT and Consumer Panels also contain continued to support initiatives to with the Welsh Government to members representing each nation. roll-out broadband and improve support the roll-out of the Superfast 52 Directors’ report mobile coverage, providing advice Cymru project, and have provided 55 Governance statement Over the past year, the UK Parliament to the Northern Ireland Executive, advice on broadband and mobile and respective nations’ parliaments 64 Remuneration report the Northern Ireland Assembly and availability in rural areas. and assemblies have been considering 68 Certificate and report of the local authorities. devolution proposals which include We are committed to implementing Comptroller and Auditor General giving additional roles to the devolved Over the past year we also briefed the Welsh Language Scheme, which to the Houses of Parliament nations, in relation to Ofcom. As a the Assembly’s Culture Committee on delivers an excellent service to anyone result of this, our Board structure TV standards and the Public Service wishing to conduct their business with D FINANCIAL STATEMENTS will be expanded over the coming Broadcasting (PSB) Review. We compiled Ofcom in Welsh. We have continued year to incorporate members directly a report for the Assembly’s Enterprise to work with the Welsh Language 70 Statement of income appointed by national governments. Committee on viewers’ access to the Commissioner preparing for the and expenditure RTÉ and TG4 online players, and gave transition to the new Welsh Language 71 Statement of financial position We will also look at other ways we evidence to the Committee on mobile Standards regime. can continue to improve our 72 Statement of changes in equity coverage improvements. engagement with and responsiveness In England, we have been working 73 Statement of cash flows to the nations. A major piece of work for us in on plans to open a new office in 74 Notes to the accounts Scotland has been implementing Warrington, which will be home to the recommendations of the our consumer-facing contact centre Smith Commission, including the and spectrum licensing teams. E ANNEX drafting of a new Memorandum We have also provided advice and 102 Ofcom Boards and Committees of Understanding between Ofcom, evidence to the UK Government the UK Government, the Scottish 105 Regulatory statements and Parliament throughout the year, Government and Scottish Parliament. 110 Investigations programme including presenting the findings We have also been preparing for the of our Strategic Review of Digital 111 Broadcasting standards opening of our new policy base in Communications, and holding a drop- 112 Spectrum engineering Edinburgh later this year. The new in event for MPs to try Ofcom’s new and enforcement office is likely to include policy and interactive coverage checker. 114 Spectrum licensing competition advisers, economists and 118 Sustainability legal experts. 120 Glossary

30 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Our international We worked throughout the year to In May 2016, the Commission issued ensure that the interests of UK citizens proposals to update the Audiovisual A OVERVIEW engagement work and consumers remain at the heart Media Services Directive, which sets 4 Who we are Ofcom’s activities, and of the policy debate. We provided EU-level minimum rules for content input to the European Commission regulation. We have collaborated 6 Chairman’s message those of the companies we ahead of its review of the Electronic with regulators in Europe, providing regulate, are influenced by Communications Framework, expert advice to the Commission B PERFORMANCE REPORT international developments. a set of Directives that governs through the European Regulators telecommunications regulation in Group for Audiovisual Media 8 Chief Executive’s report The communications sector is Europe. We were active in the Body Services (ERGA), ensuring the UK’s 12 Overview of the increasingly global in nature; we work of European Regulators of Electronic interests are well represented in this communications sector closely with European institutions, Communications (BEREC) as it continues important review. 14 Progress on delivering against other national communications to develop guidelines to implement EU our annual plan priorities regulators, international partners and We have been active in European legislation, adopted last year on mobile multilateral organisations. postal committees, to understand 30 Work in the nations and our roaming and net neutrality. the challenges facing the sector, and international engagement We also seek to learn from and Spectrum policy is a growing part of to prepare for an EU initiative on 32 Other work to supportour goals share regulatory experiences and the European debates around the cross-border parcels. good practice with our overseas 37 How we work and who Framework. Our Spectrum Director, counterparts. This includes attending Outside Europe, we represented the we work with Philip Marnick, has been elected Chair regulatory and inter-governmental UK in the telecoms standardisation 42 Financial review of the Radio Spectrum Policy Group meetings, multilateral debates, and and radiocommunications working (RSPG) for 2016/17. This is a high-level 47 Our employees speaking at international events, to groups of the International body which advises the European 48 Corporate responsibility share our insights and experiences. Telecommunications Union (ITU). Commission on spectrum matters. In November 2015 we represented 50 Sustainability report Over the course of the year we The RSPG has already produced an the UK’s interests at the World provided support – including Opinion on the Framework Review, Radiocommunications Conference the short-term secondment of a C ACCOUNTABILITY REPORT and Philip’s chairmanship will enable (see page 19). technical expert – to the European Ofcom and the UK to play a leading 52 Directors’ report Commission while it assessed the We also contributed to the work of the role during this crucial period. The 55 Governance statement proposed takeover of O2 by rival Organisation of Economic Cooperation Commission has brought forward mobile operator Three. We made and Development (OECD). 64 Remuneration report legislative proposals to make the formal submissions to the Commission 700MHz spectrum band available We will continue to work hard to 68 Certificate and report of the setting out our concerns about a Comptroller and Auditor General for mobile broadband, and we ensure that the outcomes of transaction which, if approved, would to the Houses of Parliament are engaging on this and other international policy debates are have created a new market leader in matters through the Radio Spectrum positive for the communications the UK mobile market and removed an Committee. sector in the UK and in Europe. D FINANCIAL STATEMENTS important competitor. The proposed acquisition was subsequently blocked 70 Statement of income by the Commission, as it had strong and expenditure concerns that UK mobile customers 71 Statement of financial position would have had less choice and 72 Statement of changes in equity paid higher prices as a result of the takeover, and that the deal would have 73 Statement of cash flows harmed innovation. 74 Notes to the accounts

31 OTHER WORK TO SUPPORT OUR GOALS

OTHER WORK TO SUPPORT A OVERVIEW 4 Who we are OUR GOALS 6 Chairman’s message

As well as fulfilling our Protecting audiences from We also found the broadcaster B PERFORMANCE REPORT Governance Ministries in breach of Annual Plan priorities, we harm and offence 8 Chief Executive’s report This year we commissioned research the Code, for broadcasting a personal work to deliver on our long- testimony suggesting that cancer 12 Overview of the on audience attitudes towards communications sector term goals and achieve the offensive language. The findings had been treated by prayer alone. 14 Progress on delivering against best outcomes for citizens will inform how we assess offensive Protecting freedom of speech our annual plan priorities and consumers within our language before 9:00pm on television, As well as enforcing against 30 Work in the nations and our day-to-day responsibilities. and when children are particularly likely to be listening to radio. breaches of the Code, we international engagement must have due regard to the 32 Other work to supportour goals Secure standards and We also carried out research into broadcaster’s right to freedom of adults’ media use and attitudes 37 How we work and who improve quality expression, and the audience’s we work with across TV, radio, games, mobile and right to freedom of information. the internet, with a particular focus 42 Financial review Content standards, licensing and on online use and attitudes. This year we found no breach 47 Our employees enforcement in broadcasting in “Fighting Terror with Torture” 48 Corporate responsibility Ofcom has a range of duties relating We fined Asia TV Limited £25,000 (Panorama, BBC One), a documentary to broadcasting content. These for broadcasting claims that serious exploring extreme interrogation 50 Sustainability report include securing adequate protection medical conditions could be treated methods. We noted the strong public for the public from harmful or by alternative remedies alone. interest, and that the programme C ACCOUNTABILITY REPORT offensive material; the protection of was not aimed at children. children; and ensuring a wide range 52 Directors’ report of TV and radio services of high 55 Governance statement quality and wide appeal. 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General A year in broadcast to the Houses of Parliament complaints D FINANCIAL STATEMENTS 70 Statement of income and expenditure 23,420 16 71 Statement of financial position Complaints 7,080 specific upheld 72 Statement of changes in equity programmes / issues (of which 4 were 4 partially upheld) sanctioned 73 Statement of cash flows & fined 74 Notes to the accounts broadcasters E ANNEX 102 Ofcom Boards and Committees 222 127 105 Regulatory statements cases cases 110 Investigations programme 111 Broadcasting standards needed further breached 205 Complaints 112 Spectrum engineering investigation our rules Fines issued: £70,000+ and enforcement 114 Spectrum licensing 118 Sustainability CONTENT STANDARDS FAIRNESS AND SANCTIONS COMPLAINTS PRIVACY COMPLAINTS 120 Glossary

32 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

We also found no breach in “Politicians for Hire” (Dispatches, Channel 4), A OVERVIEW which reported allegations that two 4 Who we are Parliamentarians were willing to use their positions and contacts for 6 Chairman’s message personal gain. We found no unfairness to the subjects, and that secret filming B PERFORMANCE REPORT was warranted. 8 Chief Executive’s report Protecting children 12 Overview of the We have a duty to protect children communications sector from unsuitable broadcast material 14 Progress on delivering against and harmful content on video-on- our annual plan priorities demand services. 30 Work in the nations and our international engagement This year we found Paramount UK Partnership in breach of the 32 Other work to supportour goals Broadcasting Code for including 37 How we work and who offensive language, sexual themes we work with and adult humour in pre-watershed 42 Financial review trailers on Comedy Central and 47 Our employees Comedy Central Extra. 48 Corporate responsibility We also found ITV in breach of the Code for showing fantasy violence 50 Sustainability report scenes that were unsuitable for children in the first episode of Jekyll Protection against Diversity in broadcasting C ACCOUNTABILITY REPORT and Hyde at 6:30pm. extremist views The UK is a world leader in 52 Directors’ report We took rapid action to protect Ofcom has a duty to prohibit television production, and it is 55 Governance statement children from the on-demand broadcast material that is likely to important that there are equal programme service ShebangTV, encourage or incite crime or disorder. opportunities for everyone who 64 Remuneration report wants a career in broadcasting. by issuing a notice to comply. This In January 2016, we consulted on 68 Certificate and report of the was in response to the service changes to our rules which prohibit Ofcom has a duty to promote equality Comptroller and Auditor General to the Houses of Parliament containing unrestricted adult content material that is likely to encourage of opportunity in broadcasting. and prohibited content that was or incite crime, or lead to disorder. In August 2015, together with accessible to minors. The revised rules took effect from the Equality and Human Rights D FINANCIAL STATEMENTS We also carried out wide-ranging 9 May 2016. Commission, we published a report called ‘Thinking Outside the Box’. This 70 Statement of income research into how children and We expanded our programme of provides guidance for the television and expenditure young people access and use content monitoring, with a focus on broadcasting sector on what action 71 Statement of financial position different types of media, and the role channels posing greater potential can be taken to increase diversity in parents play in overseeing them. risks of harm to the public. 72 Statement of changes in equity the industry. It aims to tackle some of 73 Statement of cash flows We also found broadcaster Club TV the misunderstandings about what Limited in breach of the Code for equality law prohibits and permits. 74 Notes to the accounts broadcasting highly offensive and discriminatory comments about Jewish E ANNEX people in lectures on Peace TV Urdu. MAKING 102 Ofcom Boards and Committees COMMUNICATIONS 105 Regulatory statements WORK FOR EVERYONE 110 Investigations programme 111 Broadcasting standards • Promoting choice 112 Spectrum engineering • Securing standards and enforcement 114 Spectrum licensing • Preventing harm 118 Sustainability 120 Glossary

33 OTHER WORK TO SUPPORT OUR GOALS

A OVERVIEW 4 Who we are 6 Chairman’s message

Public service broadcasting review B PERFORMANCE REPORT Public service broadcasting (PSB) 8 Chief Executive’s report means TV programmes that are 12 Overview of the broadcast for the public benefit, communications sector rather than for purely commercial 14 Progress on delivering against purposes. This kind of broadcasting our annual plan priorities brings significant cultural benefits to 30 Work in the nations and our society in a number of ways. It ensures international engagement diversity in the media and plurality in 79% PSB is delivering 32 Other work to supportour goals news, and provides programmes that of TV viewers reflect and examine wider society. PSB on its purposes 37 How we work and who also plays an important economic role we work with in supporting the creative industries, 42 Financial review particularly the independent Watching online, on demand Around half (51%) of disabled people 47 Our employees production sector. and across a range of devices is felt under-represented. 48 Corporate responsibility increasingly important to viewers, As the UK broadcast regulator, Ensuring PSB reflects the diversity of especially younger people. We 50 Sustainability report Ofcom has duties to conduct regular the UK is an area broadcasters must believe this presents challenges as PSB reviews. We examine how well monitor closely to ensure they meet well as opportunities for PSBs, who the system is working, whether their responsibilities and audience C ACCOUNTABILITY REPORT broadcasters are delivering its need new ways of connecting with expectations. 52 Directors’ report purposes, and how the quality of audiences and remaining effective PSB can be maintained and in the digital age. Future challenges 55 Governance statement strengthened in future. Investment in new UK content from We believe broadcasters need to 64 Remuneration report In July 2015 we published our the PSBs fell by around £440m in continue adapting their models to 68 Certificate and report of the annual report on PSB, alongside the real terms between 2008 and 2014, maximise commercial revenues and Comptroller and Auditor General conclusions of our most detailed a decline of 15%. Broadcasters have efficiencies. Otherwise, they are to the Houses of Parliament review since 2008. responded through a mixture of likely to face difficult choices about savings and changes to the types of which content and services they are D FINANCIAL STATEMENTS Main conclusions programmes they make. As a result, able to fund. the volume of new content from PSBs 70 Statement of income We found that public service PSB is supported by certain benefits remained high, with 32,491 hours and expenditure broadcasters continue to make such as access to valuable digital TV of new UK programmes in 2014, 71 Statement of financial position a significant contribution to UK spectrum, prominence on electronic compared to 33,981 hours in 2008. broadcasting. Viewers value programme guides and, in the BBC’s 72 Statement of changes in equity PSB programmes, and audience Representing different audiences case, the licence fee. Policy makers 73 Statement of cash flows satisfaction is high. will need to consider whether the Audiences across the UK attach a high 74 Notes to the accounts benefits designed to enable PSB will Over half of all TV viewing is to the degree of importance to the portrayal remain effective in the internet age. main PSB channels – BBC One, BBC of their nation or region. But one in E ANNEX Two, ITV, UTV, STV, Channel 4 and five (21%) viewers in Scotland, and Channel 5. That rises to over 70% one in four (26%) viewers in Northern 102 Ofcom Boards and Committees when all the channels broadcast Ireland, felt they were portrayed 105 Regulatory statements by PSBs, such as time-shifted ‘+1’ negatively in PSB programmes. channels, are taken into account. 110 Investigations programme Additionally, eight in ten viewers Ofcom research found that more than 111 Broadcasting standards half (55%) of respondents from black (79%) believe PSB is delivering on its 112 Spectrum engineering ethnic groups also felt they were purposes – such as trustworthy news and enforcement and high quality programmes that under-represented in PSB programmes 114 Spectrum licensing reflect the UK – a notable increase and a similar proportion (51%) felt from 69% in 2008. they were negatively portrayed. 118 Sustainability 120 Glossary

34 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Spectrum for audio programme The market for premium sports has making and special events evolved markedly since 2010. As A OVERVIEW a result of commercial wholesale (PMSE) uses 4 Who we are arrangements, Sky Sports is now PMSE relies on radio spectrum available from a range of pay-TV 6 Chairman’s message for wireless applications that are providers – including TalkTalk, Virgin essential to the production and Media and BT Vision. Sky Sports staging of a wide range of live and B PERFORMANCE REPORT channels are also available on Sky’s broadcast entertainment events, internet-based NOW TV service, which 8 Chief Executive’s report such as location-based news can be accessed on a range of devices. 12 Overview of the broadcasts and theatre productions. communications sector Meanwhile, new providers such The planned release of the 700MHz as EE and Vodafone have entered, 14 Progress on delivering against band for mobile services will reduce our annual plan priorities or plan to enter, the TV market, the amount of spectrum available for and companies are increasingly 30 Work in the nations and our using audio PMSE equipment – such competing to bundle pay-TV services international engagement as wireless microphones and in-ear Over the course of the year, we with broadband and mobile. 32 Other work to supportour goals monitors. provided support to the CMA and the Having considered Sky’s supply 37 How we work and who In October 2015 Ofcom consulted on EC during their respective merger arrangements, and market we work with plans to make spectrum available for review processes. We analysed the developments since 2010, we users of wireless audio equipment in markets affected by each merger, 42 Financial review removed the wholesale must-offer the PMSE sector. provided market data; made formal 47 Our employees regulation in November 2015. submissions setting out our concerns, 48 Corporate responsibility In March 2016 we published our and suggested potential remedies. We recognise that pay-TV is an decision to allow PMSE users to share We also arranged the short-term 50 Sustainability report important market valued by access to the 960-1164MHz band secondment of a technical expert to consumers, with 58% of UK homes with aeronautical radio navigation both the CMA and the EC. now subscribing to a service. We ACCOUNTABILITY REPORT services. We will implement this C want to ensure choice and innovation Consolidation has the potential to decision in accordance with spectrum 52 Directors’ report is delivered to consumers through management rules agreed with the undermine competition and lead fair and effective competition, and we 55 Governance statement Civil Aviation Authority. to increasing prices in wholesale will continue to monitor the market and consumer markets. Following 64 Remuneration report Promote competition and closely. Should evidence emerge of any given merger, we will consider 68 Certificate and report of the anti-competitive practices, we will any alternative interventions that Comptroller and Auditor General ensure that markets work reassess the need for regulation. may be necessary to help foster to the Houses of Parliament effectively for consumers better outcomes. For example, we Takeovers feel our decision to introduce ‘dark D FINANCIAL STATEMENTS Ensure fair and effective BT announced plans to acquire the fibre’ access, as part of our Business competition in the delivery of mobile operator EE in December Connectivity Market Review, will help 70 Statement of income pay-TV services 2014, a deal which was reviewed mitigate some of the concerns raised and expenditure In 2010, we required Sky to offer Sky by the Competition and Markets by stakeholders on the provision of 71 Statement of financial position Authority (CMA). The following wholesale mobile services following Sports 1 and 2 to other retailers at a 72 Statement of changes in equity wholesale price set by Ofcom. This month, the UK’s smallest mobile the acquisition of EE by BT. 73 Statement of cash flows rule, known as ‘wholesale must-offer’ network operator, Three, announced Wholesale Local Access and (WMO), was introduced to ensure plans to acquire its competitor O2. 74 Notes to the accounts competition, leading to choice and This proposal was reviewed by the Narrowband Market Reviews European Commission (EC). Both of these market reviews will innovation for sports audiences. E ANNEX be heavily influenced by the initial In December 2014 we began a review conclusions of our Strategic Review of 102 Ofcom Boards and Committees of the WMO rule to determine Digital Communications. 105 Regulatory statements whether it remained appropriate. Ofcom’s Wholesale Local Access 110 Investigations programme Market Review is a three-yearly study 111 Broadcasting standards of competition in the landline voice 112 Spectrum engineering and fixed broadband markets. and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

35 OTHER WORK TO SUPPORT OUR GOALS

We closed one complaint during As a result, complaints about the year on the grounds of landline mis-selling have remained A OVERVIEW administrative priority. As of 1 low throughout the year, at around 4 Who we are April 2016 we had two on-going 300 per month, from a peak of more competition law investigations. than 1,000 per month in June 2010. 6 Chairman’s message More details of these investigations In July we concluded our can be found in our Competition and investigation into Universal Utilities B PERFORMANCE REPORT Consumer Enforcement Bulletin. Limited (trading as Unicom), and 8 Chief Executive’s report imposed a £200,000 penalty. Statistical data covering our 12 Overview of the casework and that of the Consumer communications sector Ensuring disabled consumers Protection team is given in the are given the right information 14 Progress on delivering against Annex on page 110. our annual plan priorities An Ofcom ‘mystery shopping’ exercise revealed that disabled customers may 30 Work in the nations and our New annual licence fees international engagement for mobile spectrum not be getting the information they We have sought stakeholders’ initial need from communication providers. 32 Other work to supportour goals In September 2015, we published views, and plan to follow this up revised annual fees for mobile In August 2015, we opened a 37 How we work and who during the current year with a formal we work with operators. These are the amounts monitoring and enforcement consultation. We aim to introduce of money operators must pay to use programme to assess providers’ 42 Financial review any necessary changes to the the 900MHz and 1800MHz spectrum practices for publishing and promoting regulatory framework in 2017. 47 Our employees bands to provide their voice and the services they offer to users with 48 Corporate responsibility The Narrowband Market Review data services. disabilities. We are currently assessing 50 Sustainability report looks at competition in making the responses, and will take further In 2010, the Government directed and connecting landline calls. We action where necessary. Ofcom to revise these fees to fully sought initial views on this market reflect their market value. C ACCOUNTABILITY REPORT in 2015, and plan to consult in detail New rights and clearer before reaching a conclusion during Following extensive analysis and information for residential 52 Directors’ report the current year. The consultation consultations, we concluded that broadband customers 55 Governance statement process will consider how far we can mobile operators should pay a We strengthened our existing 64 Remuneration report deregulate traditional voice telephony combined annual total of £199.6m per Broadband Speeds Code of Practice for 68 Certificate and report of the while maintaining protection for year, compared with £64.4m previously. residential consumers in January 2016, Comptroller and Auditor General vulnerable users and those who allowing them to walk away from a to the Houses of Parliament remain dependent on their landline. Protect consumers contract without penalty, at any point, if their provider fails to deliver the Competition investigations and from harm FINANCIAL STATEMENTS minimum speeds initially promised. As D industry disputes We want to make sure that part of the changes, signatories agree 70 Statement of income consumers get the best choice Ofcom’s Competition Investigations to provide customers with transparent and expenditure and value for money from their Team investigates suspected breaches and accurate information on their communications services, and we 71 Statement of financial position of rules and resolves regulatory likely broadband speeds, so that are ready to intervene if things are 72 Statement of changes in equity disputes between companies. customers fully understand what they not working as well as they should. are signing up to. 73 Statement of cash flows During 2015/16, we resolved two During the past year, we acted on 74 Notes to the accounts disputes relating to BT’s average a wide range of consumer issues, Separately, acting on Ofcom porting conveyancing charges and some of which are reviewed here. research, the Advertising Standards the company’s use of a mechanism Authority (ASA) announced new E ANNEX for postponing Ethernet installations, Tackling mis-selling rules to make the advertising of line known as ‘deemed consent’. 102 Ofcom Boards and Committees We continue to monitor complaints rental and broadband deals clearer, about landline mis-selling and which will help people compare 105 Regulatory statements ‘slamming’ – where a customer’s line is deals more easily. 110 Investigations programme transferred without them knowing – 111 Broadcasting standards and have taken action as appropriate. 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

36 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

HOW WE WORK AND A OVERVIEW 4 Who we are WHO WE WORK WITH 6 Chairman’s message

When we regulate B PERFORMANCE REPORT Ofcom’s Regulatory The Communications Act 2003 Principles 8 Chief Executive’s report requires us to have regard to the 12 Overview of the principles of better regulation: that When we regulate communications sector regulation should be transparent, Ofcom will operate with a bias proportionate, consistent, MAKING 14 Progress on delivering against against intervention, but with a our annual plan priorities accountable, and targeted only at COMMUNICATIONS willingness to intervene promptly 30 Work in the nations and our cases where action is needed. When WORK FOR EVERYONE and effectively where required. Ofcom was established, we built international engagement on these principles by developing Ofcom will intervene where there 32 Other work to supportour goals • Promoting choice is a specific statutory duty to work a more specific set of regulatory 37 How we work and who principles to inform our day-to-day • Securing standards towards a goal that markets alone we work with work. The speed with which the cannot achieve. 42 Financial review communications sector is changing • Preventing harm makes it especially important for us How we regulate 47 Our employees to have clear guiding principles. Ofcom will always seek the least 48 Corporate responsibility intrusive regulatory methods of 50 Sustainability report achieving its objectives. Ofcom will strive to ensure that C ACCOUNTABILITY REPORT interventions are evidence- based, proportionate, consistent, 52 Directors’ report accountable and transparent in 55 Governance statement both deliberation and outcome. 64 Remuneration report Ofcom will regulate with a 68 Certificate and report of the clearly articulated and publicly Comptroller and Auditor General reviewed annual plan, with to the Houses of Parliament stated objectives.

How we support regulation D FINANCIAL STATEMENTS Ofcom will research markets 70 Statement of income constantly and will aim to remain and expenditure at the forefront of technological 71 Statement of financial position understanding. 72 Statement of changes in equity Ofcom will consult widely with all 73 Statement of cash flows relevant stakeholders and assess 74 Notes to the accounts the impact of regulatory action before imposing regulation on a market. E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

37 HOW WE WORK AND WHO WE WORK WITH

Reducing regulation supported our focus on reducing Consultations OVERVIEW Ofcom is focused on reducing regulation. In order to safeguard the Public consultations allow A interests of citizens and consumers, regulation where possible. We stakeholders to comment on, and 4 Who we are some decisions required additional believe that ‘better regulation’ respond to, our proposals before any 6 Chairman’s message means ensuring rules are properly or strengthened regulation, mainly final decisions are made. targeted, and do not impose undue around our work to secure the optimal If the period for consultation is too burdens on stakeholders. use of spectrum. Figure 1 provides B PERFORMANCE REPORT an overview of how the regulatory short, some of those with important During the past year we made a burden on stakeholders changed as a views to share may not have enough 8 Chief Executive’s report number of significant regulatory result of Ofcom’s regulatory decisions time to prepare their responses. If it is 12 Overview of the decisions. Some of these decisions and statements in 2015/16. too long, the market concerned may communications sector have changed dramatically. When 14 Progress on delivering against we decide how long a consultation our annual plan priorities should last, we need to strike the Figure 1: Impact of our statements on the regulatory burden to 30 Work in the nations and our right balance between these two stakeholders: 2015/16 international engagement considerations. There are generally Impact of our statements on the regulatory burden to stakeholders three categories of consultation: 32 Other work to supportour goals in 2015/16 of the 62 major statements made in the year: 37 How we work and who • Category 1: consultations which we work with contain major policy initiatives and/or are of interest to a wide 42 Financial review range of stakeholders (especially 47 Our employees those who may need a longer time 48 Corporate responsibility to respond); in these cases we will 50 Sustainability report normally consult for ten weeks. • Category 2: consultations which, ACCOUNTABILITY REPORT while containing important policy C proposals, will be of interest to a 52 Directors’ report limited number of stakeholders 55 Governance statement who will have awareness of the issues; in these cases we will 64 Remuneration report normally consult for six weeks. 68 Certificate and report of the Comptroller and Auditor General • Category 3: consultations which to the Houses of Parliament fall within one or more of the following categories, where the normal time period for D FINANCIAL STATEMENTS consultations is one month: 70 Statement of income • technical issues; and expenditure 71 Statement of financial position • where there is a need to complete the project in a 72 Statement of changes in equity specified timetable because 73 Statement of cash flows of market developments or 74 Notes to the accounts other factors which require the project to be concluded within Reduced Regulation 8 13% a short period; E ANNEX Streamlined/co-regulatory 3 5% • where the issue has already been 102 Ofcom Boards and Committees Mixed/no-change/ongoing 40 64% the subject of a consultation; 105 Regulatory statements Increased/new regulation 11 18% • where the proposal will have a 110 Investigations programme limited effect on a market; or 111 Broadcasting standards • where the proposal is a limited 112 Spectrum engineering amendment to an existing and enforcement An overview of the key decisions and statements that we have made during the policy or regulation. 114 Spectrum licensing year can be found in the Annex on pages 105 to 107. 118 Sustainability 120 Glossary

38 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Figure 2 sets out an analysis of the length of our consultations by sector. A OVERVIEW Figure 2: Analysis of consultation 4 Who we are 6 Chairman’s message duration: 2015/16 B PERFORMANCE REPORT 8 Chief Executive’s report 12 Overview of the communications sector 14 Progress on delivering against Telecoms Broadcasting Spectrum Post Other TOTAL TOTAL TOTAL 2015/16 2014/15 our annual plan priorities 33% 26% 30 Work in the nations and our 6 4 6 0 1 17 international engagement 32 Other work to supportour goals 37 How we work and who TOTAL TOTAL we work with 2015/16 2014/15 9 7 15 3 1 35 42 Financial review 67% 74% 47 Our employees Consultation period at least ten weeks Consultation period less than ten weeks 48 Corporate responsibility (including category 2 and category 3 50 Sustainability report consultations)

C ACCOUNTABILITY REPORT 52 Directors’ report Ofcom collects statistics on the number of responses to consultations, as 55 Governance statement shown in Figure 3. We received 1,411 responses to our consultations, down from 10,519 in 2014/15. The significant increase in responses in 2014/15 was 64 Remuneration report mainly due to our consultation on the Review of Ofcom List of Major Political 68 Certificate and report of the Parties for Elections Taking Place on 7 May 2015. Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income Figure 3: Responses to consultations: 2015/16 and expenditure 71 Statement of financial position Change compared to 2014/15 72 Statement of changes in equity 0 -6 9 -1 -1 -4 -1 20 73 Statement of cash flows 19

74 Notes to the accounts

15 16 E ANNEX 10 102 Ofcom Boards and Committees 105 Regulatory statements 5 6 110 Investigations programme responses received responses Number of consultation 5 111 Broadcasting standards 0 2 0 0 0 0-10 11-20 21-30 31-40 41-50 50+ 112 Spectrum engineering and enforcement Range of responses received 114 Spectrum licensing 118 Sustainability 120 Glossary

39 HOW WE WORK AND WHO WE WORK WITH

Timeliness of decision making Impact assessments OVERVIEW We analyse how long it takes us to publish a decision following the close of Impact assessments are an important A a consultation (see Figure 4). In 2015/16 73% of decisions were announced part of the decision-making process. 4 Who we are within 20 weeks of closing a consultation, the majority of which were within Section 7 of the Communications 6 Chairman’s message ten weeks. Act 2003 requires us to carry out an impact assessment when we are Figure 4: Analysis of the time taken to publish an Ofcom decision from proposing to do anything for the B PERFORMANCE REPORT the close of the consultation period: 2015/16 purposes of, or in connection with, 8 Chief Executive’s report the carrying out of our functions, 12 Overview of the Change since 2014/15 and we consider the proposal to communications sector -4 -4 0 +4 be important. Impact assessments 30 ensure, among other things, that in 14 Progress on delivering against relation to our decisions: our annual plan priorities 25 30 Work in the nations and our • a wide range of options are international engagement 20 21 considered, including the option 32 Other work to supportour goals 15 of not regulating; 37 How we work and who 14 • these options are clearly presented; 10 we work with • the potential effects that would 42 Financial review 5 8 flow from each option are analysed 5 47 Our employees carefully; and 0 48 Corporate responsibility 0-10 weeks 11-20 weeks 21-30 weeks 31+ weeks • the costs associated with the 50 Sustainability report Period in weeks chosen option are outweighed by the benefits. ACCOUNTABILITY REPORT We must publish a list of the impact C assessments we carry out during 52 Directors’ report the year and this is in the Annex on Figure 5: Analysis of impact 55 Governance statement pages 108 and 109. 64 Remuneration report assessments carried out In July 2005, we published the 68 Certificate and report of the guidelines: Better policy-making: Comptroller and Auditor General Ofcom’s approach to impact to the Houses of Parliament assessment, which emphasised Ofcom’s commitment to conducting assessments as an integral part of the D FINANCIAL STATEMENTS policy-making process, and stated Telecoms Broadcasting Spectrum Post Other TOTAL 70 Statement of income that we expected to carry out impact and expenditure assessments in the majority of our 71 Statement of financial position policy decisions. 15 11 21 3 2 52 72 Statement of changes in equity Figure 5 highlights that, in 2015/16, 54% of consultations had conducted 73 Statement of cash flows an impact assessment, explicitly 74 Notes to the accounts referenced in a specific section 11 6 10 1 0 28 or annex of the consultation ANNEX document. In some circumstances, E Number of consultation documents Impact assessments (IA) explicit in it may not be necessary or 102 Ofcom Boards and Committees published document appropriate to conduct an impact 105 Regulatory statements assessment. We will continue to 110 Investigations programme ensure that impact assessments are carried out and properly 111 Broadcasting standards presented in all relevant cases. 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

40 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

New and revised duties Engagement with are of particular importance to OVERVIEW The former Authority for A stakeholders each nation. National interests are also represented by members Television on Demand (ATVOD) 4 Who we are had responsibility for handling Consumers and citizens of Ofcom’s Content Board and by 6 Chairman’s message complaints relating to the editorial Understanding consumers’ and the Communications Consumer Panel. The Consumer Forum for content of UK-based video-on- citizens’ interests and behaviour PERFORMANCE REPORT Communications, with more demand (VoD) services. This has now B is vital to our work. Ofcom makes been integrated into Ofcom, and we extensive use of market research to than 50 members from consumer 8 Chief Executive’s report bodies, meets every quarter with have taken on this work alongside understand trends in the take-up our other regulatory duties. 12 Overview of the and use of communications services Ofcom to discuss consumer policy communications sector topics. We also hold regular and the behaviour and concerns of Co-regulators and other bodies 14 Progress on delivering against bilateral meetings with consumer consumers. Our annual Consumer our annual plan priorities Ofcom has a co-regulatory partnership Experience and Communications stakeholder organisations as with the Advertising Standards 30 Work in the nations and our Market Report, in particular, well as consultation meetings on Authority (ASA), which was formed international engagement highlight and analyse these trends. specific topics. in 2004. This covers broadcasters and 32 Other work to supportour goals Ofcom’s Consumer Contact Industry and Governments advertising on video-on-demand 37 How we work and who Team receives around 70,000 Ofcom engages with a wide services. Broadcasters are obliged to we work with calls directly from consumers comply with the Advertising Codes range of stakeholders, including 42 Financial review each year, and the information companies and industry bodies under their broadcast licences issued 47 Our employees that consumers provide helps in the sectors we regulate, by Ofcom. When the ASA adjudicates us target our policy-making and consumers and consumer groups, on an advertisement, broadcasters 48 Corporate responsibility enforcement work. Consumers the UK government and devolved comply with rulings immediately 50 Sustainability report can also contact us through our institutions, co-regulators and other under the conditions of their website. While we cannot resolve regulators. We are members of the licences. Where necessary, the ASA ACCOUNTABILITY REPORT individual complaints about UK Regulators Network and the is able to refer licensees to Ofcom. C telecommunications services, we UK Competition Network, and we Ofcom has responsibility for the 52 Directors’ report provide advice to complainants engage with various international regulation of premium rate services 55 Governance statement and refer them to the Alternative organisations and regulatory bodies. (PRS) which enable consumers to Dispute Resolution (ADR) schemes 64 Remuneration report purchase goods and services by that we have approved. We do, Ofcom has a statutory duty to take charging the cost to their phone bills 68 Certificate and report of the however, handle complaints about into account in its decisions the Comptroller and Auditor General and pre-pay accounts. The day-to- TV and radio programmes. views and interests of those who to the Houses of Parliament live in different parts of the UK. Our day regulation of PRS is carried out Our separate offices in each of operations in the nations are led by on Ofcom’s behalf by PhonepayPlus the nations of the UK provide senior Directors in Glasgow, Cardiff, through its enforcement of a code D FINANCIAL STATEMENTS Ofcom with detailed and expert of practice approved by Ofcom. Belfast and London, who work to 70 Statement of income insights into the particular ensure that the views, needs and The Competition and Markets and expenditure challenges faced by citizens and special circumstances of the nations Authority (CMA) has concurrent consumers in different parts of 71 Statement of financial position receive Ofcom’s direct attention. powers under specific consumer the UK. Our advisory committees 72 Statement of changes in equity Our advisory committees for each protection legislation and within for each nation of the UK offer of the nations also provide advice the framework of competition law 73 Statement of cash flows information and advice to Ofcom about the interests and opinions for the communications sector. 74 Notes to the accounts on aspects of its work, and of of the nations and regions on all We work with the CMA to ensure communications in general, which communications matters. that a consistent and co-ordinated ANNEX approach is taken in relation to E issues where we have concurrent 102 Ofcom Boards and Committees powers and we discuss which body is 105 Regulatory statements best placed to lead in each case. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

41 FINANCIAL REVIEW

FINANCIAL REVIEW A OVERVIEW 4 Who we are 6 Chairman’s message Delivering our duties and value for money In 2015/16 Ofcom set a budget that B PERFORMANCE REPORT delivered further real term savings 8 Chief Executive’s report against the previous year. In setting 12 Overview of the a budget of £114.3m, we achieved communications sector a budgetary reduction of £2.7m (a reduction of 3.4% in real terms) 14 Progress on delivering against compared to the 2014/15 budget. our annual plan priorities We were able to do this through 30 Work in the nations and our the focus on cost saving initiatives international engagement such as bringing our programme- 32 Other work to supportour goals making and special events licensing 37 How we work and who (PMSE) in-house, utilising cloud- we work with based ICT services where appropriate 42 Financial review and successfully securing savings in our contracts providing facilities 47 Our employees management and employee payroll 48 Corporate responsibility and benefits service provision. 50 Sustainability report Our budget for 2016/17 builds on previous efficiencies and reflects our C ACCOUNTABILITY REPORT ongoing commitment to provide value for money. By identifying 52 Directors’ report areas where we can do things 55 Governance statement differently, as well as responding to 64 Remuneration report new challenges in the markets we regulate, we have set our budget at 68 Certificate and report of the Comptroller and Auditor General £114.3m for 2016/17, the same as Note 25 to the Accounts sets out including our work on the Strategic to the Houses of Parliament our 2015/16 budget. This represents our progress on this in more detail Review of Digital Communications, a 1.5% real-term reduction. including after the end of the reporting through effective and efficient use FINANCIAL STATEMENTS In 2016/17 we will continue to look period. In 2016/17 we are relocating of the resources available. Savings D Ofcom’s Customer Contact Team away achieved in the year were offset by at how we carry out our work and 70 Statement of income from our London office to the North- additional costs for some specific where resources are limited, we will and expenditure West of England. As we move some software licences, an accrual in respect make choices in line with our goals 71 Statement of financial position and overall duty to promote citizen spectrum licensing services online, this of additional business rates liabilities 72 Statement of changes in equity and consumer interests. In 2015/16 function will also move from London to for our London property, and by we undertook an internal review to Warrington. We have reviewed how we advancing some expenditure previously 73 Statement of cash flows manage our properties, consolidating planned for the following financial year. look at the challenges Ofcom faces, 74 Notes to the accounts and simplifying our approach, to bring and how we should respond to these During the year Ofcom also invoiced greater efficiencies and cost savings. challenges, to ensure that we are as and collected a total of £270.0m ANNEX effective as possible in the future. for the public purse from Wireless E Financial performance 2015/16 Telegraphy Act licensees, geographic 102 Ofcom Boards and Committees Our internal review included Note 2 to the accounts provides an assessment of our property telephone numbers, additional 105 Regulatory statements Ofcom’s £114.1m annual running payments from broadcasting licensees requirements. It involved looking at cost on a cash accounting basis. This 110 Investigations programme where our teams are located, and at and the levying of fines and penalties running cost is broadly in line with on stakeholders, as presented 111 Broadcasting standards more agile working arrangements the budget set, and we delivered for colleagues, to reduce our in the Section 400 Accounts. 112 Spectrum engineering our annual plan of work in addition and enforcement London footprint and deliver further to managing emerging priorities, efficiencies. 114 Spectrum licensing 118 Sustainability 120 Glossary

42 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Financial framework Grant-in-aid Operating income OVERVIEW Under Paragraph 8(1) of the Schedule • To cover Ofcom’s operating costs Ofcom’s total operating income in the A to the Office of Communications Act for spectrum management Statement of Income and Expenditure 4 Who we are 2002, Ofcom is required to balance its separates out the income received • To cover the costs for spectrum 6 Chairman’s message expenditure with its income in each relating to Spectrum Clearance and clearance and awards, including financial year. Awards, as this is an additional duty spectrum efficiency grants outside our core operating budget. B PERFORMANCE REPORT Sections 38 and 347 of the • To cover statutory functions Communications Act 2003 and Income for Spectrum Clearance and 8 Chief Executive’s report and duties, which Ofcom must Schedule 4 of the Postal Services Awards was £5.9m (2014/15: £4.3m). discharge, but for which there is 12 Overview of the Act 2011 also require Ofcom to raise The increase of £1.6m reflects the no matching revenue stream. communications sector income from each of the sectors it commencement of grants payments 14 Progress on delivering against Ofcom also receives rental income from regulates, such that it covers the to facilitate the clearance of the our annual plan priorities costs to be incurred by Ofcom in sublet office space, bank interest in 700MHz band. 30 Work in the nations and our regulating that sector. respect of bank balances, and income Ofcom’s income excluding Spectrum from services incidental to Ofcom’s international engagement Ofcom must also apportion its Clearance and Awards for 2015/16 was statutory duties. 32 Other work to supportour goals common operating costs (those which £114.8m (2014/15: £111.2m). Changes 37 How we work and who do not relate directly to any one sector) from the previous year include: Financial management we work with in a proportionate manner across each A thorough understanding of our • an increase in the regulatory of those sectors. 42 Financial review costs and financial management is charges of £4.1m for the networks 47 Our employees and services operators. This is Ofcom raises its funds from the critical to allow Ofcom to fulfil its primarily due to increased activity in 48 Corporate responsibility following sources: strategic purposes while meeting the challenging targets set as part of our the sector, including the extensive 50 Sustainability report Sector stakeholder funding expenditure review. work carried out for the Strategic Review of Digital Communications Broadcast licence fees for: To achieve this, Ofcom continues to ACCOUNTABILITY REPORT and the continued programme of C focus on obtaining value for money • Television market reviews required under the 52 Directors’ report through commercial procurement EU framework; and • Radio and supplier management processes; 55 Governance statement Administrative charges for: timely and accurate budgeting • a decrease in grant-in-aid funding of 64 Remuneration report and forecasting of expenditure; £0.8m from the Scottish Government • Electronic networks and services 68 Certificate and report of the prioritisation of resources and activities; following completion of the work Comptroller and Auditor General and making available associated comprehensive management reporting; undertaken for the Glasgow 2014 to the Houses of Parliament facilities risk management; ensuring compliance Commonwealth Games in 2014/15. • Postal services regulation with key controls and efficient Ofcom continued to be the host D FINANCIAL STATEMENTS transactional processing. regulator for the UK Regulators Network (UKRN) in 2015/16, and will 70 Statement of income continue to do this for the first part of and expenditure 2016/17. The hosting responsibilities 71 Statement of financial position will then transfer to the Civil Aviation 72 Statement of changes in equity Authority (CAA) from 1 November 73 Statement of cash flows 2016. Any surplus held by Ofcom at this time will be passed onto the CAA. 74 Notes to the accounts

43 FINANCIAL REVIEW

Operating expenditure • £0.5m of audience and consumer OVERVIEW Operating costs relating to Ofcom’s research costs to assist policy A development and investigation core responsibilities in 2015/16 were 4 Who we are decisions to further the interests £48.0m, which is £1.7m lower than the 6 Chairman’s message prior year (in 2014/15 our operating of consumers; and costs were £49.7m). The differences • £0.4m of additional software from the prior year expenditure are maintenance and licence costs with B PERFORMANCE REPORT attributable to the following costs. the roll out of improved IT systems. 8 Chief Executive’s report Reductions: Staff costs are £2.7m above prior year 12 Overview of the • £2.0m from outsourced services (as set out in note 4 to the accounts) communications sector costs by bringing programme primarily as a result of the transfer of 14 Progress on delivering against making and special events (PMSE) PMSE staff as part of the insourcing of our annual plan priorities the PMSE licensing arrangements, an licensing in-house, early in 2015/16; 30 Work in the nations and our increase in restructuring costs following international engagement • £1.3m of depreciation costs, the conclusion of reorganisation plans, Accounting surplus or deficit 32 Other work to supportour goals with a number of assets fully the annual colleague pay review and An accounting surplus is required depreciated in 2014/15; successful recruitment into vacant to cover expenditure not reflected 37 How we work and who we work with • £nil impairment costs in 2015/16 positions throughout the year. in the Statement of Income and Expenditure, including capital 42 Financial review compared to £0.6m in 2014/15 Spectrum Clearance and Awards expenditure and deficit recovery relating to the development of expenditure of £5.9m (2014/15: £4.1m) 47 Our employees payments necessary in respect of the our e-licensing and programme increased as a result of commencing 48 Corporate responsibility making and special events two defined benefit pension plans. the 700MHz clearance programme 50 Sustainability report licensing system; and grant scheme, set up to clear digital An accounting deficit occurs where • £0.4m of technological research terrestrial television (DTT) licensees depreciation, amortisation and other ACCOUNTABILITY REPORT costs reflecting the programme from the band. non-cash transactions are greater C than the income received to cover of work in 2015/16, and a 52 Directors’ report prioritisation of costs for the Surplus/deficit for the cash costs of capital items and 55 Governance statement Strategic Review of Digital financial year the defined benefit pension plans. Communications. 64 Remuneration report Funding surplus or deficit The accounting deficit for the financial year after tax, recorded in the Statement 68 Certificate and report of the Offset by the following increases: The operating revenue required by of Income and Expenditure for the year Comptroller and Auditor General Ofcom to fulfil its duties and deliver • £1.4m of additional premises under review, was £0.9m (2014/15: to the Houses of Parliament its programme of work for any costs, partly as a result of £0.1m surplus). The deficit for the year recognising higher rates financial year is calculated on the basis reflects the write down of deferred tax FINANCIAL STATEMENTS of Ofcom’s statement of charging D liability on our principal office. asset of £2.4m following our review principles. This approach specifies the The previous year benefited of London property requirements. 70 Statement of income from a release of an accrual of actual funds that need to be collected and expenditure £0.9m following the successful to discharge cash liabilities during Additional funds collected on 71 Statement of financial position conclusion of our rent review; the year. Any surplus funds arising as behalf of HM Treasury a consequence of budgetary savings 72 Statement of changes in equity • £0.9m of temporary staff achieved during the financial year are Ofcom prepares a separate set of 73 Statement of cash flows costs to moderate the use of Financial Statements for the purposes returned to stakeholders through a 74 Notes to the accounts consultants, and additional reduction in the annual tariffs raised in of Section 400 of the Communications recruitment costs to fill critical the two following financial years. Act 2003. The fees, payments and organisational vacancies; penalties are reported, with further E ANNEX The funding surplus for the financial detail provided, within these Financial 102 Ofcom Boards and Committees year is set out in Note 2 to the Statements in note 23 to the accounts. accounts and totals £2.7m (in 2014/15 105 Regulatory statements In 2015/16, Ofcom collected £270.0m this was £6.8m). 110 Investigations programme (2014/15: £272.6m) on behalf of HM Treasury. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

44 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

These funds have been passed on time to put the second stage of the movement between each regulated to the public purse. The revenue consultation on hold. Once Ofcom sector, and in the balance of costs and A OVERVIEW is collected from four sources: considers it appropriate to progress charges to industry and the taxpayer 4 Who we are with the review, details will be through grant-in-aid. • Wireless Telegraphy Act licence fees; published on the Ofcom website. 6 Chairman’s message Specifically, sector fees and charges • additional payments from television for 2016/17 will change by: and radio licensees; 2016/17 tariffs B PERFORMANCE REPORT On 30 March 2016, Ofcom published • an average increase of 14.3% (12.6% • financial penalties; and 8 Chief Executive’s report the Tariff Tables for 2016/17, which real terms increase) for network and • Geographic Numbering. were based on an estimated operating service operators (telecoms) which 12 Overview of the expenditure outturn for 2015/16 of is largely due to the significant work communications sector Statement of charging principles £114.3m; this was aligned with the carried out on the Strategic Review of 14 Progress on delivering against Ofcom is funded through a combination 2015/16 budget. Digital Communications in 2015/16 our annual plan priorities of licence fees and administrative and the planned work stemming The £0.2m variance between the actual 30 Work in the nations and our charges from stakeholders and grant from the review in 2016/17; international engagement in aid from central Government. operating outturn and the estimated operating outturn used to set fees and • an average decrease of 11.1% 32 Other work to supportour goals (12.4% real terms decrease) for the Regarding stakeholder funding charges for 2016/17, will be passed 37 How we work and who under the Communications Act 2003 back to stakeholders through tariffs for TV sector; we work with (“the Act”), Ofcom is required to 2017/18 in line with our Statement of • an average increase of 8.9% 42 Financial review set licence fees in the broadcasting Charging Principles. (7.3% real terms increase) for the sector and administrative charges 47 Our employees Ofcom’s budget for 2016/17 is £114.3m, radio sector, which is driven by the in the electronic communications savings from 2014/15 that were 48 Corporate responsibility sector in accordance with charging which includes capital expenditure and actual payments to pension incorporated in the 2015/16 fees not 50 Sustainability report principles that it has published. being repeated; and There are similar provisions in the schemes, but excludes depreciation and Postal Services Act 2011 in relation to amortisation. This represents a 1.5% • a decrease of 9.1% (10.5% real C ACCOUNTABILITY REPORT real terms reduction in the total annual terms decrease) for the postal the setting of charges for the postal 52 Directors’ report services sector. cost of regulation. services sector. 55 Governance statement On a year on year basis, such charges While the overall level of costs for 64 Remuneration report and fees must be set so as to meet but Ofcom remains flat, within these not to exceed Ofcom’s annual costs of total costs there will be year-on-year 68 Certificate and report of the Comptroller and Auditor General regulating the relevant sector. to the Houses of Parliament In setting charges and fees, we must ensure that they meet the relevant FINANCIAL STATEMENTS statutory requirements, including Figure 6: Ofcom funding trends over the past seven years D that they are objectively justified, 70 Statement of income 80 75.3 proportionate and transparent. and expenditure 70 At the time of last year’s annual 64.1 71 Statement of financial position 61.7 report, a second-stage consultation 60 72 Statement of changes in equity regarding our Statement of Charging 53.2 53.3 49.7 49.4 73 Statement of cash flows Principles was intended to take place 50 during 2015/16. After considering 74 Notes to the accounts 40 39.6 stakeholders’ responses and assessing 35.2 33.6 34.9 34.6 Ofcom’s current ongoing programme 30 27.2 E ANNEX Millions (£) of work, Ofcom have taken the view 23.8 21.2 102 Ofcom Boards and Committees that it is most appropriate at this 20 16.0 15.3 15.4 15.2 13.8 13.5 105 Regulatory statements 10 8.2 6.0 5.5 4.0 4.9 4.4 110 Investigations programme 2.6 2.8 1.8 1.5 2.1 0 1.9 2.0 2.0 111 Broadcasting standards 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Years 112 Spectrum engineering and enforcement Spectrum Telecoms TV Radio Post 114 Spectrum licensing 118 Sustainability 120 Glossary

45 FINANCIAL REVIEW

However, the 2015/16 financial statements show a surplus of £15.4m, A OVERVIEW in part because the pension liabilities 4 Who we are under the financial statements are prepared on the basis that the 6 Chairman’s message liabilities are discounted in line with the yields on high-quality B PERFORMANCE REPORT bonds which, under current market conditions, differ significantly from 8 Chief Executive’s report the approach used for determining 12 Overview of the Ofcom’s contributions. This also communications sector reflects the significant movements in 14 Progress on delivering against financial markets since the date of the our annual plan priorities actuarial valuations and the deficit 30 Work in the nations and our repair payments made by Ofcom. international engagement Ofcom makes cash payments to the 32 Other work to supportour goals Ofcom Defined Benefit Plan and the 37 How we work and who Ofcom (Former ITC) Pension Plan on we work with the basis of the actuarial valuations. 42 Financial review Cash payments, rather than the amount Spectrum clearance and awards In line with prior years, costs relating charged to operating surplus as 47 Our employees to spectrum clearance and awards In 2015/16, total expenditure of £5.9m calculated under IAS19, are included have been separated out from 48 Corporate responsibility relates to Spectrum Clearance and in operating expenditure outturn Ofcom’s core responsibilities in the 50 Sustainability report Awards (2014/15: £4.1m), which is used to calculate the tariffs charged to financial statements. outside Ofcom’s core budget. stakeholders each year. C ACCOUNTABILITY REPORT Statute defines Ofcom’s powers Pensions As a consequence of the risk to award grants to promote the Ofcom provides pension benefits mitigation work between the 52 Directors’ report efficient use of spectrum, and the through a defined contribution Ofcom, Trustees and Actuaries of 55 Governance statement efficient management of that use pension allowance that is available both Pension Plans, approximately under the Wireless Telegraphy 64 Remuneration report to all colleagues. Ofcom colleagues 80% of the plans’ liabilities are now Act 2006, subject to HM Treasury 68 Certificate and report of the are employed on terms with access backed by annuities. As part of the approval. Ofcom has initiated a grant Comptroller and Auditor General to a stakeholder pension plan. The ongoing activity to manage and scheme to clear DTT licensees from to the Houses of Parliament allowance may be used to contribute mitigate risks of the plans, further the 700MHz band to facilitate a to the Ofcom defined contribution insurance-backed benefit buy-ins in change of use of the band to mobile. stakeholder pension plan. respect of pensioner members will be D FINANCIAL STATEMENTS Changes are required to a significant considered in the future. part of the DTT infrastructure (e.g. to Colleagues who joined Ofcom from 70 Statement of income DTT masts and antennas). legacy regulators were entitled to The triennial funding valuations for and expenditure retain membership of one of two both plans, as at 31 March 2015, 71 Statement of financial position The 700MHz clearance programme defined benefit (DB) pension plans. are currently in the process of being will span a number of financial 72 Statement of changes in equity Both of these plans are closed to new finalised and must conclude by 30 years and Government has made entrants and benefits accruals ceased June 2016. Ofcom’s contributions to 73 Statement of cash flows funding available until 2022, with on 31 May 2011. From this time all both these plans are not expected 74 Notes to the accounts the objective of clearing the band as existing members were provided access to materially change once the 2015 early as possible. The first DTT grant to the Ofcom stakeholder plan. Notes funding valuations are finalised. awards were made in January 2016 ANNEX 1(k) and 19 to the accounts provide E and the scale of the infrastructure further detail. 102 Ofcom Boards and Committees work will intensify over subsequent financial years. The latest actuarial valuations for 105 Regulatory statements both schemes as at 31 March 2012 110 Investigations programme The timing of the auction of the 2.3GHz highlighted a combined funding and 3.4GHz bands under the Public 111 Broadcasting standards deficit of £5.2m. Since the finalisation Sector spectrum reform project (PSSR) of the actuarial valuations, a total 112 Spectrum engineering is impacted by the competition and and enforcement of £4.4m in respect of deficit repair convergence issues of the mobile payments has been made to the 114 Spectrum licensing market. The auction is likely to proceed DB plans in accordance with the 118 Sustainability in 2016/17 following the EU decision to respective recovery plans. block a merger. 120 Glossary

46 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

OUR EMPLOYEES A OVERVIEW 4 Who we are Ofcom’s values We also carry out regular surveys, 6 Chairman’s message allowing colleagues to contribute Our values are central to the way we their views on a range of topics. The operate, shaping how we engage B PERFORMANCE REPORT outcomes from these surveys provide with our stakeholders and work a foundation for much of our 8 Chief Executive’s report together to achieve our priorities. organisational development work. This year, colleagues across Ofcom 12 Overview of the have been instrumental in updating communications sector Professional development the four core values that reflect our 14 Progress on delivering against desire to work in an open, effective The quality and commitment of our our annual plan priorities and people-driven way. These are: people are central to our ability to 30 Work in the nations and our fulfil our duties. During 2015 we international engagement • Excellence introduced a number of organisation- 32 Other work to supportour goals • Collaboration wide training programmes, which • Agility included management development 37 How we work and who • Empowerment training as well as sessions covering we work with the specific industry sectors Ofcom 42 Financial review Colleague involvement regulates. We also run an internal During 2015 colleagues took part in 47 Our employees and consultation coaching and mentoring scheme, and a review of our appraisal, promotion 48 Corporate responsibility Colleagues are encouraged to help have sponsored some of our senior and recruitment processes, in line ensure Ofcom gains a diversity of colleagues to gain a formal coaching with our new set of values. 50 Sustainability report perspectives in our work. Our regular qualification. This allows them to formal methods for informing and Absence support the career development of C ACCOUNTABILITY REPORT consulting colleagues include: more junior colleagues. Ofcom encourages a culture where good attendance is expected and 52 Directors’ report • the Ofcom Colleague Forum, We actively encourage colleagues to valued. However, we recognise that, 55 Governance statement a consultation forum which is shadow senior colleagues. In 2015 we from time to time, absences for made up of representatives of launched a new shadowing scheme, 64 Remuneration report medical reasons may be unavoidable. colleagues from across Ofcom and giving all colleagues the chance to gain 68 Certificate and report of the which meets regularly with senior insight into the variety of our work. Ofcom aims to treat its staff who Comptroller and Auditor General management at Joint Consultative are ill with sympathy and fairness to the Houses of Parliament Group meetings (which include Employment policies and where possible to provide them two members from the union); and processes with support which will enable them D FINANCIAL STATEMENTS • the Ofcom intranet, which is We are committed to ensuring that to recover their health and attend available to all colleagues in all of all colleagues are treated fairly, with work regularly. In 2015/16, the 70 Statement of income and expenditure Ofcom’s offices; dignity and respect. We keep our number of working days lost was staff policies and processes under 4.57 days per annum per employee 71 Statement of financial position • presentations hosted by the Chief review to ensure they are up-to-date (2014/15: 4.55 days). This compares Executive and senior managers, 72 Statement of changes in equity and consistent with our values, as favourably to the public sector during which initiatives and projects 73 Statement of cash flows well as with the requirements of average of 8.7 days per annum per are explained to colleagues; 9 employment law. employee in 2015 (2014: 7.9 days) . 74 Notes to the accounts • regular group meetings, to speak to – and hear from – colleagues; and E ANNEX • the Colleague Engagement Panel, a 102 Ofcom Boards and Committees panel of colleagues responsible for interviewing applicants for senior 105 Regulatory statements roles and contributing their views 110 Investigations programme to the overall selection process. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 9 CIPD Absence Management 2015: Public Sector, published October 2015. 120 Glossary

47 CORPORATE RESPONSIBILITY

CORPORATE A OVERVIEW 4 Who we are RESPONSIBILITY 6 Chairman’s message Ofcom’s commitment to equality, B PERFORMANCE REPORT diversity and human rights. 8 Chief Executive’s report 12 Overview of the As an employer, we are Our Single Equality Scheme (SES) communications sector committed to equality of describes how we go about ensuring 14 Progress on delivering against that diversity and equality are at the our annual plan priorities opportunity for all colleagues, heart of how we operate. Our latest 30 Work in the nations and our SES, published in 2014, builds on irrespective of race, disability, international engagement what we have already accomplished. gender (including gender re- 32 Other work to supportour goals We have also published an Equality assignment), age, religion or 37 How we work and who belief, and sexual orientation. Scheme for Northern Ireland we work with setting out how we will promote 42 Financial review This commitment sits at the equality of opportunity and good heart of our employment relations across groups of people 47 Our employees policies and our approach when carrying out our functions 48 Corporate responsibility relating to Northern Ireland. to training and career 50 Sustainability report development. C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

48 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

In the past year, Ofcom has: As part of our commitment to Although we are starting with gender providing a fair and equitable pay and ethnicity targets, we are committed A OVERVIEW • been rated a gold-banded employer structure at Ofcom, in 2016 we to ensuring equality of opportunity for within Business in the Community’s 4 Who we are carried out our biennial equal pay all under-represented groups. gender and race equality indexes; audit. This showed that, while there 6 Chairman’s message • continued to improve our score in were some differences in levels of Corporate responsibility the Stonewall Workplace Equality pay among colleagues doing similar Ofcom has corporate responsibilities B PERFORMANCE REPORT Index, which looks at our attitude roles, there did not appear to be a not only to its colleagues, but to 8 Chief Executive’s report to lesbian, gay and bisexual staff; bias for colleagues of one gender to the wider community. We aim to: • sponsored the Institute of Electrical be paid more than the other gender 12 Overview of the for equal work. We also reported • treat all colleagues with dignity communications sector Engineering’s ‘Young Female and respect, in an inclusive and fair on the diversity composition of our 14 Progress on delivering against Engineer of the Year’ award for working environment, promoting colleagues and will use the findings our annual plan priorities the fourth year in a row; and equality of opportunity for all; to help us recruit and retain a diverse 30 Work in the nations and our • made significant progress in mix of employees. • reduce our carbon footprint, international engagement implementing the improvements providing value for money and 32 Other work to supportour goals set out in our disability action plan. ensuring that Ofcom’s practices are environmentally sustainable; and 37 How we work and who we work with • engage, inspire and develop Figure 7: In 2015 we set ourselves the following targets for increasing the 42 Financial review colleagues, while seeking to representation of women across Ofcom as a whole, and ethnic minority 47 Our employees groups at senior levels. support our local community. 48 Corporate responsibility In the wider community, we have run GENDER a reading mentoring scheme with a 50 Sustainability report OFCOM local primary school in Southwark, giving colleagues the opportunity Current Ofcom composition Economically active* Targets: By 2020 C ACCOUNTABILITY REPORT to coach young children to improve their literacy skills. 52 Directors’ report 55 Governance statement In addition, we work with Career 40% 60% 47% 53% 50% 50% Ready, mentoring 16-to-17-year-old 64 Remuneration report students and helping them prepare 68 Certificate and report of the for corporate life. In the summer of Comptroller and Auditor General PRINCIPAL/SMS 2015 we hosted four interns from local to the Houses of Parliament academies. We have also promoted N/A opportunities for colleagues to speak D FINANCIAL STATEMENTS 32% 68% 40% 60% at schools through campaigns such as Inspiring the Future, Inspiring Women 70 Statement of income and STEMNET. and expenditure 71 Statement of financial position 72 Statement of changes in equity ETHNICITY 73 Statement of cash flows OFCOM 74 Notes to the accounts Current Ofcom composition Economically active* Targets: By 2020

ETHNIC NOT ETHNIC E ANNEX MINORITY WHITE KNOWN MINORITY NO TARGET 102 Ofcom Boards and Committees 16% 71% 13% 13% 105 Regulatory statements 110 Investigations programme PRINCIPAL/SMS 111 Broadcasting standards

ETHNIC NOT 13% OF COLLEAGUES TO BE FROM AN 112 Spectrum engineering MINORITY WHITE KNOWN N/A ETHNIC MINORITY BACKGROUND and enforcement

9% 79% 12% 114 Spectrum licensing 118 Sustainability

* (2011 census) 120 Glossary

49 SUSTAINABILITY REPORT

SUSTAINABILITY REPORT A OVERVIEW 4 Who we are 6 Chairman’s message This section presents an overview of Ofcom’s B PERFORMANCE REPORT sustainability strategy and 8 Chief Executive’s report our performance in this area. 12 Overview of the It contains sustainability communications sector data and associated 14 Progress on delivering against financial costs, presented in our annual plan priorities 30 Work in the nations and our a format that conforms to international engagement the sustainability reporting 32 Other work to supportour goals guidelines issued by HM 37 How we work and who Treasury for 2015/16. we work with 42 Financial review Ofcom’s sustainability 47 Our employees strategy 48 Corporate responsibility Introduction 50 Sustainability report In 2007, Ofcom commissioned an independent carbon audit and C ACCOUNTABILITY REPORT subsequently committed to reducing 52 Directors’ report internal carbon emissions by 25% by In 2015, Ofcom was recertified to the to an organisation with a track the end of 2012/13 (relative to the 55 Governance statement Carbon Trust Standard, achieving a record of delivering efficiencies in 2007 baseline). Ofcom’s Footprint 64 Remuneration report further reduction in our footprint energy consumption in conjunction and Sustainability project was set of 10.5% since 2013. The report with the International Performance 68 Certificate and report of the up to identify and drive forward produced by the Carbon Trust Measurement and Verification Protocol Comptroller and Auditor General actions to ensure that Ofcom met alongside our recertification contains (IMPVP), which is a global standard for to the Houses of Parliament its carbon reduction commitment a number of recommendations quantifying the performance of energy and that its operating practices which we will seek to implement. control measures. FINANCIAL STATEMENTS were environmentally sustainable. D Last year we undertook a project 70 Statement of income Overview of reduction targets Further detail about Ofcom’s to rationalise the fleet of leased and expenditure vehicles used by our Spectrum Ofcom’s initial 25% reduction sustainability performance 71 Statement of financial position can be found on our website: Engineering and Enforcement Team. target represented a reduction 72 Statement of changes in equity across seven areas: information www.ofcom.org.uk/about/ The project resulted in a significant services, utilities, waste, business corporate-responsibility/ reduction in the number of leased 73 Statement of cash flows travel, procurement materials, footprint-and-sustainability. vehicles, and the introduction of a 74 Notes to the accounts procurement capital and commuting. fleet of vehicles that are 20% more fuel efficient and deliver a 30% In 2009, Ofcom commissioned 2015/16 performance reduction in carbon emissions. E ANNEX a second independent carbon We have continued to invest in 102 Ofcom Boards and Committees audit which confirmed that a 15% Greenhouse gas emissions reduction in carbon emissions had our video-conferencing capability 105 Regulatory statements In 2015, Ofcom awarded a single been achieved. A third carbon audit across our offices, to reduce the Total Facilities Management contract 110 Investigations programme was undertaken in 2013, which need for travel and to support more for the entirety of our property 111 Broadcasting standards confirmed that Ofcom had achieved a agile working. Our expenses policy portfolio. This contract came into 112 Spectrum engineering 30% reduction in its carbon emissions requires colleagues to consider effect on 1 January 2016 and replaced and enforcement exceeding the original 25% savings the impact on Ofcom’s carbon approximately 150 individual facilities target originally set in 2007. footprint before planning to travel. 114 Spectrum licensing contracts. The contract was awarded 118 Sustainability 120 Glossary

50 B Ofcom Annual Report & Accounts 2015/16 PERFORMANCE REPORT

Waste minimisation and Sustainable procurement Future plans OVERVIEW management The consideration of sustainability In the coming years, Ofcom will A Ofcom has a ‘no waste to landfill’ forms an integral part of our continue to monitor its carbon 4 Who we are policy across its entire property procurement processes. Ofcom emissions on a regular basis with 6 Chairman’s message portfolio. We recycle paper, includes provisions in its procurement particular focus on energy consumption cardboard, cans, plastics, glass, documentation that require suppliers and waste management. We will batteries, toners and CDs. All disposal to demonstrate their approach to also continue to promote sustainable B PERFORMANCE REPORT sustainability and reducing carbon behaviour to our colleagues. of ICT equipment complies with 8 Chief Executive’s report the Waste Electrical and Electronic emissions. Bidders’ responses to these Equipment Directive (WEEE). provisions are then considered as a A summary of Ofcom’s emissions 12 Overview of the communications sector specific part of the overall evaluation over the past five years is provided in Finite resource consumption of the tender. We also make use of the Figure 8. Please refer to the Annex on 14 Progress on delivering against our annual plan priorities Water consumption comes primarily framework agreements that the Crown pages 118 and 119 for more detail. from washrooms and drinking water Commercial Service has in place. These 30 Work in the nations and our Sharon White in all offices, as well as catering frameworks include specifications international engagement Chief Executive and and offer standard contract terms 32 Other work to supportour goals facilities in our London office. Ofcom Accounting Officer that assist buying organisations to monitors water consumption on a 21 June 2016 37 How we work and who monthly basis. monitor/reduce their environmental we work with impact and embed sustainability into 42 Financial review Biodiversity action planning procurement contracts. 47 Our employees Biodiversity is not a significant consideration for Ofcom and we do not 48 Corporate responsibility undertake data collection in this area. 50 Sustainability report

C ACCOUNTABILITY REPORT 52 Directors’ report Figure 8: Sustainability performance overview 55 Governance statement 64 Remuneration report 2011/12 2012/13 2013/14 2014/15 2015/16 68 Certificate and report of the Greenhouse tCO2e2 1,639 1,550 1,498 1,632 1,559 Comptroller and Auditor General gas emissions to the Houses of Parliament (Scopes 1,2) Expenditure £486,769 £457,486 £442,226 £475,261 £440,044

1 Business travel tCO2e 375 375 346 290 250 D FINANCIAL STATEMENTS Expenditure £713,021 £705,867 £628,340 £596,116 £569,099 70 Statement of income Waste Tonnes 159 166 173 168 173 and expenditure 71 Statement of financial position Expenditure £53,345 £46,068 £60,796 £45,500 £32,023 72 Statement of changes in equity Finite resource Water 11,508 11,509 13,694 14,213 10,767 consumption consumption 73 Statement of cash flows (m3) 74 Notes to the accounts

Expenditure £22,771 £26,610 £20,506 £24,931 £16,784 ANNEX Paper reams3 9,286 7,623 7,721 7,880 7,545 E 102 Ofcom Boards and Committees

1 In our 2014/15 Annual Report & Accounts emissions data relating to business travel (flights) was restated for 2011/12, 2012/13 and 2013/14 following enhanced data 105 Regulatory statements provided by our travel company. 2 We have re-stated our greenhouse gas emissions (tCO2e) for 2011/12 and 2012/13 and our water consumption figures from 2011/12 following clarification of the 110 Investigations programme allocation of consumption across our estate. 111 Broadcasting standards 3 We have restated our paper consumption figure for 2014/15 following clarification from our supplier. 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

51 DIRECTORS’ REPORT A OVERVIEW 4 Who we are The Ofcom Board 6 Chairman’s message

Dame Patricia Hodgson, DBE 30 years at KPMG. She was President B PERFORMANCE REPORT of the Institute of Chartered Dame Patricia Hodgson, DBE was 8 Chief Executive’s report appointed as a Non-Executive Accountants in England and Wales. 12 Overview of the Member of the Ofcom Board on 1 In 2000 she was appointed to communications sector July 2011, became Deputy Chairman the House of Lords as a life peer. on 1 January 2012 and Chairman She has been a non-executive 14 Progress on delivering against on 1 April 2014. She was Director director of a number of listed our annual plan priorities of Policy and Planning at the BBC companies and currently is a non- 30 Work in the nations and our (1993-2000), Chief Executive of the executive director of Royal Bank international engagement of Scotland Group plc, where she Independent Television Commission 32 Other work to supportour goals chairs its Board Risk Committee. (2000-2003), a non-executive director 37 How we work and who of The Competition Commission we work with (2004 – 2011) and a Member of the Dame Lynne Brindley, DBE 42 Financial review Higher Education Funding Council for Dame Lynne Brindley, DBE was England (2005 -2011). She was Chair appointed as a Non-Executive Member 47 Our employees of the School Teachers’ Review Body of the Ofcom Board on 1 September 48 Corporate responsibility 2011. She became Master of Pembroke from 2012 to 2014 and a Member 50 Sustainability report of the BBC Trust from its inception College, Oxford in 2013. She is also C until June 2011. She is Chairman of a council member of the Arts and Ofcom’s Nominations Committee, Humanities Research Council, a Board C ACCOUNTABILITY REPORT Member of the Creative Industries a Member of the Remuneration 52 Directors’ report Committee and a Member of the Risk Knowledge Transfer Network, a 55 Governance statement and Audit Committee. member of the Council of City ACCOUNTABILITY University and on the Court of the 64 Remuneration report Sharon White Goldsmiths’ Company. She is Chairman 68 Certificate and report of the REPORT Sharon White took over as Chief of Ofcom’s Nations Committee and Comptroller and Auditor General Executive of Ofcom in March 2015. a Member of the Remuneration to the Houses of Parliament Before joining Ofcom Sharon had a Committee, the Content Board and the Nominations Committee. long career in the civil service. She D FINANCIAL STATEMENTS was second Permanent Secretary at the Treasury, responsible for Graham Mather 70 Statement of income overseeing the public finances. Graham Mather was appointed and expenditure Before that she held Board level as a Non-Executive Member of 71 Statement of financial position Ofcom’s Board in June 2014. He was positions at the Ministry of Justice 72 Statement of changes in equity and the Department for International a member of Ofcom’s Consumer 73 Statement of cash flows Development and has worked in the Panel from 2004 to 2008. He served Prime Minister’s Policy Unit and in as a member of the Monopolies and 74 Notes to the accounts Washington DC as a senior economist Mergers Commission and, between 2000 and 2012, was also a member at the World Bank. ANNEX of the Competition Appeal Tribunal. E Baroness Noakes, DBE He is currently the President of the 102 Ofcom Boards and Committees Baroness Noakes was appointed to European Policy Forum and Chairman 105 Regulatory statements of its Regulatory Best Practice Group. the Ofcom Board on 1 June 2014 110 Investigations programme as its Deputy Chairman. She is He is a Member of Ofcom’s Nations 111 Broadcasting standards Chairman of Ofcom’s Remuneration Committee, Remuneration and and Risk and Audit Committees and Nominations Committees and was 112 Spectrum engineering a Member of Ofcom’s Nominations appointed to the Risk and Audit and enforcement Committee. Sheila Noakes is a Committee in January 2016. 114 Spectrum licensing chartered accountant and spent 118 Sustainability 120 Glossary

52 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

A OVERVIEW 4 Who we are 6 Chairman’s message

Bill Emmott Ben Verwaayen B PERFORMANCE REPORT Bill Emmott was appointed as a Non- the London Library from 2009 to Ben Verwaayen was appointed as a 8 Chief Executive’s report Executive Member of Ofcom’s Board 2015, is one of Swiss Re’s panel of Non-Executive Member of Ofcom’s 12 Overview of the in January 2016. He is currently a advisers, Group Economic Adviser to Board in January 2016. He has had communications sector freelance journalist, broadcaster, Stonehage Fleming wealth managers 30 years’ experience in running documentary film-maker and writer, and a visiting professor at Shujitsu major telecoms, technology and 14 Progress on delivering against having worked at ‘The Economist’ for University in Okayama, Japan. He is media companies in executive and our annual plan priorities 26 years with 13 years as Editor-in- a Member of Ofcom’s Remuneration non-executive roles. He is a former 30 Work in the nations and our Chief and as a main Board Director, and Nominations Committees and Chief Executive of BT, KPN in the international engagement until 2006. He was Chairman of Chairman of Ofcom’s Content Board. Netherlands and Alcatel Lucent, 32 Other work to supportour goals and has served as a Chairman of 37 How we work and who Endemol. He is currently a General we work with Partner at investment fund Keen 42 Financial review Venture Partners and holds various Board positions, including Akamai 47 Our employees in the US and mobile operator 48 Corporate responsibility Bharti Airtel in India. He is a 50 Sustainability report Member of Ofcom’s Remuneration and Nominations Committees. C ACCOUNTABILITY REPORT Jonathan Oxley 52 Directors’ report Jonathan Oxley joined Ofcom as Dame Patricia Sharon White Baroness Noakes, 55 Governance statement Hodgson, DBE DBE Group Director, Competition in November 2014 and was appointed 64 Remuneration report to the Ofcom Board in January 68 Certificate and report of the 2015. Prior to joining Ofcom, he Comptroller and Auditor General was a Partner in PwC’s Strategy and to the Houses of Parliament Economics practice, specialising in telecoms, media and technology, D FINANCIAL STATEMENTS having joined PwC in 1995. 70 Statement of income Dr Steve Unger and expenditure Steve Unger is Group Director, 71 Statement of financial position Strategy, International, Technology 72 Statement of changes in equity Dame Lynne Graham Mather Bill Emmott and Economists and was appointed Brindley, DBE 73 Statement of cash flows to the Ofcom Board in March 2015, having been Acting Chief Executive 74 Notes to the accounts from January 2015 until Sharon White took up the post in March E ANNEX 2015. He has been with Ofcom since its inception and has held a 102 Ofcom Boards and Committees variety of senior roles, including 105 Regulatory statements Ofcom’s Chief Technology Officer. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement Ben Verwaayen Jonathan Oxley Dr Steve Unger 114 Spectrum licensing 118 Sustainability 120 Glossary

53 DIRECTORS’ REPORT

A OVERVIEW 4 Who we are 6 Chairman’s message

C ACCOUNTABILITY REPORT 52 Directors’ report Register of disclosable interests Pension liabilities Protected personal data 55 Governance statement related incidents Board members, their partners or Ofcom has a range of pension 64 Remuneration report dependent children are required schemes which include defined Ofcom did not report any protected 68 Certificate and report of the not to hold interests (including contribution plans, defined benefit personal data-related incidents to Comptroller and Auditor General shareholdings, directorships and plans and unfunded plans. Note 1 the Information Commissioner’s to the Houses of Parliament employments) in companies whose in the Notes to the Accounts refers Office in 2015/6. core business activities (and hence to the relevant accounting policy share price) could be affected by and Note 19 in the Notes to the Sickness absence data D FINANCIAL STATEMENTS Ofcom’s decisions. Ofcom maintains a Accounts provides details of Ofcom’s Sickness absence data is reported 70 Statement of income register of disclosable interests, which retirement benefit obligations. in the Our Employees section of and expenditure can be found on our website at: The pension allowance paid to the Annual Report on page 47. 71 Statement of financial position http://www.ofcom.org.uk/ Executive Directors during 2015/16 is 72 Statement of changes in equity about/how-ofcom-is-run/ detailed in the Remuneration Report Directors’ disclosure ofcom-board/members/register- on page 64. As far as the Directors are aware, 73 Statement of cash flows of-disclosable-interests/ there is no relevant audit information 74 Notes to the accounts Non-audit work of which the auditors have not been made aware. All reasonable steps No fees for non-statutory audit work E ANNEX were paid to the National Audit have been taken by the Directors Office during 2015/16 (no fees for in order to make themselves aware 102 Ofcom Boards and Committees non-statutory audit work were paid of any relevant audit information 105 Regulatory statements and to establish that the auditors to the National Audit Office during 110 Investigations programme 2014/15). are aware of this information. 111 Broadcasting standards Sharon White 112 Spectrum engineering Chief Executive and and enforcement Accounting Officer 114 Spectrum licensing 21 June 2016 118 Sustainability 120 Glossary

54 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

GOVERNANCE STATEMENT A OVERVIEW 4 Who we are The governance structure • setting the overall strategy for risk management and control 6 Chairman’s message The Ofcom Board leads the Ofcom; exist to mitigate such risks; organisation, with a shared • acting as the ultimate decision- • defining Ofcom’s appetite for B PERFORMANCE REPORT commitment to the mission and making authority; risk; and 8 Chief Executive’s report values described on page 47. Its • obtaining assurance that material • Board and executive management core activities include: 12 Overview of the risks to Ofcom are identified succession planning. communications sector and that appropriate systems of 14 Progress on delivering against our annual plan priorities 30 Work in the nations and our Figure 9: Ofcom’s Board and Committees international engagement 32 Other work to supportour goals 37 How we work and who Non-Board/ Risk and Audit The Board we work with Advisory Committee Committees 42 Financial review Nominations 47 Our employees Nations Committee Committee Policy and Management Board 48 Corporate responsibility Remuneration 50 Sustainability report Advisory Committee Committees for: England, Operations Spectrum Non-Executive C ACCOUNTABILITY REPORT Northern Executive Team Board Remuneration Ireland, Scotland Committee 52 Directors’ report and Wales Strategy 55 Governance statement Security Content Board Spectrum Consumer 64 Remuneration report Advisory Board Committee Content, 68 Certificate and report of the Communications Media Policy Health & Safety Comptroller and Auditor General Consumer Panel Committee to the Houses of Parliament Investigations Advisory & Compliance Corporate Social Committee Responsibility D FINANCIAL STATEMENTS on Older and Broadcast Pensions Disabled People Competition 70 Statement of income and expenditure Telecoms 71 Statement of financial position Postal Policy 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

55 GOVERNANCE STATEMENT

The Ofcom Board a wide range of experience Board members and the Senior OVERVIEW The Ofcom Board is led by the which ensures an effective Board Management Team. The Chairman A to lead and control Ofcom; works with the Department for Chairman, who manages the Board 4 Who we are Culture, Media & Sport (DCMS) to ensure that: • the Non-Executive Members on the process for selecting Non- 6 Chairman’s message comprise a majority of the • Ofcom has appropriate objectives Executive Members for the Ofcom Board. The Deputy Chairman and an effective strategy; Board (and, where relevant, their is regarded as being the senior B PERFORMANCE REPORT re-appointment) and ensures that • there is a structure in place to Non-Executive Member for the the views of the Committee are 8 Chief Executive’s report allow the effective contribution of purposes of the UK Corporate available to DCMS, which makes 12 Overview of the all Members; Governance Code; and the appointments. Appointments communications sector • the Chief Executive and other • the Board meets at regular of Executive Members to the Board 14 Progress on delivering against executives are able to implement intervals during the year. During are made by all the Non-Executive our annual plan priorities the strategy; 2015/16 the Board met on 13 Members of the Board on the 30 Work in the nations and our • the Board Committees are occasions. The role of executive recommendation of the Committee. international engagement management is to implement properly established, composed 32 Other work to supportour goals and operated; Board policies. The work of The Remuneration Committee 37 How we work and who both the Board and Executive is The Remuneration Committee • there are procedures in place to we work with informed by the contributions of consists of all the Non-Executive inform the Board of performance a number of advisory bodies. Members of the Ofcom Board. The 42 Financial review against objectives; and that Chief Executive and the HR Director 47 Our employees • Ofcom is operating in accordance attend meetings at the invitation 48 Corporate responsibility with the highest standards of Minutes and notes from Ofcom of the Remuneration Committee. corporate governance. Board meetings are available 50 Sustainability report The Committee advises Ofcom on the website at The Chairman and Non-Executive on the remuneration and terms http://www.ofcom.org.uk/ ACCOUNTABILITY REPORT Members of the Ofcom Board and conditions of service for the C about/how-ofcom-is-run/ are appointed by the Secretary of Chief Executive, other Executive ofcom-board/minutes-notes/ 52 Directors’ report State for Culture, Media & Sport, Members of the Board and the Senior 55 Governance statement for periods of three to four years. Management team. The Committee Executive Members of the Board are 64 Remuneration report Board Committees also advises Ofcom on the terms appointed by the Chairman and all and conditions of the part-time 68 Certificate and report of the In the exercising of its powers of the Non-Executive Members, with Members of the Content Board, the Comptroller and Auditor General under the Office of Communications the Chief Executive’s appointment Communications Consumer Panel, to the Houses of Parliament Act 2002, the Board delegates requiring approval by the Secretary the Advisory Committee on Older and certain of its responsibilities to of State for Culture, Media & Sport. Disabled People, the four National the Executives within Ofcom and D FINANCIAL STATEMENTS Members’ duties and responsibilities Advisory Committees and other Non- certain responsibilities to Board are set out in a Members’ Code of Executive Members of other bodies in 70 Statement of income Committees with clearly defined Conduct, and a Register of Members’ Ofcom’s governance structure. and expenditure authority and terms of reference Interests is maintained. Both are 71 Statement of financial position The Committee oversees the available on the Ofcom website. (see Figure 10). The activities and process for determining the 72 Statement of changes in equity For the purposes of adopting the main functions of these principal terms and conditions of all other key principles of the UK Corporate committees are described below. 73 Statement of cash flows Ofcom colleagues. The Committee Governance Code: Ofcom has a number of other 74 Notes to the accounts specialist committees with a also oversees and decides upon • the Board considers all of the governance role or an advisory issues relating to the pension Non-Executive Members to be role to the Board, described in the arrangements established by E ANNEX independent of management Ofcom for all Ofcom colleagues. Annex on pages 103 and 104. 102 Ofcom Boards and Committees and free of any business or The remuneration of Non-Executive other relationship which could 105 Regulatory statements The Nominations Committee Members of the Ofcom Board is materially interfere with the 110 Investigations programme The Nominations Committee determined by the Secretary of exercising of their judgement. comprises all the Non-Executive State for Culture, Media & Sport. 111 Broadcasting standards However, should special Members of the Ofcom Board. Should it be necessary for Ofcom to 112 Spectrum engineering circumstances arise, appropriate The Committee is responsible consider any aspect of Non-Executive and enforcement action is taken to ensure that for reviewing the structure, size Member remuneration, a Non- independence is maintained; 114 Spectrum licensing and composition of the Ofcom Executive Member Remuneration 118 Sustainability • the Board believes that the Board as well as overseeing the Committee has been established, Members have, between them, succession plan for all executive comprising the Finance Director, the 120 Glossary

56 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

HR Director and the Corporation internal control framework and to The Content Board OVERVIEW Secretary, which will meet and report advise in respect to the accounting The Content Board is a committee of A directly to the Secretary of State as policies and the process for review, the main Ofcom Board, with delegated 4 Who we are appropriate. Consequently, no Board and the content of, the draft annual and advisory responsibility for a wide 6 Chairman’s message Member is involved in the setting financial accounts and annual report. range of content issues, predominantly of his or her own remuneration. The Committee is also responsible dealing with broadcasting. It is set up for overseeing the appointment of under statute, specifically section 12(1) B PERFORMANCE REPORT Risk and Audit Committee the internal auditors and the work of the Communications Act 2003. 8 Chief Executive’s report The Risk and Audit Committee undertaken by both the internal and The Ofcom Board may seek advice and comprises of three Non-Executive external auditors. This includes the 12 Overview of the recommendations from the Content Members of the Ofcom Board. The approval of the annual internal audit communications sector Board on any content related aspects of Chief Executive, the Group Director – plan. The Committee’s functions are 14 Progress on delivering against decisions it has reserved for itself. Corporate Services, the Finance Director fully described in its terms of reference, our annual plan priorities and the Financial Controller are invited available on the Ofcom website. The Content Board serves as 30 Work in the nations and our to attend Committee meetings, as are The internal audit function is outsourced Ofcom’s primary forum for the international engagement the internal and external auditors. by Ofcom to KPMG. The provision of regulation of television and radio 32 Other work to supportour goals quality and standards. It is charged The role of the Risk and Audit any other services by KPMG to Ofcom 37 How we work and who with understanding, analysing and Committee is to provide assurance is not permitted if it threatens the we work with championing the voices and interest of to the Board and the Accounting independence of internal audit and is the viewer, the listener and the citizen. 42 Financial review Officer regarding the appropriateness decided on a case-by-case basis. The 47 Our employees and effectiveness of Ofcom’s risk external audit function is carried out by management processes and the the National Audit Office on behalf of 48 Corporate responsibility the Comptroller and Auditor General. 50 Sustainability report

Figure 10: Ofcom Board and Board Committees C ACCOUNTABILITY REPORT Ofcom Remuneration Risk and Nominations Content Broadcast Nations Election 52 Directors’ report Board Committee Audit Committee Board Licensing Committee Committee Committee Committee5 55 Governance statement 64 Remuneration report Number of meetings 13 5 5 1 5 7 4 0 68 Certificate and report of the Attendance Comptroller and Auditor General to the Houses of Parliament Dame Patricia Hodgson DBE 13 5 5 1 – – – –

Sharon White 13 5 5 – – – – – D FINANCIAL STATEMENTS Baroness Noakes DBE 13 5 5 1 – – – – 70 Statement of income Dame Lynne Brindley DBE 13 4 – 1 5 – 4 – and expenditure

Tim Gardam1 9 4 – 1 4 6 – – 71 Statement of financial position 72 Statement of changes in equity Stephen Hill2 6 1 – – – – – – 73 Statement of cash flows Graham Mather3 13 5 1 1 – – 3 – 74 Notes to the accounts Mike McTighe1 9 4 4 1 – – – –

Jonathan Oxley 13 – – – – – – – E ANNEX

Dr Stephen Unger 13 – – – – – – – 102 Ofcom Boards and Committees

Bill Emmott4 4 1 – – 1 – – – 105 Regulatory statements 110 Investigations programme Ben Verwaayen4 4 1 – – – – – – 111 Broadcasting standards 112 Spectrum engineering 1 Tim Gardam and Mike McTighe both retired as Non-Executive Members of the Board with effect from 31 December 2015. and enforcement 2 Stephen Hill retired as a Non-Executive Member of the Board with effect from 11 November 2015. 3 Graham Mather was appointed as a member of the Risk and Audit Committee in January 2016. 114 Spectrum licensing 4 Bill Emmott and Ben Verwaayen were appointed as Non-Executive Members of the Board with effect from 1 January 2016. 5 At the Board meeting on 15 March 2016 it was agreed to adopt a revised approach to decision-makers for broadcast licensing decisions. The Broadcast Licensing Committee ceased to exist 118 Sustainability with effect from this date. 120 Glossary

57 GOVERNANCE STATEMENT

Policy and Management Board development of Ofcom’s agenda Board performance and and Operations Board policy agenda and for overseeing effectiveness A OVERVIEW the management of Ofcom. Membership of the Policy and The Board meets regularly; it is 4 Who we are Management Board is made up The Operations Board is responsible provided with regular strategic 6 Chairman’s message of the Senior Management Team for overseeing Ofcom’s internal updates, briefings on the markets and the Chief Economist. The operational initiatives to ensure Ofcom regulates, the activities of Finance Director, Human Resources that they support the effective key stakeholders, and reports on B PERFORMANCE REPORT Director, Corporation Secretary, delivery of Ofcom’s remit. The Board Ofcom’s operational and policy 8 Chief Executive’s report Communications Director and is chaired by the Group Director, activities. In addition, all Members 12 Overview of the other senior executives attend by Corporate Services and membership have access to the Secretary to the communications sector invitation. The Board provides an is comprised of senior executives Corporation to assist them with the internal forum for senior executives from across the organisation. provision of information and the 14 Progress on delivering against to scrutinise and oversee the internal making of arrangements for informal our annual plan priorities meetings with executives within 30 Work in the nations and our Ofcom to gain greater knowledge of international engagement specific issues. The Board undertook 32 Other work to supportour goals an evaluation of its performance Figure 11: Senior Management Team 37 How we work and who during summer 2015 utilising the we work with services of external consultants, 42 Financial review Name Role Condign Board Consulting. 47 Our employees Sharon White Chief Executive The performance of individual Board members is assessed by the 48 Corporate responsibility Philip Marnick1 Group Director, Spectrum Chairman and each member receives 50 Sustainability report Jonathan Oxley Group Director, Competition a performance review annually.

2 ACCOUNTABILITY REPORT Claudio Pollack Group Director, Content, Consumer Accountability C and External Affairs Ofcom’s Annual Report and Accounts 52 Directors’ report 3 Dr Steve Unger Group Director, Strategy, International, is sent to DCMS, which lays copies of 55 Governance statement Technology and Economists and Acting Group Director, Consumer and Acting it before each House of Parliament. 64 Remuneration report Group Director, Content and Media Policy The Board is responsible for 68 Certificate and report of the ensuring that proper records are 4 Comptroller and Auditor General Alison Crosland Group Director, Corporate Services maintained, which disclose with to the Houses of Parliament Polly Weitzman General Counsel reasonable accuracy, at any time, the financial position of Ofcom and enable it to ensure that the D FINANCIAL STATEMENTS 1 Philip Marnick was appointed Acting Group Director for the Corporate Services Group between 28 October 2014 and 10 January 2015. Statement of Accounts complies with 70 Statement of income 2 Claudio Pollack left Ofcom on 31 December 2015. the Communications Act 2003. In 3 Dr Steve Unger became Acting Group Director for the Consumer Group and Acting Group Director for the Content and and expenditure Media Policy Group on 1 January 2016. addition, the Board is responsible 71 Statement of financial position 4 Alison Crosland joined Ofcom on 11 January 2016. for safeguarding Ofcom’s assets and hence for taking reasonable steps 72 Statement of changes in equity for the prevention and detection 73 Statement of cash flows of fraud and other irregularities. 74 Notes to the accounts How Ofcom manages the public funds it receives, and its relationship ANNEX with DCMS in this regard, is set E out in a Financial Memorandum. 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

58 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

Compliance with the Corporate Ofcom also received eight requests The Communications Consumer Governance Code for information under the Data Panel consists of eight independent A OVERVIEW Protection Act 1998 and, where experts who work to protect and Ofcom is not subject to the UK 4 Who we are we held relevant information, promote the interests of consumers, Corporate Governance Code published 6 Chairman’s message by the Financial Reporting Council. we provided the requested citizens and small businesses in information in five cases. the communications sector. Ofcom However, the principles of the shares information and ideas with B PERFORMANCE REPORT Code provide a useful benchmark Engagement the Panel at the early stages of 8 Chief Executive’s report for all bodies wishing to make a Ofcom’s actions will affect people development, allowing it to provide statement about their corporate and organisations across the UK. robust and independent advice on 12 Overview of the governance performance. To this As a result, it is very important policies to ensure consumer interests communications sector end, Ofcom will continue to adopt that it takes decisions at the right are built into the decision making 14 Progress on delivering against the principles of the Code where time and in the right way. These process from the outset. Additionally, our annual plan priorities it is appropriate to do so. In this decisions must be based on Ofcom engages with a number of 30 Work in the nations and our regard Ofcom has complied with evidence and Ofcom needs to take other consumer consultation bodies, international engagement the principles of the UK Corporate including the Consumer Forum for into account, when making these 32 Other work to supportour goals Governance Code during the period decisions, the views of those who Communications, which we host, and 37 How we work and who 1 April 2015 to 31 March 2016. have an interest in the outcome. includes representation from a broad range of consumer advocate bodies. we work with Transparency Consultation plays an important 42 Financial review This engagement is increasingly Ofcom continues to review its part in obtaining this evidence. It important in the devolved nations 47 Our employees publication scheme and make allows those who could be affected of the UK, where the role of the 48 Corporate responsibility a wider range of information by or concerned about a particular nations’ members of the Content readily accessible on our website. issue to give us their views before 50 Sustainability report Board, Communications Consumer Wherever possible, we make the we decide on a course of action. Panel and the National Advisory data we collect and create available Consequently, Ofcom consults Committees is immensely valuable C ACCOUNTABILITY REPORT to the public following open publicly on all its major strategic in helping Ofcom take into data principles. Our open data is 52 Directors’ report priorities before making decisions. account specific issues in its policy available in one public portal on 55 Governance statement Details about Ofcom’s method of formulation and implementation. our website and on the data.gov.uk consultation, and the consultations 64 Remuneration report portal, alongside data sets from all that took place during the year, Ofcom also engages with other 68 Certificate and report of the central government departments are set out on pages 38 and 39. national regulatory authorities Comptroller and Auditor General and many other public sector (including participation in the UK The membership of the bodies to the Houses of Parliament bodies and local authorities. Regulators Network), European that make up the governance institutions and global bodies, so During 2015/16, Ofcom received 399 structure has been designed to offer that decisions taken in international FINANCIAL STATEMENTS requests for information under the D specific levels of expertise, so that fora are practical, proportionate Freedom of Information Act 2000 70 Statement of income Ofcom’s policies and projects can and reflect the interests of citizens and the Environmental Information and expenditure be tested and challenged robustly and consumers in the UK. Regulations 2004. Where we held before decisions are reached. 71 Statement of financial position relevant information we provided all 72 Statement of changes in equity or part of the information requested in 69% of cases. Information is 73 Statement of cash flows withheld only if it is exempt from 74 Notes to the accounts disclosure under legislation. E ANNEX MAKING 102 Ofcom Boards and Committees COMMUNICATIONS 105 Regulatory statements WORK FOR EVERYONE 110 Investigations programme 111 Broadcasting standards • Promoting choice 112 Spectrum engineering • Securing standards and enforcement 114 Spectrum licensing • Preventing harm 118 Sustainability 120 Glossary

59 GOVERNANCE STATEMENT

Figure 12: Ofcom’s control framework By carrying out impact assessments (as required under the Communications A OVERVIEW Act), which evaluate the impact of 4 Who we are any potential regulatory decision Ofcom Board across the range of stakeholders, the 6 Chairman’s message consideration of risk sits at the very centre of our activities. B PERFORMANCE REPORT The following sections provide a 8 Chief Executive’s report brief insight into some of the work 12 Overview of the undertaken during the year to further communications sector Risk and Audit enhance the control framework. Committee 14 Progress on delivering against Financial Memorandum our annual plan priorities Our current Financial Memorandum 30 Work in the nations and our international engagement was drawn up by the Department for Business, Enterprise and Regulatory 32 Other work to supportour goals Reform (BERR) in consultation with 37 How we work and who Policy and Management Board / Operations Board ourselves and the Department for we work with Culture, Media & Sport and sets out 42 Financial review the financial arrangements between 47 Our employees Ofcom and Government in respect of public funds and the respective 48 Corporate responsibility responsibilities of BERR now (BIS) 50 Sustainability report Management & and DCMS Accounting Officers and Risk Management Independent Assurance Internal Control Ofcom’s Chief Executive. The Financial ACCOUNTABILITY REPORT Memorandum was signed in January C 2008 and remains in force until a 52 Directors’ report new Framework Document is agreed 55 Governance statement The risk and control framework Management and internal between Ofcom and DCMS. During the Ofcom’s risk and control framework control year, work has continued with DCMS to 64 Remuneration report underpins the governance structure Responsibility for operating and agree a new Framework Document. 68 Certificate and report of the and is designed to support the monitoring the internal control Comptroller and Auditor General delivery of its statutory duties and system is delegated by the Ofcom Security arrangements to the Houses of Parliament the achievement of its objectives, Board through specific Boards and In light of the heightened security while safeguarding public funds. The Committees to Group Directors driven by a perceived increased D FINANCIAL STATEMENTS control framework is built around and senior managers. This scheme terrorist threat, we commissioned three pillars of responsibility: of delegation is outlined in the a globally recognised, independent 70 Statement of income Financial Authorities Framework, and expenditure • management and internal control; organisation to undertake a which was refreshed during 2015/16 • risk management; and comprehensive review of the physical 71 Statement of financial position to ensure that it is aligned with the • independent assurance. security arrangements at all of our 72 Statement of changes in equity structure of the organisation and offices. The review was competed Each of these areas of responsibility 73 Statement of cash flows appropriately reflects its appetite for in March 2015 and during the year is embedded across the organisation risk. Group Directors are asked to we have taken action to implement 74 Notes to the accounts and they come together to provide provide assurance that the system the recommendations in the report. the Senior Management Team and of internal controls is working We have also implemented steps to ANNEX the Board with the assurance needed E effectively within their area of enhance the security arrangements to manage the business effectively responsibility by completing an for colleagues when they are required 102 Ofcom Boards and Committees (see Figure 12). The risk and control annual internal control assurance to travel. Both the travel and the 105 Regulatory statements framework is consistent with statement. Additionally, assurance physical security arrangements guidance on compliance with the 8th 110 Investigations programme is taken from the work carried remain under constant review in line EU Company Law Directive provided 111 Broadcasting standards out by specialist teams across with the current security threat. by the Federation of European Risk the organisation, including the 112 Spectrum engineering Management Associations (FERMA). Security Committee, the Health and and enforcement Safety Committee, the Diversity 114 Spectrum licensing and Equality Working Group and 118 Sustainability the Business Continuity Group. 120 Glossary

60 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

During the year, we also commenced • further progress with the Trustees Figure 13: Ofcom risk hierarchy a comprehensive, cross-organisational of the two Ofcom Defined Benefit A OVERVIEW BUSINESS PRIORITIES BUSINESS review of our information security pension plans regarding more 4 Who we are policies and procedures. The review efficient governance; and Strategic Risk is led by a member of the Senior 6 Chairman’s message • continued oversight by the Policy Register Management Team and focuses on five and Management Board of our list key areas: of business critical models, together B PERFORMANCE REPORT i Information security strategy; with further work to share best 8 Chief Executive’s report ii. Information assets and classification; practice for the quality assurance Group Risk Registers

RISK ESCALATION 12 Overview of the iii. Governance and risk management; frameworks which support our use communications sector iv. Use of technology to enhance of business models. This is in line security; and with the recommendations made in 14 Progress on delivering against our annual plan priorities v. Education and awareness the Macpherson Report. Programme/Project Risk Registers 30 Work in the nations and our The working group that is leading Risk management international engagement the review has reported its initial 32 Other work to supportour goals findings to both the Policy and Ofcom continues to demonstrate strong leadership in the management 37 How we work and who Management Board and the Risk and During the past year, the strategic of risk through the work of the we work with Audit Committee. Work is underway to risk register continued to evolve, to Board and its Committees. In implement the recommendations. ensure that it allowed the Policy and 42 Financial review providing support to the Board, Management Board to focus on the 47 Our employees the Policy and Management Board Further initiatives key risks which might undermine and the Operations Board are 48 Corporate responsibility the delivery of the organisation’s A number of initiatives have been responsible for providing leadership 50 Sustainability report objectives. Group level risks are started or implemented as part of on the management of risks reviewed by the Group Directors, the ongoing programme to review arising from specific operational their senior management teams ACCOUNTABILITY REPORT and enhance the existing internal and regulatory developments. C and the Risk and Insurance Manager control framework. These include: 52 Directors’ report To ensure that our risk management on a monthly cycle, and escalated • a review of Ofcom’s Expenses framework is effective and aligned to onto the strategic risk register 55 Governance statement Policy, which included an exercise the requirements of the organisation, where appropriate. Senior managers 64 Remuneration report to benchmark the policy against a review of our risk management are responsible for ensuring that other, similar organisations; 68 Certificate and report of the framework is undertaken as part of colleagues have the appropriate skill Comptroller and Auditor General • a review of the Financial each year’s internal audit plan. The levels to identify, assess and manage to the Houses of Parliament Authorities Framework in recommendations that emerge from risk in line with Ofcom’s policy to conjunction with a broader review the review form part of an ongoing embed and support a culture of well- FINANCIAL STATEMENTS of Board delegations; programme to improve our risk managed risk. In support of senior D management framework. managers’ role in championing the • the completion of competitive 70 Statement of income risk process, the Risk and Insurance and expenditure tender processes for the provision Ofcom’s risk management policy Manager, together with a team of of outsourced ICT services, internal and procedures clearly define its 71 Statement of financial position Group Portfolio Managers, works audit services, insurance broker approach to risk management, across all areas of the organisation 72 Statement of changes in equity services and facilities management. as well as identifying specific risk to promote and integrate the risk 73 Statement of cash flows The facilities management contract management roles, accountabilities management process and to support replaced approximately 150 and responsibilities across the 74 Notes to the accounts and inform colleagues. individual facilities contracts; organisation. Ofcom’s Board and Executive undertook • the implementation of financial Ofcom’s strategic risk register is E ANNEX a review of the organisation’s risk control arrangements regarding reviewed monthly by the Policy and appetite statements in March 2015. 102 Ofcom Boards and Committees cash management activities relating Management Board and quarterly by Work has continued to embed the 105 Regulatory statements to the insourcing of PMSE licensing the Risk and Audit Committee. The consideration of risk appetite into the responsibilities from Arqiva; strategic risk register is submitted 110 Investigations programme organisation’s decision-making and monthly to the main Board for 111 Broadcasting standards • the implementation of a new information. planning processes. outsourced payroll and benefits 112 Spectrum engineering The table on page 28 highlights solution; and enforcement some of the key risks being managed 114 Spectrum licensing by the organisation. 118 Sustainability 120 Glossary

61 GOVERNANCE STATEMENT

Independent assurance a result of disclosing information The Board has maintained strategic OVERVIEW Ofcom outsources its internal audit which is considered to be in the oversight and review of internal A public interest. Ofcom is a ‘prescribed control and risk management function to KPMG. KPMG carries 4 Who we are person’ as defined under the Public arrangements through regular out its work in line with the Annual 6 Chairman’s message Internal Audit Plan, which is informed Interest Disclosure (Prescribed reports by directors on their areas of by an assessment of the strategic Persons) Order 2014. As such, responsibility and through specific risk register, discussions with individuals working outside Ofcom, reports for discussion at Risk and B PERFORMANCE REPORT management and the National Audit but in the communications sector, Audit Committee and Board meetings. may contact Ofcom if they have 8 Chief Executive’s report Office, and an ongoing consideration During the year, the Risk and Audit concerns about possible wrongdoing 12 Overview of the of the environment in which Ofcom Committee has considered: communications sector operates. The Plan is approved by the at their own organisation. During • individual internal audit reports, Risk and Audit Committee. During 2015/16 Ofcom did not receive any 14 Progress on delivering against management responses and 2015/16 a total of 13 internal audits disclosures under the Public Interest our annual plan priorities progress against any actions raised; were completed, including reviews Disclosure Act 1998 or otherwise. 30 Work in the nations and our of health & safety, information • the internal auditor’s annual report international engagement Statement of Accounting Officer security, cross entity programme and opinion on the adequacy of 32 Other work to supportour goals governance and payroll and flexible As Chief Executive and Accounting our internal control system; 37 How we work and who benefits. Where appropriate, Ofcom Officer I have overall responsibility • National Audit Office reports and we work with has sought independent, third-party for reviewing the effectiveness of recommendations; 42 Financial review assurance for key business processes. the system of internal control. Group Directors have responsibility for • regular reports on Ofcom’s 47 Our employees Public interest disclosure the development and maintenance strategic risk register, including 48 Corporate responsibility of the internal control framework. the identification of risks to the The Public Interest Disclosure Act 50 Sustainability report 1998 gives legal protection to This framework informs the work organisation’s system of internal employees against being dismissed of internal audit and comments control and information about or penalised by their employers as made by external auditors in their the controls that have been put in C ACCOUNTABILITY REPORT management letter and other reports. place to mitigate these risks; and 52 Directors’ report • any additional assurance reports 55 Governance statement that have been requested by the 64 Remuneration report Risk and Audit Committee. 68 Certificate and report of the To my knowledge, and based on Comptroller and Auditor General the advice I have received from to the Houses of Parliament those managers with designated responsibilities for managing risks and the risk management system, D FINANCIAL STATEMENTS I am not aware of any significant 70 Statement of income internal control findings for 2015/16. and expenditure

Sharon White 71 Statement of financial position Chief Executive and 72 Statement of changes in equity Accounting Officer 73 Statement of cash flows 21 June 2016 74 Notes to the accounts

62 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

Statement of responsibilities The Board is responsible for ensuring that proper records are maintained, A OVERVIEW The Board’s responsibilities which disclose with reasonable 4 Who we are Under the terms of the Office of accuracy at any time the financial Communications Act 2002, the position of Ofcom and enable it to 6 Chairman’s message Board is required to prepare a ensure that the Statement of Accounts Statement of Accounts for each complies with the Companies Act B PERFORMANCE REPORT financial year. This conforms to the 2006. In addition, the Board is Accounts Direction issued by the responsible for safeguarding Ofcom’s 8 Chief Executive’s report Secretaries of State for Business, assets and hence for taking reasonable 12 Overview of the Innovation and Skills and for Culture, steps for the prevention and detection communications sector Media & Sport. The Board is also of fraud and other irregularities. 14 Progress on delivering against responsible for sending a copy of our annual plan priorities Chief Executive’s responsibilities the Statement of Accounts to the 30 Work in the nations and our Comptroller and Auditor General. The Chief Executive is appointed international engagement by the Board, which delegates This Statement of Accounts is 32 Other work to supportour goals prepared, in so far as applicable, in responsibility to her for the day- to-day management of Ofcom. 37 How we work and who accordance with the Companies Act we work with 2006 and the International Financial The Permanent Secretary for the 42 Financial review Reporting Standards (IFRS) as well Department for Culture, Media As a Member of the Board, the Chief as the interpretations issued by the & Sport has designated the Chief Executive has to ensure that her 47 Our employees accountability responsibilities do International Financial Reporting Executive as Ofcom’s Accounting 48 Corporate responsibility Officer. The appointment carries not conflict with her responsibilities Interpretations Committee (IFRIC), 50 Sustainability report and on an accruals basis. It must with it duties of responsibility in as a Board Member. The Chief give a true and fair view of the respect of regularity, propriety, Executive may be called upon by the state of affairs of Ofcom as at value for money and good financial Committee of Public Accounts and C ACCOUNTABILITY REPORT management, and the safeguarding other Parliamentary committees to the end of the financial year and 52 Directors’ report of its income and expenditure, of public funds. give evidence on the discharge of her duties. 55 Governance statement recognised gains and losses and The Chief Executive has specific cash flows for the financial year. responsibilities for ensuring 64 Remuneration report compliance with the terms of the 68 Certificate and report of the The Board confirms that in preparing Comptroller and Auditor General this Statement of Accounts it has existing Financial Memorandum to the Houses of Parliament observed the relevant accounting issued by the Secretary of State (and and disclosure requirements, applied will continue to do so under the new Framework Document when suitable accounting policies on a D FINANCIAL STATEMENTS consistent basis, made judgements it becomes effective). She must 70 Statement of income and estimates on a reasonable basis, also ensure that proper accounting and expenditure followed applicable accounting records are maintained and she must standards and prepared the statement sign the accounts. 71 Statement of financial position of accounts on a going-concern basis. 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

E ANNEX MAKING 102 Ofcom Boards and Committees COMMUNICATIONS 105 Regulatory statements WORK FOR EVERYONE 110 Investigations programme 111 Broadcasting standards • Promoting choice 112 Spectrum engineering • Securing standards and enforcement 114 Spectrum licensing • Preventing harm 118 Sustainability 120 Glossary

63 REMUNERATION REPORT

REMUNERATION REPORT A OVERVIEW 4 Who we are 6 Chairman’s message In preparing the General policy Performance-related payments remuneration report, and In setting Ofcom’s remuneration Each Executive Member and Group B PERFORMANCE REPORT establishing its remuneration policy the Remuneration Committee Director participates in an annual believes that Ofcom should, within performance bonus scheme, which 8 Chief Executive’s report policy, the Board has given the constraints of being a public is calculated as a percentage of 12 Overview of the consideration to, and adopts body, provide rewards which will salary based on the individual’s communications sector the provisions of, the UK attract and retain the high-calibre performance, up to a maximum of 14 Progress on delivering against Corporate Governance management necessary to enable 20% of salary, depending upon the our annual plan priorities Ofcom to fulfil its statutory remit individual concerned. This allows 30 Work in the nations and our Code, and compliance with and responsibilities. The overall Ofcom to recognise the contribution international engagement policy approach is not expected of high performers in any year the Government Financial 32 Other work to supportour goals Reporting Manual where to change in the coming year. without raising base salary levels. No element of a performance bonus 37 How we work and who appropriate and applicable. Components of is pensionable. Performance bonuses we work with Ofcom is not required to comply remuneration noted against individuals for the 42 Financial review with the Schedule 8 of The Large review period 1 April 2015 to 31 47 Our employees The main components of March 2016 have been approved and Medium-sized Companies and 48 Corporate responsibility Groups (Accounts and Reports) Executive Members’ and Group by the Remuneration Committee 50 Sustainability report Regulations 2008 as amended in Directors’ remuneration are: and accrued but not paid as at August 2013 but has prepared this the year end. Ofcom does not Salary and flexible benefits report to be compliant so far as provide a long-term performance C ACCOUNTABILITY REPORT is practicable and appropriate. The basic salary for Executive bonus scheme for its employees. Members and Group Directors is 52 Directors’ report Constitution of the determined by taking into account Fair pay disclosure 55 Governance statement Remuneration Committee each colleague’s responsibilities, Public sector organisations are 64 Remuneration report performance and experience, required to disclose the relationship 68 Certificate and report of the The constitution of the Remuneration together with market trends. between the remuneration of Comptroller and Auditor General Committee is set out on page 56. In addition, a flexible benefits the highest-paid director in their to the Houses of Parliament allowance is made available to organisation and the median Advisers each Executive Member and remuneration of the organisation’s FINANCIAL STATEMENTS Where necessary, the Remuneration Group Director from which the workforce. The remuneration of D Committee takes advice and/or individual concerned may purchase the highest paid director in Ofcom 70 Statement of income obtains services from specialist certain benefits. All basic salaries in the financial year 2015/16 was and expenditure are reviewed annually with £320,200 (£317,782 in 2014/15). external organisations. 71 Statement of financial position effect from 1 July each year. This was 5.71 times (5.79 times in The Committee also takes advice 2014/15) the median remuneration 72 Statement of changes in equity from Ofcom’s HR Director. The Chief Standard benefits of Ofcom’s workforce, which was 73 Statement of cash flows Executive and the Group Director, Each Executive Member and Group £56,085 in 2015/16 (£54,971 in Corporate Services are normally 74 Notes to the accounts Director receives certain standard 2014/15). No employees received invited by the Remuneration benefits: specifically, private remuneration in excess of the Committee to attend meetings of medical insurance, life assurance, highest-paid director. In 2015/16, E ANNEX the Committee. No individual is group income protection and remuneration ranged from £17,357 present for any discussion about 102 Ofcom Boards and Committees the opportunity to undertake an to £320,200 and in 2014/15 from his or her own remuneration. 105 Regulatory statements annual health check. The total £13,401 to £317,782. For comparison value of group income protection, purposes, total remuneration 110 Investigations programme life assurance and annual health includes base salary, performance 111 Broadcasting standards checks has not been disclosed in the bonus, flexible benefits and benefits 112 Spectrum engineering remuneration schedules because in kind. It does not include any and enforcement it is not treated by HM Revenue & pension allowance, in line with the 114 Spectrum licensing Customs as a taxable emolument. Treasury Financial Reporting Manual. 118 Sustainability 120 Glossary

64 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

Pension arrangements Table 1: Ofcom Non-Executive Board Member remuneration: 2015/16 OVERVIEW Under Ofcom’s pension A arrangements, each Executive Name Guidance note Fees 15/16 Fees 14/15 4 Who we are reference £ £ Member and Group Director 6 Chairman’s message is provided with an allowance, Dame Lynne Brindley DBE 1 42,519 42,519 determined as a percentage of base salary, which the individual can Bill Emmott + 1,2 10,630 – B PERFORMANCE REPORT take as extra salary or invest in a Tim Gardam + 1,2 31,889 42,519 8 Chief Executive’s report pension scheme of their choice. Stephen Hill + 1,2 28,346 21,260 12 Overview of the The Chairman, Patricia Hodgson, communications sector is in receipt of a pension from the Dame Patricia Hodgson DBE 1 142,500 142,500 14 Progress on delivering against Ofcom (former ITC) Pension Plan. Graham Mather + 1,2 42,519 35,433 our annual plan priorities No other Non-Executive Member 30 Work in the nations and our received a pension benefit from Mike McTighe + 1,2 31,889 42,519 international engagement Ofcom during the year under review. Baroness Noakes DBE + 1,2 70,000 58,333 32 Other work to supportour goals Guidance to the Ben Verwaayen + 1,2 10,630 – 37 How we work and who we work with remuneration schedules 410,922 385,082 42 Financial review Details of remuneration received Annualised costs were £425,095 for 2015/16 and £425,095 for 2014/15 47 Our employees for the Board, the Content Board and the Senior Management Team, 48 Corporate responsibility which have been audited by the 50 Sustainability report National Audit Office, are set out in the following tables and notes. Table 2: Ofcom Non-Executive Content Board Member remuneration: 2015/16 C ACCOUNTABILITY REPORT These schedules refer to remuneration during the financial 52 Directors’ report Name Guidance note Fees 15/16 Fees 14/15 55 Governance statement year. The schedule reflects reference £ £ remuneration for that part of the 64 Remuneration report year during which individuals were Andrew Chitty 1 10,800 10,800 68 Certificate and report of the either members of the Board or Juan Andrew Colman 1 10,800 10,800 Comptroller and Auditor General the Content Board, or members to the Houses of Parliament of the Senior Management Team. Aled Eirug + 1,3 3,600 – Those individuals with the note ‘+’ Robin Foster + 1,3 2,700 – against their name in the schedules D FINANCIAL STATEMENTS Zahera Harb + 1,3 3,600 – were in their roles for only part 70 Statement of income of 2014/15 or 2015/16. Where David Levy 1 10,800 10,800 and expenditure individuals are members of more 71 Statement of financial position than one Board/Committee (as set Lesley Mackenzie 1 10,800 10,800 out on pages 65 and 66) they appear 72 Statement of changes in equity Iseabail Mactaggart+ 1,3 – 2,700 only once in the remuneration 73 Statement of cash flows schedules. All Executive Members Glyn Mathias + 1,3 7,800 15,900 74 Notes to the accounts are listed under the Senior Nick Pollard + 1,3 1,800 – Management Team in Table 3. Philip Schlesinger + 1 10,800 3,600 E ANNEX The guidance note reference numbers against the names Mary Ann Sieghart + 1 10,800 6,300 102 Ofcom Boards and Committees of individuals refer to the 105 Regulatory statements notes on pages 66 and 67. Janey Walker 1 15,900 20,100 110 Investigations programme 100,200 91,800 As a result of the various changes 111 Broadcasting standards in membership in 2014/15 and Annualised costs were £134,700 for 2015/16 and £91,500 for 2014/15 112 Spectrum engineering 2015/16, an annualised figure is and enforcement given below each table, to provide a clearer comparison of total costs. 114 Spectrum licensing 118 Sustainability The following tables are subject to audit. 120 Glossary

65 REMUNERATION REPORT

Table 3: Ofcom Senior Management Team and Executive Content Board remuneration: 2015/16 A OVERVIEW Name Guidance Salary Pension Flexible Benefits Performance Total Total 4 Who we are Note 15/16 entitlement/ benefits In kind Bonus remuneration Remuneration reference allowance Allowance 15/16 15/16 15/16 14/15 6 Chairman’s message 15/16 15/16 £ £ £ £ £ £ £ B PERFORMANCE REPORT Jill Ainscough + 4,5 – – – – – – 175,855 8 Chief Executive’s report Tony Close + 3,4 119,083 17,862 12,500 2,254 12,000 163,699 – 12 Overview of the Alison Crosland + 4,7 44,107 6,616 3,393 461 – 54,577 – communications sector 14 Progress on delivering against Philip Marnick 4,6 208,075 31,211 15,000 2,700 15,000 271,986 265,549 our annual plan priorities Stuart McIntosh + 4,5 – – – – – – 49,804 30 Work in the nations and our international engagement Jonathan Oxley 4,6 253,750 38,062 15,000 2,700 15,000 324,512 110,984 32 Other work to supportour goals Claudio Pollack + 4,5 146,300 21,945 11,250 2,008 – 181,503 256,445 37 How we work and who Ed Richards + 4,5,8 27,185 5,437 1,817 446 – 34,885 376,902 we work with 42 Financial review James Thickett 4,6 157,625 23,644 15,000 2,700 10,000 208,969 206,911 47 Our employees Steve Unger 4,5,6 252,865 37,930 15,000 2,700 25,000 333,495 294,144 48 Corporate responsibility Polly Weitzman 4,6,9 229,390 34,408 15,000 2,700 25,000 306,498 305,401 50 Sustainability report Sharon White + 4,6 275,000 55,000 15,000 2,700 27,500 375,200 28,973

1,713,380 272,115 118,960 21,369 129,500 2,255,324 2,070,968 C ACCOUNTABILITY REPORT

Annualised costs were £2,240,611 for 2015/16 and £1,981,305 for 2014/15 52 Directors’ report 55 Governance statement Notes to the Janey Walker of £15,900 per annum 3. Iseabail Mactaggart resigned 64 Remuneration report and the fee paid to Nick Pollard to from the Content Board on 30 June 68 Certificate and report of the remuneration tables reflect their additional work and 2014; Glyn Mathias retired from the Comptroller and Auditor General 1. The fees for all the Non-Executive responsibilities for standards work). Content Board on 30 June 2015; to the Houses of Parliament Members of the Ofcom Board are The Non-Executive Members of the Zahera Harb and Aled Eirug were fixed in agreement with DCMS for Ofcom Board and Content Board appointed to the Content Board on D FINANCIAL STATEMENTS the duration of their appointment. Members received no additional 1 December 2015; Robin Foster was The fees shown represent the full remuneration beyond their fees, appointed to the Content Board 70 Statement of income year under review. The basic fee of other than the entitlement for the on 1 January 2016 and Nick Pollard and expenditure the Non-Executives of the Ofcom Non-Executive Members of the was appointed to the Content 71 Statement of financial position Board (with the exception of the Ofcom Board only, to the provision Board on 1 March 2016. Tony Close 72 Statement of changes in equity Chairman and Deputy Chairman) of IT equipment. Not all Non- was appointed as an Executive has been £42,519 per annum Executive Members of the Ofcom Member of the Content Board 73 Statement of cash flows since 1 April 2008. The fees for Board took up the entitlement on 1 June 2015 and the full-year 74 Notes to the accounts Non-Executive Members of the during the period under review. equivalent of his salary is £150,000. Content Board are fixed by Ofcom. 2. Graham Mather and Baroness 4. The total annual remuneration E ANNEX The fees shown represent the Noakes joined the Ofcom Board on shown for Ofcom executives who full year or, where appropriate, 102 Ofcom Boards and Committees 1 June 2014 and Stephen Hill joined are, or were, all members of the part of the year, if the relevant the Ofcom Board on 1 October 2014. Senior Management Team, apart 105 Regulatory statements Non-Executive Member joined or Bill Emmott and Ben Verwaayen from James Thickett and Tony Close 110 Investigations programme retired from the Content Board, or were appointed to the Ofcom Board who are Executive Members of took on additional responsibilities 111 Broadcasting standards on 1 January 2016. Stephen Hill the Content Board, includes basic during the period under review. 112 Spectrum engineering resigned from the Ofcom Board on salary, performance bonus, a cash The basic fee of the Content Board and enforcement 11 November 2015; Mike McTighe allowance for flexible benefits and Members is £10,800 per annum and Tim Gardam retired from the a percentage of basic salary paid as 114 Spectrum licensing (the exception being the fee paid to Ofcom Board on 31 December 2015. a pension allowance. The ‘benefits 118 Sustainability 120 Glossary

66 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

in kind’ column reflects the cost to 7. Alison Crosland joined Ofcom as a There was one redundancy Ofcom of the provision of private member of the Senior Management payment relating to a member A OVERVIEW medical insurance for each executive. Team on 11 January 2016. The of the Senior Management Team 4 Who we are full-year equivalent of her salary included in the accounts for the year 5. Ed Richards resigned as an is £195,000. Lindsey Fussell joined for loss of office during 2015/16, 6 Chairman’s message Executive Member of the Ofcom Ofcom as a member of the Senior as set out in Note 5 above. Board and from the Executive Management Team on 18 April Committee on 31 December 2014 B PERFORMANCE REPORT 2016, outside the reporting period. Compensation for early and left the organisation on 4 May 8 Chief Executive’s report 2015. The full-year equivalent of his 8. Ed Richards continued to receive termination 12 Overview of the salary is £298,650. Stuart McIntosh remuneration from Ofcom between The arrangements for early termination communications sector resigned as an Executive Member resigning from Ofcom on 31 of a contract of employment for an of the Ofcom Board and from the December 2014 and leaving the 14 Progress on delivering against Executive Member of the Ofcom Board, our annual plan priorities Executive Committee on 31 May organisation on 4 May 2015; this Content Board or member of the 2014, and Jill Ainscough resigned period was his formal period of 30 Work in the nations and our Senior Management Team are decided as an Executive Member of the notice from Ofcom during which international engagement by the Remuneration Committee and Ofcom Board on 16 September 2014 time he was placed on ‘garden leave’. 32 Other work to supportour goals will be made in accordance with the and from the Executive Committee 9. Polly Weitzman is paid £12,120 contract of employment of the relevant 37 How we work and who on 27 October 2014, and left the per annum as a Non-Executive Executive Member or Group Director. we work with organisation on 31 December 2014. Director of the Homerton University Each contract of employment provides 42 Financial review In early 2016, Ofcom’s Consumer, NHS Foundation Trust; these fees for a payment in lieu of notice on early Content and External Affairs Group 47 Our employees are paid direct to Ofcom and Ms. termination at Ofcom’s discretion. was split into two new groups – 48 Corporate responsibility Weitzman receives no part of them. Consumer, and Content and Media Non-Executive Members have no 50 Sustainability report Policy – to ensure that each group 10. As of 31 March 2016, the Senior entitlement to compensation in the had sufficient focus on key areas Management Team comprised six event of early termination. of Ofcom’s remit. As a result of members (there were six members C ACCOUNTABILITY REPORT as at 31 March 2015). this restructure, Claudio Pollack Outside directorships 52 Directors’ report left Ofcom on 31 December 2015 No Executive Member of the Ofcom 55 Governance statement and ceased to be a member of Contract of employment Board may accept a non-executive the Senior Management Team 64 Remuneration report The Chief Executive and Jonathan appointment without the prior and an Executive Member of the 68 Certificate and report of the Oxley, Group Director of Competition, approval of the Board, to ensure Content Board with effect from this Comptroller and Auditor General have a notice period of 12 months. No that it does not give rise to conflicts date. The full-year equivalent of to the Houses of Parliament other Executive Member of the Ofcom of interest. Any fees paid to the his salary is £196,350. In line with Board or other Ofcom colleague has a Executive Member for such an his contract of employment and contract of employment containing a appointment may only be retained FINANCIAL STATEMENTS Ofcom’s redundancy policy, Claudio D notice period exceeding nine months. by the Executive at the discretion received a payment in lieu of notice 70 Statement of income The Remuneration Committee has of the Remuneration Committee. of £105,675 and the cost of his and expenditure considered the notice period and redundancy payment of £151,038 has No Board Member holds or held any termination arrangements in the light 71 Statement of financial position been included in the accounts for directorships or significant interests of the UK Corporate Governance Code 72 Statement of changes in equity the year. Steve Unger was appointed that conflicted with their duties. and believes them to be appropriate. as an Executive Member of the 73 Statement of cash flows On behalf of Ofcom, Ofcom Board on 23 March 2015. The Non-Executive Members are all 74 Notes to the accounts on fixed-term appointments for a Sharon White 6. Sharon White, Jonathan Oxley, set time commitment to Ofcom of Chief Executive and Philip Marnick, Steve Unger and ANNEX up to two days per week (with the Accounting Officer E Polly Weitzman have been members exception of Patricia Hodgson and 21 June 2016 102 Ofcom Boards and Committees of the Senior Management Team Sheila Noakes who committed up to throughout the period; James 105 Regulatory statements three days per week and two-and- Baroness Noakes DBE Thickett has been an Executive 110 Investigations programme a-half days per week respectively). Chairman of the Member of the Content Board Remuneration Committee 111 Broadcasting standards throughout the period. 21 June 2016 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

67 THE CERTIFICATE AND REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE HOUSES OF PARLIAMENT

THE CERTIFICATE AND REPORT OF THE A OVERVIEW 4 Who we are COMPTROLLER AND AUDITOR GENERAL 6 Chairman’s message

TO THE HOUSES OF PARLIAMENT B PERFORMANCE REPORT 8 Chief Executive’s report I certify that I have audited the view. My responsibility is to audit, disclosed; the reasonableness of 12 Overview of the financial statements of the Office of certify and report on the financial significant accounting estimates made communications sector Communications for the year ended statements in accordance with the by the Office of Communications; 14 Progress on delivering against 31 March 2016 under the Office Office of Communications Act 2002. I and the overall presentation of the our annual plan priorities of Communications Act 2002. The conducted my audit in accordance with financial statements. In addition I read financial statements comprise: the International Standards on Auditing all the financial and non-financial 30 Work in the nations and our international engagement Statements of Income and Expenditure, (UK and Ireland). Those standards information in the Annual Report Financial Position, Changes in Equity, require me and my staff to comply to identify material inconsistencies 32 Other work to supportour goals Cash Flows; and the related notes. with the Auditing Practices Board’s with the audited financial statements 37 How we work and who These financial statements have Ethical Standards for Auditors. and to identify any information that we work with been prepared under the accounting is apparently materially incorrect 42 Financial review policies set out within them. I have Scope of the audit of the based on, or materially inconsistent 47 Our employees also audited the information in the financial statements with, the knowledge acquired by 48 Corporate responsibility Remuneration Report that is described An audit involves obtaining evidence me in the course of performing in that report as having been audited. about the amounts and disclosures the audit. If I become aware of any 50 Sustainability report in the financial statements sufficient apparent material misstatements Respective responsibilities of or inconsistencies I consider the to give reasonable assurance that the C ACCOUNTABILITY REPORT the Board, Accounting Officer financial statements are free from implications for my certificate. and auditor material misstatement, whether I am required to obtain evidence 52 Directors’ report As explained more fully in the caused by fraud or error. This includes sufficient to give reasonable assurance 55 Governance statement an assessment of: whether the Statement of Responsibilities, the that the expenditure and income 64 Remuneration report Board and Accounting Officer are accounting policies are appropriate recorded in the financial statements responsible for the preparation of the to the Office of Communications’ 68 Certificate and report of the have been applied to the purposes Comptroller and Auditor General financial statements and for being circumstances and have been intended by Parliament and the to the Houses of Parliament satisfied that they give a true and fair consistently applied and adequately financial transactions recorded in the financial statements conform to the authorities which govern them. D FINANCIAL STATEMENTS 70 Statement of income Opinion on regularity and expenditure In my opinion, in all material respects 71 Statement of financial position the expenditure and income recorded 72 Statement of changes in equity in the financial statements have been applied to the purposes intended 73 Statement of cash flows by Parliament and the financial 74 Notes to the accounts transactions recorded in the financial statements conform to the authorities ANNEX which govern them. E 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

68 C Ofcom Annual Report & Accounts 2015/16 ACCOUNTABILITY REPORT

A OVERVIEW 4 Who we are 6 Chairman’s message

C ACCOUNTABILITY REPORT 52 Directors’ report Opinion on financial statements • the information given in the • I have not received all of the 55 Governance statement In my opinion: Performance Report and the information and explanations I 64 Remuneration report Accountability Report for the require for my audit; or 68 Certificate and report of the • the financial statements give a financial year for which the • the Governance Statement does Comptroller and Auditor General true and fair view of the state of financial statements are prepared to the Houses of Parliament not reflect compliance with HM the Office of Communications’ is consistent with the financial Treasury’s guidance. affairs as at 31 March 2016 and of statements. the deficit after tax for the year D FINANCIAL STATEMENTS Report then ended; and Matters on which I report 70 Statement of income I have no observations to make on • the financial statements have been by exception and expenditure these financial statements. properly prepared in accordance I have nothing to report in respect of 71 Statement of financial position with the Office of Communications the following matters which I report Sir Amyas C E Morse 72 Statement of changes in equity Act 2002 and Secretaries of State to you if, in my opinion: 73 Statement of cash flows directions issued thereunder. • adequate accounting records have 74 Notes to the accounts not been kept or returns adequate Opinion on other matters for my audit have not been received Comptroller and Auditor General In my opinion: from branches not visited by my 27 June 2016 E ANNEX staff; or National Audit Office • the parts of the Remuneration 102 Ofcom Boards and Committees 157-197 Buckingham Palace Road Report to be audited have been • the financial statements and Victoria, London SW1W 9SP 105 Regulatory statements properly prepared in accordance the part of the Remuneration 110 Investigations programme with Secretary of State directions Report to be audited are not in made under the Office of agreement with the accounting 111 Broadcasting standards Communications Act 2002; and records and returns; or 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

69 STATEMENT OF INCOME A OVERVIEW 4 Who we are AND EXPENDITURE 6 Chairman’s message For the year ended 31 March 2016 B PERFORMANCE REPORT 8 Chief Executive’s report Notes 2015/16 2014/15 12 Overview of the £’000 £’000 communications sector

Income 3 114,813 111,208 14 Progress on delivering against our annual plan priorities Spectrum Clearance and Awards 3 5,911 4,290 30 Work in the nations and our Total income 120,724 115,498 international engagement 32 Other work to supportour goals Operating expenditure 37 How we work and who Staff costs 4 (65,723) (62,678) we work with

Other operating costs 6 (48,009) (49,737) 42 Financial review 47 Our employees Spectrum Clearance and Awards 4,6 (5,916) (4,054) 48 Corporate responsibility Total operating expenditure (119,648) (116,469) 50 Sustainability report D Operating surplus/(deficit) 1,076 (971) ACCOUNTABILITY REPORT Vacant property (cost)/income (152) 170 C 52 Directors’ report Finance income 94 61 55 Governance statement Finance costs – – FINANCIAL 64 Remuneration report Other finance income 15,19 537 881 68 Certificate and report of the STATEMENTS Comptroller and Auditor General Surplus on ordinary activities for 1,555 141 to the Houses of Parliament financial year before tax

Taxation 7 – (46) D FINANCIAL STATEMENTS Write down of deferred tax asset 7 (2,415) – 70 Statement of income (Deficit)/Surplus for financial (860) 95 and expenditure year after tax 71 Statement of financial position 72 Statement of changes in equity The accounting policies and notes on pages 74 to 101 form part of these financial statements. 73 Statement of cash flows 74 Notes to the accounts

70 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION A OVERVIEW 4 Who we are As at 31 March 2016 6 Chairman’s message

B PERFORMANCE REPORT 8 Chief Executive’s report Notes As at As at 12 Overview of the 31 March 2016 31 March 2015 communications sector £’000 £’000 14 Progress on delivering against Non–current assets our annual plan priorities Property, plant and equipment 8 6,166 6,621 30 Work in the nations and our Intangible assets 9 3,290 3,212 international engagement 32 Other work to supportour goals Deferred tax asset 7 – 2,415 37 How we work and who Trade and other receivables 11 1,464 745 we work with Retirement benefit assets 19 15,370 17,200 42 Financial review Total non–current assets 26,290 30,193 47 Our employees 48 Corporate responsibility Current assets 50 Sustainability report Trade and other receivables 10 8,194 6,557

Cash and cash equivalents 12 11,570 14,279 C ACCOUNTABILITY REPORT Total current assets 19,764 20,836 52 Directors’ report Total assets 46,054 51,029 55 Governance statement 64 Remuneration report Current liabilities 68 Certificate and report of the Trade and other payables 13 20,232 19,930 Comptroller and Auditor General Provisions for liabilities and charges 15 68 204 to the Houses of Parliament

Total current liabilities 20,300 20,134 D FINANCIAL STATEMENTS Non–current liabilities 70 Statement of income Trade and other payables 14 2,381 4,362 and expenditure Provisions for liabilities and charges 15 274 466 71 Statement of financial position Retirement benefit liabilities 19 1,148 1,206 72 Statement of changes in equity

Total non–current liabilities 3,803 6,034 73 Statement of cash flows 74 Notes to the accounts Total liabilities 24,103 26,168

E ANNEX Assets less liabilities 21,951 24,861 102 Ofcom Boards and Committees Equity 105 Regulatory statements

Reserves 21,951 24,861 110 Investigations programme

Total equity 21,951 24,861 111 Broadcasting standards 112 Spectrum engineering The accounting policies and notes on pages 74 to 101 form part of these financial statements. and enforcement These financial statements were approved by the Board on 21 June 2016. 114 Spectrum licensing Dame Patricia Hodgson, DBE Sharon White 118 Sustainability Chairman Chief Executive and Accounting Officer 120 Glossary

71 FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN EQUITY A OVERVIEW 4 Who we are For the year ended 31 March 2016 6 Chairman’s message

B PERFORMANCE REPORT 8 Chief Executive’s report Notes Reserve 12 Overview of the £’000 communications sector 14 Progress on delivering against Balance as at 1 April 2014 31,425 our annual plan priorities

Changes in equity for 2014/15 30 Work in the nations and our international engagement Remeasurement on pensions 19 (6,659) 32 Other work to supportour goals Surplus for year 95 37 How we work and who we work with Total recognised income and expense for 2014/15 (6,564) 42 Financial review Balance as at 31 March 2015 24,861 47 Our employees 48 Corporate responsibility Changes in equity for 2015/16 50 Sustainability report Remeasurement on pensions 19 (2,050)

Deficit for year (860) C ACCOUNTABILITY REPORT

Total recognised income and expense for 2015/16 (2,910) 52 Directors’ report 55 Governance statement Balance as at 31 March 2016 21,951 64 Remuneration report

The accounting policies and notes on pages 74 to 101 form part of these financial statements. 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

72 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWS A OVERVIEW 4 Who we are For the year ended 31 March 2016 6 Chairman’s message

B PERFORMANCE REPORT 8 Chief Executive’s report Notes 2015/16 2014/15 12 Overview of the £’000 £’000 communications sector

Cash flows from operating activities 14 Progress on delivering against our annual plan priorities Operating surplus/(deficit) 1,076 (971) 30 Work in the nations and our Adjustments for non–cash transactions international engagement Amortisation 9 1,137 908 32 Other work to supportour goals Depreciation 8 2,046 3,368 37 How we work and who we work with (Profit)/Loss on disposal of non-current assets 6 (14) 110 42 Financial review Impairment 6 – 624 47 Our employees (Increase)/Decrease in trade and other receivables 10,11 (2,356) 4,470 48 Corporate responsibility (Decrease)/Increase in trade and other payables 13,14 (1,679) (2,264) 50 Sustainability report (Decrease)/Increase in provisions 15 (490) (389)

Increase/(Decrease) in retirement pension 19 269 223 C ACCOUNTABILITY REPORT Net cash (outflow)/inflow from operating activities (11) 6,079 52 Directors’ report 55 Governance statement Cash flows from investing activities 64 Remuneration report Interest received 94 61 68 Certificate and report of the Purchases of property, plant and equipment 8 (1,229) (1,002) Comptroller and Auditor General Purchases of intangible assets 9 (1,598) (1,407) to the Houses of Parliament

Proceeds from sale of non-current assets 35 1 D FINANCIAL STATEMENTS Net cash outflow from investing activities (2,698) (2,347) 70 Statement of income and expenditure Cash flows from financing activities 71 Statement of financial position Repayment of borrowings – – 72 Statement of changes in equity Net cash outflow from financing activities – – 73 Statement of cash flows 74 Notes to the accounts (Decrease)/Increase in cash and cash equivalents in the year (2,709) 3,732

ANNEX Cash and cash equivalents at beginning of year 12 14,279 10,547 E

(Decrease)/Increase in cash and cash equivalents in the year (2,709) 3,732 102 Ofcom Boards and Committees 105 Regulatory statements Closing net funds 12 11,570 14,279 110 Investigations programme

The accounting policies and notes on pages 74 to 101 form part of these financial statements. 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

73 NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS A OVERVIEW 4 Who we are For the year ended 31 March 2016 6 Chairman’s message

a) Adoption of new and Ofcom recognises income when the 1. Basis of presentation B PERFORMANCE REPORT and principal revised standards amount of income can be reliably measured and it is probable that 8 Chief Executive’s report accounting policies Certain new standards, amendments and interpretations to existing future economic benefits will flow to 12 Overview of the The Office of Communications standards, listed below, have been the entity. communications sector (Ofcom) is an organisation that published but do not have any material Grant-in-aid 14 Progress on delivering against provides a broad range of regulatory impact on the financial statements of our annual plan priorities This income comprises grant-in-aid services, and is domiciled in the Ofcom. All standards below will relate 30 Work in the nations and our from DCMS to meet the costs of United Kingdom. The financial to future accounting periods. international engagement statements of the Organisation for spectrum management, spectrum • IAS 16 Property Plant and 32 Other work to supportour goals 31 March 2016 have been prepared awards and clearance, competition Equipment and IAS 38 Intangible in accordance with the International law enforcement, public interest tests, 37 How we work and who Assets (Amendment) applicable to Financial Reporting Standards local media assessments, website we work with annual periods beginning on or (IFRS) issued by the International blocking, joint ventures, nuisance 42 Financial review after 1 January 2016. calls and consumer protection. Accounting Standards Board (IASB) 47 Our employees as well as interpretations issued by • IAS 27 Separate Financial Statements Grant-in-aid received from DCMS is 48 Corporate responsibility the International Financial Reporting (Amendment) applicable to annual allocated and matched to costs in the Interpretations Committee (IFRIC) as periods beginning on or after 1 year to which it relates. 50 Sustainability report endorsed by the European Union. January 2016. The 700MHz clearance programme These financial statements have • IAS 1 Presentation of Financial oversee the clearance (including C ACCOUNTABILITY REPORT Statements (Amendment) applicable mitigation of potential interference) been prepared under the historical 52 Directors’ report cost convention modified by the to annual periods beginning on or of the UHF 700MHz band. Clearance evaluation of certain non-current after 1 January 2016. is undertaken by third parties 55 Governance statement assets, on a going concern basis, who are funded by way of capital 64 Remuneration report • Annual Improvement to IFRSs 2012- in accordance with International grants that have been considered 2014 cycle (Minor Amendments 68 Certificate and report of the Financial Reporting Standards (IFRS). and approved in-principle by the to the following standards are Comptroller and Auditor General The financial statements are prepared Spectrum Clearance and Awards to the Houses of Parliament applicable for annual periods on the basis of all IFRS accounting Programme Management Board beginning on or after 1 January standards and interpretations and (SCAP-MB), with final approval by HM 2016). These standards are IFRS 5 FINANCIAL STATEMENTS in accordance with the Companies Treasury. The programme is funded D Non-current Assets Held for Sale Act 2006 applicable to companies via grant-in-aid. and Discontinued Operations, IFRS 70 Statement of income reporting under IFRS and Article 4 of and expenditure 7 Financial Instruments: Disclosures, The grant recipients for the the European Union IAS Regulation, IAS 19 Employee Benefits, IAS 34 programme request funding from 71 Statement of financial position except where these are overridden Interim Financial Reporting. Ofcom once the grant conditions have 72 Statement of changes in equity by the Office of Communications been satisfied. For awarded grants, 73 Statement of cash flows Act 2002. These financial statements b) Income recognition Ofcom will only pay monies for actual are prepared under the accounts 74 Notes to the accounts Income comprises the fair value costs incurred, and will recognise direction from the Departments of the consideration received or the costs on agreement to pay the for Business, Innovation and Skills receivable in the ordinary course of recipient for the requested funds. ANNEX (BIS) and Culture, Media & Sport E Ofcom’s activities. Income is shown (DCMS) issued on 16 January 2008 102 Ofcom Boards and Committees net of value-added tax, returns, which forms part of the Financial rebates and discounts. 105 Regulatory statements Memorandum (FM) as approved by 110 Investigations programme BIS and DCMS. 111 Broadcasting standards Amounts in the Financial Statements are stated in pounds sterling, which 112 Spectrum engineering and enforcement is the functional currency of the organisation. 114 Spectrum licensing 118 Sustainability 120 Glossary

74 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

Postal services, networks and No entries are made in these cost of the item can be measured services administrative fees Financial Statements in respect of reliably. The carrying amount of the A OVERVIEW Section 400 related transactions, replaced part is derecognised. Income which comprises 4 Who we are unless payments and fees have been administrative fees invoiced by Ofcom Property, plant and equipment are collected and deposited into Ofcom’s 6 Chairman’s message is accounted for on an accruals basis. depreciated, on a straight-line basis, main bank account at the end of Income in excess of networks and at rates estimated to write off their the reporting date. These are shown services and postal services’ cash costs book values over their estimated B PERFORMANCE REPORT is classified as deferred income on the as due to the Consolidated Fund useful lives as follows: 8 Chief Executive’s report Statement of Financial Position. Cash within Cash and cash equivalents. 12 Overview of the costs in excess of income received are Ofcom prepares a separate set of classified as a receivable at the end of Fixtures & Fittings – Period of communications sector financial statements to 31 March Leasehold Improvements the lease the reporting date. each year for the purposes of Section 14 Progress on delivering against our annual plan priorities 400 of the Communications Act 2003 Fixtures & Fittings 7 years Broadcasting licence fees which are laid before Parliament. – Furniture 30 Work in the nations and our international engagement Income from broadcasting licence Office and Field 4 to 7 years fees represents the amount invoiced d) Leases Equipment 32 Other work to supportour goals to licensees and is accounted for Leases in which a significant portion of Computer Hardware 3 to 5 years 37 How we work and who on an accruals basis. Income in the risks and rewards of ownership are we work with excess of broadcasting’s cash costs Motor Vehicles 5 years retained by the lessor are classified as 42 Financial review is classified as deferred income on operating leases. Payments made and 47 Our employees the Statement of Financial Position. received under operating leases are Cash costs in excess of income recognised in Income or Expenditure Depreciation is calculated from the 48 Corporate responsibility received are classified as a receivable on a straight-line basis over the month following that in which an 50 Sustainability report at the end of the reporting date. term of the lease. Lease incentives asset is brought into service. are recognised as an integral part of The assets’ residual values and useful Application fees C ACCOUNTABILITY REPORT the total lease value, over the non- lives are reviewed, and adjusted One-off broadcasting and networks cancellable term of the lease. if appropriate, at the end of each 52 Directors’ report and services application fees are reporting period. 55 Governance statement non-refundable and accordingly e) Property, plant and are recorded as income on receipt equipment Gains and losses on disposals are 64 Remuneration report of the stakeholder application. recognised within ‘(Profit)/Loss on Property, plant and equipment 68 Certificate and report of the disposal of non-current assets’ in include the purchase of new assets Comptroller and Auditor General Other income the ‘Other operating costs’ note to the Houses of Parliament and extensions to, enhancements to, per the Statement of Income and Other income is accounted for on an or replacement of existing assets. accruals basis and is matched with Expenditure. D FINANCIAL STATEMENTS the expenditure towards which it The minimum capitalisation contributes. threshold is £2,500 and property, f) Intangible assets 70 Statement of income plant and equipment is recorded Intangible assets are stated at cost and expenditure c) Receipts collected by Ofcom at cost or deemed cost, less less accumulated amortisation using 71 Statement of financial position within the scope of Section 400 accumulated depreciation and the revaluation model where the 72 Statement of changes in equity of the Communications Act 2003 any impairment losses. A Treasury impact of revaluation is material, direction on property, plant and 73 Statement of cash flows In accordance with Section 400 and are reviewed annually for equipment allows Ofcom to use of the Communications Act 2003, impairment as per IAS 38 Intangible 74 Notes to the accounts depreciated historical cost as a Broadcasting Act Additional Assets. Expenditure capitalised proxy for current valuation for Payments, Geographic Numbering includes the costs of software non-property assets of a short E ANNEX receipts and Financial Penalties applications and development and useful life or low value. All Ofcom levied by Ofcom are remitted to related licences fees. The minimum 102 Ofcom Boards and Committees assets fall in this category. the Consolidated Fund. Licence capitalisation threshold is £2,500. 105 Regulatory statements fees levied by Ofcom arising from Subsequent costs are included in the 110 Investigations programme the issue or renewal of licences asset’s carrying amount or recognised 111 Broadcasting standards under the Wireless Telegraphy (WT) as a separate asset, as appropriate, Acts are also remitted to DCMS for only when it is probable that future 112 Spectrum engineering payment to the Consolidated Fund. economic benefits associated with and enforcement the item will flow to Ofcom and the 114 Spectrum licensing 118 Sustainability 120 Glossary

75 NOTES TO THE ACCOUNTS

Internally generated intangible non- h) Trade receivables New staff may join a stakeholder OVERVIEW current assets, such as computer Trade receivables are amounts due pension scheme, which is a A software, are recognised only if an defined contribution scheme. from stakeholders for licences, 4 Who we are asset is created that can be identified. fees and charges. If collection is Defined benefit plans 6 Chairman’s message Where no internally generated expected in one year or less (or in intangible asset can be recognised, the normal operating cycle of the A defined benefit plan is a post- development expenditure is recorded business if longer), they are classified employment benefit plan where the B PERFORMANCE REPORT as an expense in the period in which as current assets. If not, they are benefits its members are entitled to 8 Chief Executive’s report it is incurred. presented as non-current assets. are pre-determined by a formula. 12 Overview of the Amortisation on capitalised Ofcom’s net obligation in respect Trade receivables are recognised of defined benefit pension plans communications sector development costs is charged to the initially at fair value less provision income statement on a straight-line is calculated separately for each 14 Progress on delivering against for impairment. our annual plan priorities basis, from the month following that plan by estimating the amount of future benefit that employees have in which an asset is brought into i) Cash and cash equivalents 30 Work in the nations and our service, over the estimated useful life earned during their membership of international engagement Cash and cash equivalents include the plan. That benefit is discounted of the asset of three to five years. 32 Other work to supportour goals cash in hand, deposits held at call to determine its present value Information technology relates to with banks, rent deposits and amount and the fair value of plan assets is 37 How we work and who we work with the development of our core systems due to the Consolidated Fund. deducted. The discount rate is the whilst systems under development yield at the reporting date on high 42 Financial review comprise costs incurred in developing j) Trade payables quality bonds that have maturity 47 Our employees computer systems, which will replace Trade payables are obligations dates approximating the terms of 48 Corporate responsibility some of the current applications. No to pay for goods or services that Ofcom’s obligations and that are 50 Sustainability report amortisation is provided on these have been acquired in the ordinary denominated in the same currency assets in the course of development course of business from suppliers. in which the benefits are expected to or construction. Research expenditure Accounts payable are classified be paid. The calculation is performed C ACCOUNTABILITY REPORT is written off as incurred to the as current liabilities if payment is annually by a qualified actuary using Statement of Income and Expenditure. due within one year or less (or in the projected unit credit method. 52 Directors’ report the normal operating cycle of the 55 Governance statement When the calculation results in a g) Impairment of assets business if longer). If not, they are benefit to Ofcom, the recognised 64 Remuneration report At each reporting date, the carrying presented as non-current liabilities. asset is limited to the present value 68 Certificate and report of the value of non-current assets is of any future refunds. Actuarial Comptroller and Auditor General reviewed to determine if there is some k) Employee benefits gains and losses are recognised in to the Houses of Parliament indication that the carrying value of the Statement of Changes in Equity the assets may have been impaired as Pension Schemes in full in the period in which they per IAS 36 Impairment of Assets. Ofcom has a range of pension D FINANCIAL STATEMENTS occur. Interest income and costs, schemes which include a defined An asset’s carrying amount is written and administration costs of the 70 Statement of income contribution plan, two defined down immediately, as an impairment defined benefit plans are recognised and expenditure benefit plans and an unfunded plan. loss, to its recoverable amount if the in the Statement of Income and 71 Statement of financial position asset’s carrying amount is greater than Defined contribution plan Expenditure in the current period. 72 Statement of changes in equity its estimated recoverable amount. A defined contribution plan is a Ofcom participates in two defined 73 Statement of cash flows Material impairments are disclosed post-employment benefit plan under benefit pension schemes which relate 74 Notes to the accounts separately in the notes to the which Ofcom pays contributions to staff that transferred to Ofcom Statement of Income and Expenditure into a separate entity and will from legacy organisations. These and Statement of Financial Position. have no legal or constructive schemes are closed to new members E ANNEX Assets that suffered impairment are obligation to pay further amounts. and following consultation with Plan 102 Ofcom Boards and Committees reviewed for possible reversal of the members have been closed for future Obligations under Ofcom’s defined impairment at each reporting date. accrual as from 1 June 2011. 105 Regulatory statements contribution scheme are recognised 110 Investigations programme within staff costs as an expense in the Statement of Income and Expenditure 111 Broadcasting standards as incurred. 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

76 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

The Ofcom Defined Benefit Pension Colleague leave liability m) Settlement of claims OVERVIEW Plan provides benefits that are Under IAS 19 Employee Benefits, all Provision is made for estimated A broadly equivalent to the Principal costs must be recorded as an expense third party legal costs and 4 Who we are Civil Service Pension Scheme as soon as the obligation to pay damages in respect of challenges 6 Chairman’s message (PCSPS). The second scheme is the employees arises. This includes the cost to regulatory decisions of Ofcom Ofcom (Former ITC) Staff Pension of any untaken leave as at the year end. where it is judged probable Plan. This is a multi-employer that these will be payable. B PERFORMANCE REPORT scheme with Ofcom, ASA, and S4C Colleagues who have completed five years of continuous service are 8 Chief Executive’s report as participating employers. The n) Foreign exchange assets of both schemes are held in entitled to a paid sabbatical of five 12 Overview of the Transactions designated in foreign separately administered trusts. weeks and thereafter accrue one communications sector week for each additional year of currencies are translated into sterling IAS 19 requires that, where a scheme at the rate of exchange prevailing 14 Progress on delivering against service subject to a maximum of our annual plan priorities is in surplus according to the IAS 19 ten weeks. An accrual, based on at the transaction date. Monetary assumptions, the surplus can only management’s best estimates using assets and liabilities designated in 30 Work in the nations and our international engagement be recognised on Ofcom’s Statement current salary data and churn rates foreign currencies are translated at of Financial Position if an economic is included as part of accruals. As the rates prevailing at the reporting 32 Other work to supportour goals benefit is “available” to it as a result from 1 January 2008, this benefit date with the resulting profit or 37 How we work and who of the surplus. was withdrawn for new employees. loss recognised in the Statement of we work with Income and Expenditure for the year. 42 Financial review Unfunded schemes l) Provisions o) Financial instruments and 47 Our employees Ofcom also has liabilities in respect Provisions for early retirement, legal 48 Corporate responsibility of pension payments to two former provisions and vacant property are credit risk Chairmen of the Independent recognised when: Ofcom has a present Cash and cash equivalents 50 Sustainability report Television Commission, two former legal or constructive obligation as a Cash and cash equivalents include Chairmen of the Radio Authority, result of past events; it is probable cash in hand, deposits held at C ACCOUNTABILITY REPORT two former Directors General of that an outflow of resources will be call with banks, rent deposits and The Office of Telecommunications required to settle the obligation; 52 Directors’ report amount due to the Consolidated and two former Chairmen of and the amount has been reliably Fund. Interest income receivable 55 Governance statement Postcomm. These unfunded benefits estimated. Provisions are not on cash and cash equivalents 64 Remuneration report are accounted for under IAS 19 recognised for future operating losses. Employee Benefits via a provision is recognised as it is earned. 68 Certificate and report of the in Ofcom’s Statement of Financial Ofcom provides for obligations Comptroller and Auditor General Position equal to the actuarial value relating to excess leased space in its Trade receivables to the Houses of Parliament of these liabilities. properties, discounted by appropriate Trade and other receivables are market discount rates. The provisions non-interest bearing and stated at FINANCIAL STATEMENTS Other employee benefits represent the net present value of fair value. Provision is made where D the future estimated costs after there is evidence that the balances 70 Statement of income Early retirement costs recognising reasonably certain future will not be recovered in full. and expenditure The annual compensation payment rental income. The unwinding of the 71 Statement of financial position (ACP) is part of the severance discount is included within other Trade payables 72 Statement of changes in equity package for some colleagues who finance costs in the Statement of Trade payables are not interest bearing transferred to Ofcom on their old Income and Expenditure. and are stated at their fair value. 73 Statement of cash flows Civil Service terms and conditions 74 Notes to the accounts of employment. From the date of early retirement until retiring age the colleague receives an annual E ANNEX compensation payment (ACP) equal 102 Ofcom Boards and Committees to the preserved pension. This is paid 105 Regulatory statements by monthly instalments in arrears like a pension. It begins to accrue on 110 Investigations programme the day immediately following the 111 Broadcasting standards date of retirement and continues 112 Spectrum engineering until the preserved pension comes and enforcement into payment, when it stops. 114 Spectrum licensing 118 Sustainability 120 Glossary

77 NOTES TO THE ACCOUNTS

p) Current and deferred tax q) Segmental analysis Areas of judgement that have OVERVIEW HM Revenue and Customs has A segment is a distinguishable the most significant effect on the A amounts recognised in the financial ruled that Ofcom’s regulatory component of the organisation 4 Who we are statements are as follows: functions do not constitute a that is engaged either in providing 6 Chairman’s message trading business. Consequently, products or services (business • Revenue recognition and Ofcom is unable to recover VAT segment), or in providing products assessment of unbilled revenue on expenditure which it incurs as or services within a particular – accounting policy (b) B PERFORMANCE REPORT part of its regulatory activities. economic environment (geographical • Deferred tax asset utilisation in 8 Chief Executive’s report segment), and is subject to risks Corporation Tax is assessable on respect of available future taxable and rewards that are different 12 Overview of the interest received, and in respect profits – accounting policy (p) communications sector from those of other segments. No of rental income net of property analysis of Ofcom’s turnover from The source of estimation uncertainty 14 Progress on delivering against expenditure arising from letting operations by geographical segment that has a risk of causing a material our annual plan priorities surplus property. or business segment has been adjustment to the carrying amounts 30 Work in the nations and our At the reporting date, Ofcom had presented as all Ofcom’s activities of assets and liabilities within the international engagement unutilised tax losses available for are carried out in the UK and within next financial year is as follows: 32 Other work to supportour goals offset against future taxable income the regulatory sector. However, in • Estimation of liabilities for 37 How we work and who of £12,104k (2015: £12,067k). These order to meet with the requirements pension and other post-retirement we work with losses have arisen as a result of of the Communications Act 2003 benefits – accounting policy (k) 42 Financial review onerous lease provisions on properties to provide information on costs inherited from predecessor bodies and fees, Note 2 to these financial 47 Our employees that were excess to requirements statements presents the Statement 48 Corporate responsibility when Ofcom was incorporated. of Income and Expenditure for 50 Sustainability report the year under review by sector. Deferred tax Deferred tax is provided, using the r) Areas of judgement and C ACCOUNTABILITY REPORT liability method, on all temporary key sources of estimation 52 Directors’ report differences at the reporting date uncertainty 55 Governance statement between the tax bases of assets The preparation of financial and liabilities relating to taxable statements requires management 64 Remuneration report activities, and their carrying amounts to make estimates and assumptions 68 Certificate and report of the for financial reporting purposes. that affect the reported amounts Comptroller and Auditor General Deferred tax assets are recognised of assets and liabilities, disclosures to the Houses of Parliament for unused tax losses, to the extent of contingent assets and liabilities and the reported amounts of that it is probable that future D FINANCIAL STATEMENTS taxable profit will be available revenue and expenses during the against which they can be utilised. reporting period. Actual results 70 Statement of income could differ from these estimates. and expenditure Information about such judgements 71 Statement of financial position and estimations is contained in the 72 Statement of changes in equity accounting policies or the notes to 73 Statement of cash flows the financial statements, and the key areas are summarised below. 74 Notes to the accounts

78 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

2. Sectoral analysis A OVERVIEW The analysis below refers to income by sector for the year ended 31 March 2016, together with attributable costs. 4 Who we are This is prepared in accordance with the Communications Act 2003 and Postal Services Act 2011 and not in terms of 6 Chairman’s message IFRS 8 Segmental Reporting, as per the accounting policy 1 (q).

Spectrum Spectrum Spectrum Networks Broadcasting Postal Other 2015/16 2014/15 B PERFORMANCE REPORT management clearance awards & services Regulation income Total Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 8 Chief Executive’s report 12 Overview of the Revenue communications sector Licence and – – – 36,438 17,913 5,145 – 59,496 58,716 14 Progress on delivering against administration fees our annual plan priorities Application fees – – – 10 619 – – 629 1,003 30 Work in the nations and our international engagement Grant–in–aid 50,744 7,432 963 – – – 3,441 62,580 61,924 32 Other work to supportour goals Other income – – – – – – 330 330 330 37 How we work and who Accrued/(Deferred) 90 (2,386) (98) 1,858 (1,945) (178) (58) (2,717) (6,769) we work with income 42 Financial review Total revenue 50,834 5,046 865 38,306 16,587 4,967 3,713 120,318 115,204 47 Our employees

Rental and 181 – – 136 59 18 12 406 294 48 Corporate responsibility other Income 50 Sustainability report Operating income 51,015 5,046 865 38,442 16,646 4,985 3,725 120,724 115,498

Interest receivable 42 – – 31 14 4 3 94 61 C ACCOUNTABILITY REPORT

Total income 51,057 5,046 865 38,473 16,660 4,989 3,728 120,818 115,559 52 Directors’ report 55 Governance statement Onerous property 1,266 – – 954 413 123 85 2,841 2,507 and accrued 64 Remuneration report rental income 68 Certificate and report of the Cash income 52,323 5,046 865 39,427 17,073 5,112 3,813 123,659 118,066 Comptroller and Auditor General to the Houses of Parliament

Total costs (52,323) (5,046) (865) (39,427) (17,073) (5,112) (3,813) (123,659) (118,066) FINANCIAL STATEMENTS Surplus on cash – – – – – – – – – D cost basis 70 Statement of income Comparative costs by sector and expenditure 71 Statement of financial position Year ending (52,323) (5,046) (865) (39,427) (17,073) (5,112) (3,813) (123,659) 31 March 2016 72 Statement of changes in equity 73 Statement of cash flows Year ending (52,811) (2,658) (1,632) (35,072) (17,104) (4,860) (3,929) (118,066) 31 March 2015 74 Notes to the accounts

79 NOTES TO THE ACCOUNTS

Other income comprises: In accordance with Ofcom’s relevant stakeholders, in accordance accounting policies, as set out in with Ofcom’s Statement of Charging A OVERVIEW • grant-in-aid relating to note 1(b) to these accounts, grant-in- Principles. Where in the current year expenditure in respect of duties 4 Who we are aid is accounted for in the period in there is an excess of expenditure over for competition enquiries, media which it is received. income, the deficit will be collected 6 Chairman’s message literacy work, public interest test from the relevant stakeholders, in activity, local media assessments, The above table is prepared on an accordance with Ofcom’s Statement nuisance calls, consumer adjusted cash basis, which includes B PERFORMANCE REPORT of Charging Principles. protection and joint ventures; capital expenditure and actual 8 Chief Executive’s report contributions to pension schemes, • grant-in-aid funded online 12 Overview of the but excludes depreciation. copyright infringement work; communications sector Ofcom’s licence and administrative • adjudicator income; 14 Progress on delivering against fees are based on an estimate of our annual plan priorities • commercial activities including cash costs in accordance with its 30 Work in the nations and our spectrum interference work; and Statement of Charging Principles. international engagement Where in the current year there is an • rental income from sub-letting 32 Other work to supportour goals vacant property space. excess of income over expenditure, the surplus will be rebated to the 37 How we work and who we work with 42 Financial review 47 Our employees 48 Corporate responsibility Reconciliation from operating expenditure to actual operating out-turn 50 Sustainability report

Notes 2015/16 2014/15 £’000 £’000 C ACCOUNTABILITY REPORT

Operating expenditure – Statement of Income and Expenditure 119,648 116,469 52 Directors’ report

Adjustments in respect of pension asset and liability (351) (305) 55 Governance statement 64 Remuneration report Vacant property costs 15 401 379 68 Certificate and report of the Capital expenditure less depreciation (356) (1,867) Comptroller and Auditor General to the Houses of Parliament Actual rent payments less expenditure 1,286 1,262

Other adjustments 3,031 2,128 D FINANCIAL STATEMENTS Cash operating expenditure 123,659 118,066 70 Statement of income Spectrum clearance (5,046) (2,658) and expenditure

Spectrum awards (865) (1,632) 71 Statement of financial position 72 Statement of changes in equity Non-operating income (3,640) (3,061) 73 Statement of cash flows Actual operating costs out-turn 114,108 110,715 74 Notes to the accounts

80 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

3. Income A OVERVIEW

Ofcom Spectrum Total 2015/16 Ofcom Spectrum Total 2014/15 4 Who we are Clearance Clearance & Awards & Awards 6 Chairman’s message £’000 £’000 £’000 £’000 £’000 £’000

Grant-in-aid DCMS B PERFORMANCE REPORT

Spectrum management 50,834 – 50,834 50,637 – 50,637 8 Chief Executive’s report 12 Overview of the Spectrum awards – 865 865 – 1,632 1,632 communications sector Spectrum clearance – 5,046 5,046 – 2,658 2,658 14 Progress on delivering against our annual plan priorities Competition law enforcement 2,450 – 2,450 2,459 – 2,459 30 Work in the nations and our Nuisance calls 921 – 921 1,090 – 1,090 international engagement Consumer protection 44 – 44 87 – 87 32 Other work to supportour goals

Grant-in-aid Scottish Government 37 How we work and who we work with Commonwealth Games – – – 844 – 844 42 Financial review Total government grant-in-aid 54,249 5,911 60,160 55,117 4,290 59,407 47 Our employees 48 Corporate responsibility Stakeholder income 50 Sustainability report Networks & services administrative 38,306 – 38,306 34,188 – 34,188 and application fees C ACCOUNTABILITY REPORT Broadcasting Act licence 16,587 – 16,587 16,673 – 16,673 and application fees 52 Directors’ report

Regulation of postal services 4,967 – 4,967 4,737 – 4,737 55 Governance statement 64 Remuneration report Other income 704 – 704 493 – 493 68 Certificate and report of the Total stakeholder income 60,564 – 60,564 56,091 – 56,091 Comptroller and Auditor General to the Houses of Parliament Total income 114,813 5,911 120,724 111,208 4,290 115,498 D FINANCIAL STATEMENTS Spectrum Clearance and Awards incomes have been presented separately from core Ofcom income in order to provide 70 Statement of income a more meaningful comparison between the years. and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

81 NOTES TO THE ACCOUNTS

4. Staff costs A OVERVIEW Ofcom Spectrum Total 2015/16 Ofcom Spectrum Total 2014/15 4 Who we are Clearance Clearance & Awards & Awards 6 Chairman’s message £’000 £’000 £’000 £’000 £’000 £’000

Staff costs, including fees paid to Board Members, were: B PERFORMANCE REPORT

Salaries & benefits 52,601 542 53,143 50,562 896 51,458 8 Chief Executive’s report 12 Overview of the National Insurance costs 6,042 63 6,105 6,007 105 6,112 communications sector Pension costs 5,583 46 5,629 5,375 79 5,454 14 Progress on delivering against our annual plan priorities Restructuring costs 1,497 – 1,497 734 – 734 30 Work in the nations and our Total staff costs 65,723 651 66,374 62,678 1,080 63,758 international engagement 32 Other work to supportour goals The restructuring costs in 2016 relate to restructuring activities completed in the year and includes an accrual for those 37 How we work and who costs unpaid at year end relating to six (2015: 2) employees. we work with More detailed information in respect of the remuneration and pension entitlements of the directors and senior executives is 42 Financial review shown in the remuneration report on pages 64 to 67. 47 Our employees During the year, seven (2015: 7) employees were seconded to other organisations and thus this credit is included within 48 Corporate responsibility the staff costs line in the table above. 50 Sustainability report Spectrum Clearance and Awards costs have been presented separately from core Ofcom staff costs in order to provide a more meaningful comparison between the years. C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement 64 Remuneration report 5. Employee numbers 68 Certificate and report of the Comptroller and Auditor General 2015/16 2014/15 to the Houses of Parliament

The average number of employees (full time equivalents) 795 787 D FINANCIAL STATEMENTS As at 31 March 2016, Ofcom had 799 employees (2015: 783). 70 Statement of income and expenditure Non-Executive Members of the Ofcom Board, Content Board, Advisory Committees and employees seconded to Ofcom are excluded from employee numbers. 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

82 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

6. Other operating costs A OVERVIEW Ofcom Spectrum Total 2015/16 Ofcom Spectrum Total 2014/15 4 Who we are Clearance Clearance & Awards & Awards 6 Chairman’s message £’000 £’000 £’000 £’000 £’000 £’000

Auditors remuneration 76 – 76 76 – 76 B PERFORMANCE REPORT – statutory audit fees 8 Chief Executive’s report Auditors remuneration 13 – 13 13 – 13 12 Overview of the – Section 400 communications sector Professional fees 5,538 988 6,526 5,832 588 6,420 14 Progress on delivering against Outsourced services 10,177 19 10,196 12,146 60 12,206 our annual plan priorities 30 Work in the nations and our Audience and consumer research 5,759 150 5,909 5,273 – 5,273 international engagement Technological research and 646 14 660 1,007 1,586 2,593 32 Other work to supportour goals spectrum efficiency projects 37 How we work and who Spectrum clearance scheme – 3,852 3,852 – 47 47 we work with

Temporary staff and recruitment 4,061 156 4,217 3,126 499 3,625 42 Financial review 47 Our employees Travel and subsistence 1,042 24 1,066 1,178 51 1,229 48 Corporate responsibility Premises costs 7,294 13 7,307 5,914 15 5,929 50 Sustainability report Administration and 6,340 26 6,366 6,433 122 6,555 office expenses C ACCOUNTABILITY REPORT Information and technology costs 3,774 15 3,789 3,350 3 3,353 52 Directors’ report Vehicles 247 – 247 273 – 273 55 Governance statement Bad and doubtful debt (119) – (119) 109 – 109 64 Remuneration report

Amortisation 1,137 – 1,137 908 – 908 68 Certificate and report of the Comptroller and Auditor General Depreciation 2,038 8 2,046 3,365 3 3,368 to the Houses of Parliament

(Profit)/Loss on disposal (14) – (14) 110 – 110 of non-current assets D FINANCIAL STATEMENTS Impairment – – – 624 – 624 70 Statement of income Total other operating costs 48,009 5,265 53,274 49,737 2,974 52,711 and expenditure 71 Statement of financial position The costs, above, include: 72 Statement of changes in equity Operating leases – land 5,387 – 5,387 4,737 – 4,737 and buildings 73 Statement of cash flows 74 Notes to the accounts Operating leases – vehicles 117 - 117 136 – 136

Operating leases – other 245 – 245 246 – 246 E ANNEX

Spectrum Clearance and Awards costs have been presented separately from core Ofcom operating costs in order to 102 Ofcom Boards and Committees provide a more meaningful comparison between the years. 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

83 NOTES TO THE ACCOUNTS

7. Taxation A OVERVIEW 2015/16 2014/15 4 Who we are £’000 £’000 6 Chairman’s message Tax (charge)/credit for the year

Deferred tax charge – (46) B PERFORMANCE REPORT Taxation – (46) 8 Chief Executive’s report 12 Overview of the 2015/16 2014/15 communications sector £’000 £’000 14 Progress on delivering against Write down of deferred tax asset (2,415) – our annual plan priorities 30 Work in the nations and our Reconciliation of tax charge 2015/16 2014/15 international engagement £’000 £’000 32 Other work to supportour goals Surplus before tax 1,555 141 37 How we work and who we work with Tax on profit at the UK standard rate of Corporation Tax of 20% (2015: 20%) 311 28 42 Financial review Tax effect of: 47 Our employees Income not subject to tax (24,141) (23,100) 48 Corporate responsibility

Expenses not subject to tax 23,822 23,118 50 Sustainability report

Deferred tax charge – (46) C ACCOUNTABILITY REPORT Increase to brought forward tax losses 8 – 52 Directors’ report Tax charge – – 55 Governance statement

Deferred tax Tax losses 64 Remuneration report £’000 68 Certificate and report of the Comptroller and Auditor General Analysis of movements in the net deferred tax balance during the year to the Houses of Parliament Deferred tax asset at 1 April 2014 2,461

Utilisation of brought forward tax losses (46) D FINANCIAL STATEMENTS

Deferred tax asset at 31 March 2015 2,415 70 Statement of income and expenditure Write down of deferred tax asset (2,415) 71 Statement of financial position Deferred tax asset at 31 March 2016 – 72 Statement of changes in equity 73 Statement of cash flows Deferred tax asset to be recovered within 12 months – 74 Notes to the accounts Deferred tax asset to be recovered after more than 12 months –

– E ANNEX 102 Ofcom Boards and Committees In line with IAS 12, following a review, Ofcom has insufficient future taxable profits to utilise this tax asset and as a result has written down the deferred tax asset accordingly. 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

84 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

8. Property, plant and equipment A OVERVIEW Leasehold Fixtures & Office & field Computer Motor Total 4 Who we are improvements fittings equipment hardware vehicles £’000 £’000 £’000 £’000 £’000 £’000 6 Chairman’s message

Cost B PERFORMANCE REPORT At 1 April 2014 14,570 842 14,918 6,858 409 37,597 8 Chief Executive’s report Additions during year – 282 595 125 – 1,002 12 Overview of the Impairment – – – – – – communications sector

Disposals (384) (109) (1,907) (137) (11) (2,548) 14 Progress on delivering against our annual plan priorities Transfers – – – 396 – 396 30 Work in the nations and our At 31 March 2015 14,186 1,015 13,606 7,242 398 36,447 international engagement 32 Other work to supportour goals Additions during year 4 57 955 54 159 1,229 37 How we work and who Impairment – – – – – – we work with

Disposals (44) (66) (566) (200) – (876) 42 Financial review 47 Our employees Transfers – – 131 251 – 382 48 Corporate responsibility Cost at 31 March 2016 14,146 1,006 14,126 7,347 557 37,182 50 Sustainability report

Depreciation C ACCOUNTABILITY REPORT At 1 April 2014 11,057 596 11,836 5,276 130 28,895 52 Directors’ report Charge for the year 814 82 813 1,594 65 3,368 55 Governance statement Impairment – – – – – – 64 Remuneration report Disposals (303) (87) (1,899) (137) (11) (2,437) 68 Certificate and report of the Comptroller and Auditor General Transfers – – – – – – to the Houses of Parliament At 31 March 2015 11,568 591 10,750 6,733 184 29,826

Charge for the year 670 101 901 308 66 2,046 D FINANCIAL STATEMENTS

Impairment – – – – – – 70 Statement of income and expenditure Disposals (28) (64) (563) (200) – (855) 71 Statement of financial position Transfers – – – (1) – (1) 72 Statement of changes in equity Accumulated depreciation 12,210 628 11,088 6,840 250 31,016 73 Statement of cash flows at 31 March 2016 74 Notes to the accounts

NBV 31 March 2016 1,936 378 3,038 507 307 6,166 E ANNEX NBV 31 March 2015 2,618 424 2,856 509 214 6,621 102 Ofcom Boards and Committees Equipment purchased for the Spectrum Clearance and Awards programme has been included in Ofcom’s asset registers 105 Regulatory statements under Field Equipment. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

85 NOTES TO THE ACCOUNTS

9. Intangible assets A OVERVIEW Software Information Systems under Total 4 Who we are licences technology development 6 Chairman’s message £’000 £’000 £’000 £’000

Cost B PERFORMANCE REPORT

At 1 April 2014 4,893 24,190 2,125 31,208 8 Chief Executive’s report

Additions during year 594 184 629 1,407 12 Overview of the communications sector Impairment (624) – – (624) 14 Progress on delivering against Disposals – – – – our annual plan priorities 30 Work in the nations and our Transfers 1,083 – (1,479) (396) international engagement At 31 March 2015 5,946 24,374 1,275 31,595 32 Other work to supportour goals

Additions during year 1,321 – 277 1,598 37 How we work and who we work with Impairment – – – – 42 Financial review Disposals (125) (102) – (227) 47 Our employees Transfers 20 18 (420) (382) 48 Corporate responsibility

Cost at 31 March 2016 7,162 24,290 1,132 32,584 50 Sustainability report

Amortisation C ACCOUNTABILITY REPORT At 1 April 2014 4,789 22,686 – 27,475 52 Directors’ report

Charge for the year 216 692 – 908 55 Governance statement 64 Remuneration report Impairment – – – – 68 Certificate and report of the Disposals – – – – Comptroller and Auditor General Transfers – – – – to the Houses of Parliament

At 31 March 2015 5,005 23,378 – 28,383 D FINANCIAL STATEMENTS Charge for the year 481 656 – 1,137 70 Statement of income Impairment – – – – and expenditure

Disposals (125) (102) – (227) 71 Statement of financial position 72 Statement of changes in equity Transfers 1 – – 1 73 Statement of cash flows Accumulated amortisation 5,362 23,932 – 29,294 at 31 March 2016 74 Notes to the accounts

NBV 31 March 2016 1,800 358 1,132 3,290 E ANNEX NBV 31 March 2015 941 996 1,275 3,212 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

86 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

10. Trade and other receivables – amounts receivable within one year A OVERVIEW As at 31 March 2016 As at 31 March 2015 4 Who we are £’000 £’000 6 Chairman’s message Trade receivables 584 617 Other receivables 24 20 B PERFORMANCE REPORT Prepayments 5,776 5,372 8 Chief Executive’s report

Staff loans and advances 246 236 12 Overview of the communications sector Accrued income 1,400 300 14 Progress on delivering against Accrued income (Grant-in-aid DCMS) 164 12 our annual plan priorities 30 Work in the nations and our Total trade and other receivables – amounts receivable within one year 8,194 6,557 international engagement 32 Other work to supportour goals Staff loans relate to 167 (2015:165) season ticket loans to colleagues repayable over 12 months. 37 How we work and who we work with 42 Financial review 47 Our employees 11. Trade and other receivables – amounts receivable after more than one year 48 Corporate responsibility 50 Sustainability report As at 31 March 2016 As at 31 March 2015 £’000 £’000 ACCOUNTABILITY REPORT Prepayments – 13 C 52 Directors’ report Accrued income 1,464 732 55 Governance statement Total trade and other receivables – amounts receivable after more than one year 1,464 745 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament 12. Cash and cash equivalents D FINANCIAL STATEMENTS As at 31 March 2016 As at 31 March 2015 70 Statement of income £’000 £’000 and expenditure Commercial banks and cash in hand 11,570 14,279 71 Statement of financial position

Balance of funds relating to Section 400 – due to the Consolidated Fund – – 72 Statement of changes in equity 73 Statement of cash flows Total cash and cash equivalents 11,570 14,279 74 Notes to the accounts

All activities and cash balances relating to Licence Fees and Penalties are separated from the Ofcom accounts and are disclosed in the Section 400 accounts. E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

87 NOTES TO THE ACCOUNTS

13. Trade and other payables – amounts falling due within one year A OVERVIEW As at 31 March 2016 As at 31 March 2015 4 Who we are £’000 £’000 6 Chairman’s message Trade payables 796 2,060

Other tax and social security – – B PERFORMANCE REPORT Other payables 100 171 8 Chief Executive’s report

Value added tax payable 42 55 12 Overview of the communications sector Grant-in-aid DCMS 2,594 2,539 14 Progress on delivering against Accruals 12,315 9,818 our annual plan priorities 30 Work in the nations and our Lease incentive accrual 1,291 1,289 international engagement Deferred income 3,094 3,998 32 Other work to supportour goals

Total trade and other payables – amounts falling due within one year 20,232 19,930 37 How we work and who we work with The Government’s target for payments to suppliers is five days. In addition to small and medium suppliers, Ofcom also includes 42 Financial review large suppliers in this scheme to encourage them to pay their small business suppliers within the shorter timeframe. 47 Our employees For 2015/16 Ofcom achieved on average a performance of 93.06% against these targets (2014/15: 93.79%). 48 Corporate responsibility 50 Sustainability report

C ACCOUNTABILITY REPORT 14. Trade and other payables – amounts falling due after more than one year 52 Directors’ report 55 Governance statement As at 31 March 2016 As at 31 March 2015 64 Remuneration report £’000 £’000 68 Certificate and report of the Lease incentive accrual 1,936 3,224 Comptroller and Auditor General to the Houses of Parliament Deferred income 445 1,138

Total trade and other payables – amounts falling due after more than one year 2,381 4,362 D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

88 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

15. Provisions for liabilities and charges A OVERVIEW Early retirement Vacant property Legal Total 4 Who we are £’000 £’000 £’000 £’000 6 Chairman’s message At 1 April 2014 311 892 – 1,203

Discount unwound in year 5 5 – 10 B PERFORMANCE REPORT

Utilised in year (70) (379) – (449) 8 Chief Executive’s report

Provision increased/(released) 16 (170) 60 (94) 12 Overview of the communications sector At 31 March 2015 262 348 60 670 14 Progress on delivering against Discount unwound in year 3 2 – 5 our annual plan priorities 30 Work in the nations and our Utilised in year (29) (401) – (430) international engagement Provision increased/(released) 5 152 (60) 97 32 Other work to supportour goals

Total provisions as at 31 March 2016 241 101 – 342 37 How we work and who we work with Provisions are calculated in accordance with the requirements of IAS 37. Provisions for early retirement are discounted 42 Financial review by 1.37% (2015: 1.3%) per annum in accordance with HM Treasury direction; all other provisions with a time boundary 47 Our employees of 0 to 5 years are discounted by the short term discount rate of 0.70% (2015: 0.58%) and for provisions with a time 48 Corporate responsibility boundary of 5 to 10 years the medium term rate of 1.60% (2015: 2.18%). 50 Sustainability report

Analysis of expected timing Early retirement Vacant property Legal Total C ACCOUNTABILITY REPORT of cashflows £’000 £’000 £’000 £’000 52 Directors’ report Current 55 Governance statement Not later than one year 29 39 – 68 64 Remuneration report 29 39 – 68 68 Certificate and report of the Comptroller and Auditor General Non–current to the Houses of Parliament Later than one year and not 97 62 – 159 later than five years D FINANCIAL STATEMENTS Later than five years 115 – – 115 70 Statement of income 212 62 – 274 and expenditure

Total provisions as at 31 March 2016 241 101 – 342 71 Statement of financial position 72 Statement of changes in equity

The provision for early retirement of £241k (2015: £262k) is for Annual Compensation Payments (ACP). The ACP is 73 Statement of cash flows part of the severance package for some colleagues who transferred to Ofcom on their old Civil Service terms and 74 Notes to the accounts conditions of employment. The provision for vacant property relates to one property which although occupied by Ofcom has some space that is E ANNEX surplus to requirements. Professional advice has been taken in marketing vacant property, and future income streams 102 Ofcom Boards and Committees are recognised as and when sub-letting of properties is reasonably certain. The provision is the net present value of the expected cash outflows calculated to the next lease break, net of the discounted value of future income streams 105 Regulatory statements secured from committed or reasonably certain future sub-letting agreements. 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

89 NOTES TO THE ACCOUNTS

16. Commitments under operating leases A OVERVIEW As at 31 As at 31 4 Who we are March March 2016 2015 6 Chairman’s message

Buildings Vehicles Other Total Buildings Vehicles Other Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 B PERFORMANCE REPORT

The future aggregate minimum lease payments under operating leases are as follows: 8 Chief Executive’s report 12 Overview of the Not later than one year 8,802 28 112 8,942 8,787 22 67 8,876 communications sector Later than one year and 13,514 – 180 13,694 21,969 – 1 21,970 14 Progress on delivering against not later than five years our annual plan priorities Later than five years 512 – – 512 616 – – 616 30 Work in the nations and our international engagement Total commitments 22,828 28 292 23,148 31,372 22 68 31,462 under operating leases 32 Other work to supportour goals 37 How we work and who The lease agreement for Riverside House runs until September 2022 with a break option in September 2018. we work with 42 Financial review 47 Our employees 17. Amounts receivable under operating leases 48 Corporate responsibility 50 Sustainability report As at 31 March 2016 As at 31 March 2015 Buildings Buildings £’000 £’000 C ACCOUNTABILITY REPORT The future minimum lease payments receivable under non–cancellable operating leases are as follows: 52 Directors’ report Not later than one year 2,338 2,297 55 Governance statement Later than one year and not later than five years 3,514 6,861 64 Remuneration report

Later than five years – – 68 Certificate and report of the Comptroller and Auditor General Total amounts receivable under operating leases 5,852 9,158 to the Houses of Parliament

Ofcom has entered into sub-lease contracts with regards to surplus office space within its main office building. D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

90 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

18. MG Alba B) Defined benefit pension plans Contribution schedules were agreed OVERVIEW Ofcom operates two defined benefit with the Trustee of both plans as A In accordance with Section 210 of pension plans, although both closed a result of these valuations. Under the Communications Act 2003 and 4 Who we are to future accrual on 1 June 2011: the existing schedules Ofcom would Section 183 of the Broadcasting Act be expecting to contribute £540k 6 Chairman’s message 1990, the Scottish Ministers paid • The Ofcom Defined Benefit to the two defined benefit plans £10,225k (2015: £12,870k) to Ofcom. Pension Plan was established on over the next 12 months to cover B PERFORMANCE REPORT In addition DCMS paid £1,000k (2015: 29 December 2003. The employer Plan expenses. This compares to £1,000k) to Ofcom. These sums have contribution made to the Ofcom £555k over the year to 31 March 8 Chief Executive’s report not been reflected in these accounts Defined Benefit Pension Plan for 2016 (including the contribution 12 Overview of the but have been paid by Ofcom to the the year ending 31 March 2016 paid from the Feeder Trust). communications sector Gaelic Broadcasting Fund under the was £366k in relation to Plan The funding valuations as at 14 Progress on delivering against management of the Seirbheis nam expenses (2015: £365k). No funds our annual plan priorities Meadhanan Gàidhlig (MG Alba). were transferred from the Feeder 31 March 2015 are currently in 30 Work in the nations and our MG Alba prepares separate reports Trust account to this Plan in the the process of being finalised. international engagement and accounts to 31 March each year. year ending 31 March 2016 Ofcom’s contributions to both These are sent by Ofcom to the (2015: £0k); and these plans are not expected to 32 Other work to supportour goals Secretary of State for Scotland and materially change once the 2015 37 How we work and who • The Ofcom (Former ITC) Scottish Ministers to be laid before funding valuations are finalised. we work with Pension Plan which Ofcom the Scottish Parliament. jointly participates in with three Ofcom operates a Feeder Trust 42 Financial review other organisations, S4C, S4C account, which is incorporated 47 Our employees 19. Retirement benefit within the Pension Scheme Assets. Masnachol and the Advertising 48 Corporate responsibility obligations Standards Authority. The employer Funds transferred to and held in 50 Sustainability report contribution made to the Ofcom the trust account can only be paid Ofcom has a range of pension (Former ITC) Pension Plan for into one of the two Defined Benefit schemes which include defined the year ending 31 March 2016 Pension Plans and are not able to ACCOUNTABILITY REPORT contributions plan, defined benefit C was £9k in relation to Plan be used for any other purpose. plans and unfunded plans. 52 Directors’ report expenses (2015: £10k). Employer There is no contribution from Ofcom 55 Governance statement A) Defined contribution plan – contributions of £180k was in year ended 31 March 2016 into the stakeholder pension plan transferred from the Feeder Trust Feeder Trust (2015: £0k). The balance 64 Remuneration report account to the Ofcom (Former ITC) of the Feeder Trust as at 31 March 68 Certificate and report of the Ofcom’s primary means of Pension Plan in the year ending 2016 was £8,369k (2015: £8,505k). Comptroller and Auditor General providing pension benefits to its 31 March 2016 (2015: £8,042k). to the Houses of Parliament Ofcom is also responsible for colleagues is by contributing to a Both of these Plans are managed meeting the unfunded pension stakeholder pension plan. Employer by a Board of Trustees that is liabilities for former Chairmen of the FINANCIAL STATEMENTS contributions of £4,903k were made D independent of Ofcom. Independent Television Commission, in the year ended 31 March 2016 the Radio Authority and Postcomm 70 Statement of income (2015: £4,774k). There is also a Ofcom’s cash contributions to and expenditure as well as former Directors General defined contribution section in the these two plans are determined in of Telecommunications. The pension 71 Statement of financial position Ofcom Defined Benefits Pension accordance with the Pensions Act provision is unfunded, with the 72 Statement of changes in equity Plan. However, this is now closed and 2004. This requires a significantly more benefits being paid as they fall no further contributions are being prudent measure of the liabilities than 73 Statement of cash flows due and guaranteed by Ofcom. made to this arrangement. IFRS. Pensions Act funding valuations 74 Notes to the accounts with an effective date of 31 March There is no fund, and therefore no 2012 were completed for both defined surplus or deficit. Actuarial advice benefit plans and, unlike under IFRS, has been sought to ensure that the E ANNEX provision is set at a realistic level. showed a significant combined deficit 102 Ofcom Boards and Committees of £5,218k. 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

91 NOTES TO THE ACCOUNTS

Summary of Ofcom’s defined benefit pension obligations OVERVIEW The amounts recognised in the Statement of Financial Position are as follows: A 4 Who we are Defined Unfunded Total Defined Unfunded Total 6 Chairman’s message benefit pensions retirement benefit pensions retirement pensions liability benefits pensions liability benefits funded funded B PERFORMANCE REPORT 31 March 31 March 31 March 31 March 31 March 31 March 8 Chief Executive’s report 2016 2016 2016 2015 2015 2015 £’000 £’000 £’000 £’000 £’000 £’000 12 Overview of the communications sector Funded status, end of year 14 Progress on delivering against – Benefit obligation in respect (71,806) – (71,806) (83,200) – (83,200) our annual plan priorities of deferred members 30 Work in the nations and our – Benefit obligation in respect (170,811) (1,148) (171,959) (172,164) (1,206) (173,370) international engagement of pensioner members 32 Other work to supportour goals Total benefit obligations (242,617) (1,148) (243,765) (255,364) (1,206) (256,570) 37 How we work and who we work with Fair value of plan assets 257,987 – 257,987 272,564 – 272,564 42 Financial review Funded status 15,370 (1,148) 14,222 17,200 (1,206) 15,994 47 Our employees Amount not recognised – – – – – – 48 Corporate responsibility due to asset limit * 50 Sustainability report Net funded status 15,370 (1,148) 14,222 17,200 (1,206) 15,994

ACCOUNTABILITY REPORT * IAS19 requires that, where a scheme is in surplus according to IAS19 assumptions, the surplus can only be recognised on Ofcom’s Statement of Financial C Position if an economic benefit is available to Ofcom as a result. The surplus in the DB Plan and Feeder Account has economic value as it can be 52 Directors’ report recovered by Ofcom. However, the Trust Deed and Rules of the Ofcom (former ITC) Plan do not permit a surplus asset in this Plan to be recovered. 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

92 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

Changes over the year to 31 March 2016 A OVERVIEW Defined Assets Asset Funded Unfunded Total 4 Who we are benefit ceiling pension pensions pension obligation scheme 6 Chairman’s message £’000 £’000 £’000 £’000 £’000 £’000 B PERFORMANCE REPORT Opening value (255,364) 272,564 – 17,200 (1,206) 15,994 8 Chief Executive’s report Administration expenses – (726) – (726) – (726) 12 Overview of the Total service cost – (726) – (726) – (726) communications sector 14 Progress on delivering against Interest income/(cost) (8,608) 9,195 – 587 (40) 547 our annual plan priorities 30 Work in the nations and our Employer contributions – 375 – 375 – 375 international engagement

Employer contributions total – 375 – 375 – 375 32 Other work to supportour goals 37 How we work and who Benefits paid from scheme assets 11,845 (11,845) – – – – we work with 42 Financial review Benefits paid directly by Ofcom – – – – 82 82 47 Our employees Benefits paid total 11,845 (11,845) – – 82 82 48 Corporate responsibility Remeasurements 50 Sustainability report

Actuarial gains/(losses) 9,510 (11,576) – (2,066) 16 (2,050) C ACCOUNTABILITY REPORT Closing value (242,617) 257,987 – 15,370 (1,148) 14,222 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

93 NOTES TO THE ACCOUNTS

Changes over the year to 31 March 2015 A OVERVIEW Defined Assets Asset Funded Unfunded Total 4 Who we are benefit ceiling pension pensions pension obligation scheme 6 Chairman’s message £’000 £’000 £’000 £’000 £’000 £’000 B PERFORMANCE REPORT Opening value (232,238) 264,012 (8,628) 23,146 (1,177) 21,969 8 Chief Executive’s report Administration expenses – (680) – (680) – (680) 12 Overview of the Total service cost – (680) – (680) – (680) communications sector 14 Progress on delivering against Interest income/(cost) (10,091) 11,433 (384) 958 (51) 907 our annual plan priorities 30 Work in the nations and our Employer contributions – 375 – 375 – 375 international engagement

Employer contributions total – 375 – 375 – 375 32 Other work to supportour goals 37 How we work and who Benefits paid from scheme assets 11,080 (11,080) – – – – we work with 42 Financial review Benefits paid directly by Ofcom – – – – 82 82 47 Our employees Benefits paid total 11,080 (11,080) – – 82 82 48 Corporate responsibility Remeasurements 50 Sustainability report

Actuarial gains/(losses) (24,115) 8,504 9,012 (6,599) (60) (6,659) C ACCOUNTABILITY REPORT Closing value (255,364) 272,564 – 17,200 (1,206) 15,994 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

94 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

A OVERVIEW 31 March 2016 Funded pension Asset Funded Unfunded Total 4 Who we are assets and ceiling pension pension pensions liabilities before 6 Chairman’s message asset ceiling £’000 £’000 £’000 £’000 £’000 B PERFORMANCE REPORT The amounts recognised in the Statement of Income and Expenditure are as follows: 8 Chief Executive’s report Service cost – – – – – 12 Overview of the Net interest credit/(cost) 587 – 587 (40) 547 communications sector 14 Progress on delivering against Defined benefit credit/(cost) recognised 587 – 587 (40) 547 in income and expenditure our annual plan priorities 30 Work in the nations and our Administration expenses (726) – (726) – (726) international engagement Income/(cost) recognised in (139) – (139) (40) (179) 32 Other work to supportour goals income and expenditure 37 How we work and who we work with 42 Financial review 31 March 2016 Funded pension Asset Funded Unfunded Total 47 Our employees assets and ceiling pension pension pensions liabilities before 48 Corporate responsibility asset ceiling 50 Sustainability report £’000 £’000 £’000 £’000 £’000

The amounts recognised as Other Comprehensive Income are as follows: C ACCOUNTABILITY REPORT Gains/(losses) on benefit obligations due (1,762) – (1,762) (5) (1,767) to changes in financial assumptions 52 Directors’ report 55 Governance statement Gains/(losses) on benefit obligations due 3,378 – 3,378 18 3,396 to changes in demographic assumptions 64 Remuneration report

Gains/(losses) on benefit obligations 7,894 – 7,894 3 7,897 68 Certificate and report of the as a result of member experience Comptroller and Auditor General to the Houses of Parliament Total gains/(losses) arising 9,510 – 9,510 16 9,526 on benefit obligations D FINANCIAL STATEMENTS Gains/(losses) on plan assets (11,576) – (11,576) – (11,576) 70 Statement of income Gains/(losses) as a result of – – – – – and expenditure change in asset limit 71 Statement of financial position Net gains/(losses) (2,066) – (2,066) 16 (2,050) 72 Statement of changes in equity 73 Statement of cash flows Ofcom and the Plans’ Trustees have implemented a number of steps to provide protection against events that causes a 74 Notes to the accounts deterioration in the funding positions. In particular, annuity policies meet the benefit payments of pensioner members in both Plans and all non-pensioner members in the ITC Plan. However, movements in market conditions can still have an impact on the funding positions particularly on the DB Plan. E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

95 NOTES TO THE ACCOUNTS

31 March 2015 Funded pension Asset Funded Unfunded Total OVERVIEW assets and ceiling pension pension pensions A liabilities before 4 Who we are asset ceiling £’000 £’000 £’000 £’000 £’000 6 Chairman’s message

The amounts recognised in the Statement of Income and Expenditure are as follows: B PERFORMANCE REPORT Service cost – – – – – 8 Chief Executive’s report Net interest credit/(cost) 1,342 (384) 958 (51) 907 12 Overview of the Defined benefit credit/(cost) recognised 1,342 (384) 958 (51) 907 communications sector in income and expenditure 14 Progress on delivering against Administration expenses (680) – (680) – (680) our annual plan priorities

Income/(cost) recognised in 662 (384) 278 (51) 227 30 Work in the nations and our income and expenditure international engagement 32 Other work to supportour goals 37 How we work and who we work with 31 March 2015 Funded pension Asset Funded Unfunded Total assets and ceiling pension pension pensions 42 Financial review liabilities before asset ceiling 47 Our employees £’000 £’000 £’000 £’000 £’000 48 Corporate responsibility

The amounts recognised as Other Comprehensive Income are as follows: 50 Sustainability report

Gains/(losses) on benefit obligations due (25,557) – (25,557) (73) (25,630) to changes in financial assumptions C ACCOUNTABILITY REPORT Gains/(losses) on benefit obligations due – – – – – 52 Directors’ report to changes in demographic assumptions 55 Governance statement Gains/(losses) on benefit obligations 1,442 – 1,442 13 1,455 64 Remuneration report as a result of member experience 68 Certificate and report of the Total gains/(losses) arising (24,115) – (24,115) (60) (24,175) Comptroller and Auditor General on benefit obligations to the Houses of Parliament Gains/(losses) on plan assets 8,504 – 8,504 – 8,504

Gains/(losses) as a result of – 9,012 9,012 – 9,012 D FINANCIAL STATEMENTS change in asset limit 70 Statement of income Net gains/(losses) (15,611) 9,012 (6,599) (60) (6,659) and expenditure 71 Statement of financial position Ofcom and the Plans’ Trustees have implemented a number of steps to provide protection against events that causes a 72 Statement of changes in equity deterioration in the funding positions. In particular, annuity policies meet the benefit payments of pensioner members 73 Statement of cash flows in both Plans and all non-pensioner members in the ITC Plan. However, movements in market conditions can still have 74 Notes to the accounts an impact on the funding positions particularly on the DB Plan.

96 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

The major categories of plan assets as a percentage of total plan assets are as follows: A OVERVIEW 31 March 2016 31 March 2015 4 Who we are (%) (%) Total Total 6 Chairman’s message

UK Equities 4 3 B PERFORMANCE REPORT Overseas Equities 3 3 8 Chief Executive’s report Corporate bonds 3 3 12 Overview of the Index-linked bonds 7 6 communications sector

Fixed interest government bonds 1 2 14 Progress on delivering against our annual plan priorities Annuities 78 80 30 Work in the nations and our Cash/interest on bank deposit 4 3 international engagement 32 Other work to supportour goals Total 100 100 37 How we work and who we work with 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 42 Financial review Ofcom Defined Benefit Pension Plan has a strategy in place that will increase the allocation to lower risk assets that 47 Our employees better match liabilities, such as gilts and bonds, when it is affordable to do so. 48 Corporate responsibility 50 Sustainability report

Principal economic assumptions at the date of the Statement of Financial Position: C ACCOUNTABILITY REPORT 31 March 2016 31 March 2015 52 Directors’ report (%) (%) Total Total 55 Governance statement 64 Remuneration report Discount rate 3.40 3.45 68 Certificate and report of the Retail Price Inflation 3.10 3.10 Comptroller and Auditor General to the Houses of Parliament - Future pension increases (RPI) 3.10 3.10

- Future pension increases (CPI max 3%) 1.85 1.85 D FINANCIAL STATEMENTS 70 Statement of income The Ofcom pension plan is composed of two separate plans and the Principal demographic assumptions at and expenditure the date of the Statement of Financial Position are as follows: 71 Statement of financial position 72 Statement of changes in equity DB Plan DB Plan ITC Plan ITC Plan 73 Statement of cash flows Expected lifetime of a member aged 60 who is… Currently aged 40 Currently aged 60 Currently aged 40 Currently aged 60 74 Notes to the accounts

- Male 29 27 30 28 ANNEX - Female 32 30 33 31 E 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

97 NOTES TO THE ACCOUNTS

Sensitivity to changes in principal assumptions used A OVERVIEW Change in assumption Impact on 4 Who we are

DB Plan ITC Plan 6 Chairman’s message

Defined Assets Funded status Defined Assets Funded status benefit surplus benefit surplus B PERFORMANCE REPORT obligations obligations £’000 £’000 £’000 £’000 £’000 £’000 8 Chief Executive’s report 12 Overview of the Discount rate communications sector

Increases by 0.50% decrease decrease increase by decrease by decrease by increase by £6 14 Progress on delivering against by £4,732 by £1,230 £3,502 £11,857 £11,851 our annual plan priorities

Falls by 0.50% increase by increase by decrease increase by increase by decrease by £7 30 Work in the nations and our £6,680 £1,571 by £5,109 £12,727 £12,720 international engagement 32 Other work to supportour goals Retail Price Inflation 37 How we work and who Increases by 0.50% increase by increase by decrease increase by increase by decrease by £5 we work with £6,593 £4,483 by £2,110 £9,898 £9,893 42 Financial review Falls by 0.50% decrease decrease increase by decrease decrease increase by £5 47 Our employees by £4,705 by £3,666 £1,039 by £9,443 by £9,438 48 Corporate responsibility Expected lifetime of a member aged 60 50 Sustainability report Increases by 1 year increase by increase decrease increase by increase by decrease by £3 £1,916 by £492 by £1,424 £5,650 £5,647 C ACCOUNTABILITY REPORT Decreases by 1 year decrease decrease increase by decrease decrease increase by £3 by £1,680 by £432 £1,248 by £5,626 by £5,623 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

98 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

Liability profile of defined benefit plans OVERVIEW The charts below illustrates the expected benefits payable by the respective Plans at the most recent actuarial A valuation (March 2015) over the next 80 years. 4 Who we are The expected future benefit payments are calculated based on a number of assumptions including future inflation, 6 Chairman’s message 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 PERFORMANCE REPORT a greater or lesser cash lump sum at retirement. B 8 Chief Executive’s report 12 Overview of the Ofcom Defined Benefit Pension Plan The duration (average term to payment) of the Plan’s liabilities is 20 years communications sector 14 Progress on delivering against our annual plan priorities

3.5 Deferred 30 Work in the nations and our international engagement Pensioner 3.0 32 Other work to supportour goals 37 How we work and who we work with 2.5 42 Financial review 47 Our employees 2.0 48 Corporate responsibility

1.5 50 Sustainability report

1.0 C ACCOUNTABILITY REPORT

Expected annual benefit payments (£m) annual benefit payments Expected 52 Directors’ report 0.5 55 Governance statement 64 Remuneration report 0.0 68 Certificate and report of the 0 10 20 30 40 50 60 70 80 Comptroller and Auditor General Years to the Houses of Parliament

Ofcom (Former ITC) Pension Plan The duration (average term to payment) of the Plan’s liabilities is 14 years D FINANCIAL STATEMENTS 70 Statement of income and expenditure 12.0 Deferred 71 Statement of financial position Pensioner & Dependants 72 Statement of changes in equity 10.0 73 Statement of cash flows 74 Notes to the accounts 8.0 E ANNEX 6.0 102 Ofcom Boards and Committees 105 Regulatory statements 4.0 110 Investigations programme 111 Broadcasting standards Expected annual benefit payments (£m) annual benefit payments Expected 2.0 112 Spectrum engineering and enforcement 114 Spectrum licensing 0.0 118 Sustainability 0 10 20 30 40 50 60 70 80 Years 120 Glossary

99 NOTES TO THE ACCOUNTS

20. Related parties At 31 March 2016, the following Moreover, financial instruments payables were held in respect of play a limited role in creating or A OVERVIEW Ofcom does not consider that its grant-in-aid provided by DCMS: changing risk as compared to 4 Who we are regulatory and licensing role creates listed companies to which IAS 32 • Spectrum clearance and awards the relationship of a related party mainly applies. Ofcom has very 6 Chairman’s message – £2,484k (2015:£1,208k); and between itself and licence holders limited powers to borrow or invest as defined by IAS 24, Related Party • Other sectors (functions which surplus funds. Financial assets and B PERFORMANCE REPORT Disclosures. cannot be funded through liabilities that are generated by fees and charges set under the day-to-day operational activities do 8 Chief Executive’s report Members of the Board submit an Communications Act 2003) – £27k not change the risks facing Ofcom 12 Overview of the annual declaration confirming that (2015: £272k). in undertaking its activities. communications sector they have no interests prejudicial to 14 Progress on delivering against their function as a Member of Ofcom. At 31 March 2016, the following There is no material difference at our annual plan priorities There were no transactions between receivables were held in respect the reporting date between the Ofcom and its Members other than of grant-in-aid due by DCMS: fair value and the carrying value 30 Work in the nations and our international engagement remuneration as disclosed separately • Spectrum management – £110k of financial assets and liabilities. 32 Other work to supportour goals in the remuneration report. (2015: £1,035k payables). As permitted by IAS 32, receivables 37 How we work and who No other related party transactions and payables which mature or The Secretaries of State for the become payable within 12 months we work with Department for Business, Innovation were entered into during the financial year. of the reporting date have been 42 Financial review and Skills (BIS) and the Department omitted from this assessment. for Culture, Media & Sport (DCMS) are 47 Our employees 21. Financial instruments 48 Corporate responsibility regarded as the controlling related 22. Capital commitments parties of Ofcom under the terms of Ofcom has no significant exposure 50 Sustainability report the Office of Communications Act 2002. to liquidity, interest rate or currency At 31 March 2016 there were capital risks. IAS 32, Financial Instruments: commitments of £113k (2015: £0k). Details of all grant-in-aid income C ACCOUNTABILITY REPORT Presentation requires disclosure of from DCMS are provided in Notes the role which financial instruments 52 Directors’ report 2, 3, 10 and 13 of these financial have had during the year in creating 55 Governance statement statements. or changing the risks an entity faces 64 Remuneration report in undertaking its activities. Because A defined contribution pension of the nature of its activities and the 68 Certificate and report of the scheme and two defined benefit Comptroller and Auditor General way in which Ofcom is financed, it is pension schemes are operated. One to the Houses of Parliament not exposed to the degree of financial of the two defined benefit schemes risk faced by business entities. (both closed to future accruals) has a FINANCIAL STATEMENTS related party of S4C. Refer to Note 19 D for further disclosure. 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

100 D Ofcom Annual Report & Accounts 2015/16 FINANCIAL STATEMENTS

23. Receipts transferred 25. Events after the A OVERVIEW to the Consolidated Fund reporting period 4 Who we are In accordance with Section 400 Between the reporting date and of the Communications Act 2003, the date when the accounts were 6 Chairman’s message Ofcom remitted £4,444k (2015: certified, Ofcom entered into new £3,237k) of Broadcasting Act lease arrangements for two offices, B PERFORMANCE REPORT Additional Payments, Geographical which are non-adjusting events after Numbering and Fines to the the end of the reporting period. 8 Chief Executive’s report Consolidated Fund. 12 Overview of the On 29 April 2016, Ofcom entered communications sector £265,571k (2015: £269,378k) of WT into a lease for a new office in Act licence fees was remitted to Warrington with a lease from 29 14 Progress on delivering against our annual plan priorities DCMS for transfer to the Consolidated July 2016 until 28 July 2026 at £92k Fund. Details on amounts due to the excluding VAT per annum after a rent 30 Work in the nations and our Consolidated Fund at 31 March 2016 free and transitional period. international engagement are disclosed in Note 12 to these 32 Other work to supportour goals On 23 May 2016, Ofcom has also financial statements. signed an agreement for a new lease 37 How we work and who for its London head office which is we work with 24. Contingent liabilities effective from 23 June 2017 until 28 42 Financial review Ofcom may be subject to appeal September 2030 on a new rent starting 47 Our employees at £4,803k excluding VAT per annum. of decisions made in carrying out 48 Corporate responsibility its functions as regulator of the The new secured lease is a reduction of 50 Sustainability report communications sector. Appeals its existing head office space. against Ofcom’s decisions could give In accordance with the requirements rise to liabilities for legal costs. Ofcom of IAS 10 Events after the Reporting C ACCOUNTABILITY REPORT will make a provision in the financial Period, post year end events are 52 Directors’ report statements for costs to the extent that considered up to the date on which they are probable and quantifiable. the accounts are authorised for 55 Governance statement issue. This is interpreted as the date 64 Remuneration report of the Certificate and Report of the 68 Certificate and report of the Comptroller and Auditor General. Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

101 A OVERVIEW 4 Who we are 6 Chairman’s message

Members Zahera Harb3 D FINANCIAL STATEMENTS Bill Emmott (Chairman)1 Dr David Levy 70 Statement of income Dame Lynne Brindley, DBE Lesley MacKenzie and expenditure Andrew Chitty Nick Pollard5 71 Statement of financial position Tony Close2 James Thickett 72 Statement of changes in equity Andrew Colman Philip Schlesinger 73 Statement of cash flows Aled Eirug3 Mary Ann Sieghart 74 Notes to the accounts Robin Foster4 Janey Walker E ANNEX 102 Ofcom Boards and Committees 1 Bill Emmott was appointed to the Content Board on 1 January 2016. 2 Tony Close was appointed as an Executive Member of the Content Board on 1 June 2015. 105 Regulatory statements 3 Aled Eirug and Zahera Harb were appointed to the Content Board on 1 December 2015. 4 Robin Foster was appointed to the Content Board on 1 January 2016. 5 Nick Pollard was appointed to the Content Board on 1 March 2016. 110 Investigations programme

Glyn Mathias retired from the Content Board on 30 June 2015, Tim Gardam retired from the Content Board on 31 December 111 Broadcasting standards 2015 and was Chairman until 31 December 2015, Claudio Pollack resigned as an Executive Member of the Content Board on 31 December 2015. 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

102 E Ofcom Annual Report & Accounts 2015/16 ANNEX

A OVERVIEW 4 Who we are 6 Chairman’s message

C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement Community Radio Fund Panel Classic FM, talkSPORT and Virgin 1215 comprises two Non-Executive 64 Remuneration report services. Unresolved disputes between Members of the Ofcom Board and the Section 359 of the Communications 68 Certificate and report of the any licensee and any political party, as Chairmen of the National Advisory Act makes it possible for a fund for Comptroller and Auditor General to the length, frequency, allocation or Committees. The Executive Directors community radio operators to be to the Houses of Parliament set up, and for Ofcom to administer scheduling of broadcasts, are brought of each nation, together with other it and “make such grants as they to Ofcom for resolution. The Ofcom senior Ofcom executives, are invited to FINANCIAL STATEMENTS consider appropriate” to community Board has delegated the adjudication attend Nations Committee meetings. D on such disputes to a committee radio licensees. The Panel meets as 70 Statement of income The Advisory Committees required to examine applications known as the Election Committee. and expenditure The Committee meets as and when for the Nations and make awards from the Fund. 71 Statement of financial position It is independent of the Broadcast required and consists of members Section 20 of the Communications 72 Statement of changes in equity Licensing Committee which awards drawn from the Ofcom Board, Content Act requires Ofcom to establish community radio licences. Board and Ofcom Executive. Advisory Committees for each 73 Statement of cash flows of the UK nations. The function 74 Notes to the accounts Nations Committee of each Committee is to provide Members The Nations Committee is a direct advice to Ofcom about the Wendy Pilmer (Chairman) Committee of the Ofcom Board. Its interests and opinions, in relation E ANNEX Richard Hilton role includes: understanding the to communications and postal 102 Ofcom Boards and Committees political dynamics in each nation matters, of people living in the part Fiona Lennox 105 Regulatory statements of the UK and advising on Ofcom’s of the UK for which the Committee engagement in each nation; agreeing has been established. In addition 110 Investigations programme Election Committee appropriate processes for Ofcom’s to the appointed members of the 111 Broadcasting standards Section 333 of the Communications Act engagement with each National National Advisory Committees, the 112 Spectrum engineering requires Ofcom to ensure that party Advisory Committee; monitoring Content Board member and the and enforcement political broadcasts (including party stakeholder events in each nation Communications Consumer Panel 114 Spectrum licensing election broadcasts) and referendum and overseeing the involvement member for the respective nations campaign broadcasts are included in of, and engagement of, the Ofcom are invited to attend the Advisory 118 Sustainability the UK regional ITV, Channel 4, Five, Board in each nation. Its membership Committee meetings as observers. 120 Glossary

103 OFCOM BOARDS AND COMMITTEES

Nations Advisory Committee members The Ofcom Spectrum Advisory Board A OVERVIEW England Scotland Wales Northern Ireland The Ofcom Spectrum Advisory 4 Who we are Board (OSAB) was established in 6 Chairman’s message Chairman John Varney Laura John Davies Maureen 2004 to provide independent advice Alexander Edmondson to Ofcom on strategic spectrum OBE management issues. Further B PERFORMANCE REPORT Members Barnie Amanda Bryan1 Nerys Evans Fiona Boyle information can be found on the 8 Chief Executive’s report Choudhury OSAB website at www.osab.org.uk. 12 Overview of the 3 2 Graham Stuart Gibson Karen Lewis Fiona MacMillan communications sector Creelman OBE Members 14 Progress on delivering against David Meyer (Chairman) our annual plan priorities Andrew Davis Liz Leonard Glyn Mathias2 Brendan Mulgrew Mischa Dohler4 30 Work in the nations and our Becky Hogge Ian McKay Huw Roberts Sharon Professor Linda Doyle international engagement O’Connor John Fuller (DCMS) (ex officio)4 32 Other work to supportour goals Duncan Ingram Peter Peacock Hywel Wiliam Paul Wilson Philippa Marks 37 How we work and who CBE we work with Dr Robert Pepper 1 John Trower Jean-Jacques Sahel 42 Financial review Mike Walker 47 Our employees Gavin Young 48 Corporate responsibility David Harrison (ex officio)5 50 Sustainability report Non-Board committees The Advisory Committee on David Hendon (ex officio)5 Older and Disabled People Chris Pook (DCMS) (ex officio)4 ACCOUNTABILITY REPORT The Communications C Section 21(1) of the Communications Greg Bensberg Consumer Panel Act 2003 requires Ofcom to establish 52 Directors’ report Niall Murphy Section 16 of the Communications a Committee to advise Ofcom on 55 Governance statement issues in the communications sector Act requires Ofcom to establish a 64 Remuneration report Consumer Panel. The Panel acts that particularly affect older and 68 Certificate and report of the as a ‘critical friend’ to Ofcom, disabled people. To take advantage Comptroller and Auditor General of the synergy between the providing advice that is robust to the Houses of Parliament and independent, but at the same Communications Consumer Panel time pragmatic and constructive. and the Advisory Committee on Older and Disabled People, and to FINANCIAL STATEMENTS Independent of Ofcom, the Panel is D avoid potential duplication, cross- made up of independent experts, 70 Statement of income membership of the two bodies was including representatives from and expenditure established in 2012. The remits of Scotland, Wales, Northern Ireland the bodies remain unchanged. 71 Statement of financial position and England, with experience 72 Statement of changes in equity in many different fields. Further information on the Panel can be Members 73 Statement of cash flows found at www.communications Dr Jo Connell, OBE (Chairman) 74 Notes to the accounts consumerpanel.org.uk. Jaya Chakrabarti MBE 1 Amanda Bryan and John Trower were appointed to the Rhys Evans Advisory Committee for Scotland on 1 September 2015. E ANNEX 2 Karen Lewis was appointed to the Advisory Committee Members Rick Hill [MBE] for Wales on September 1 2015. Glyn Mathias attended the Advisory Committee for Wales from 1 April 2015 to 30 102 Ofcom Boards and Committees Dr Jo Connell OBE (Chairman) Chris Holland June 2015 as an observer in his capacity as Content Board member for Wales. With effect from 1 July 2015 he became 105 Regulatory statements Jaya Chakrabarti MBE Mairi Macleod a member of the Advisory Committee for Wales. 3 Stuart Gibson retired from the Advisory Committee for 110 Investigations programme Rhys Evans Craig Tillotson Scotland on 31 May 2016. 4 Mischa Dohler joined the Spectrum Advisory Board 111 Broadcasting standards Rick Hill MBE Bob Twitchin MBE with effect from 1 January 2016, Nick Munn from DCMS has been attending the Spectrum Advisory Board 112 Spectrum engineering Chris Holland throughout 2015/16 in a deputising capacity for John Fuller and Chris Pook. and enforcement Mairi Macleod 5 David Harrison and David Hendon are both employees 114 Spectrum licensing Craig Tillotson of Ofcom. 118 Sustainability Bob Twitchin MBE 120 Glossary

104 E Ofcom Annual Report & Accounts 2015/16 ANNEX

REGULATORY STATEMENTS A OVERVIEW 4 Who we are List of statements published in 2015/16 including regulatory impact on stakeholders 6 Chairman’s message

Contribute to and implement public policy defined by Parliament B PERFORMANCE REPORT Significant Work Area: Complete the Ofcom review of public service broadcasting 8 Chief Executive’s report Public Service Broadcasting in the internet age 12 Overview of the A review of Channel 4 – Channel 4 Corporation's performance in meeting its media content duties communications sector Significant Work Area: Develop a framework for measuring media plurality 14 Progress on delivering against our annual plan priorities Measurement Framework for Media Plurality: Ofcom's advice to the Secretary of State for Culture, Media & Sport 30 Work in the nations and our Maintain audience confidence in broadcast content international engagement Priority: Promote audience safety and assurance in traditional and online environments 32 Other work to supportour goals Future regulation of on–demand programme services 37 How we work and who Significant Work Area: Complete our review of music formats regulation on radio we work with Review of music in radio formats 42 Financial review Significant Work Area: Develop plans for the implementation and licensing of small–scale DAB 47 Our employees Small Scale DAB trial licence awards 48 Corporate responsibility Programmatic: Assign broadcast licences including those for local TV stations and promote diversity 50 Sustainability report and equality of opportunity in broadcasting Statement on Radio City 2 and City Talk (Liverpool) format change requests C ACCOUNTABILITY REPORT Statement on Blast 106 Limited's request to change the Key Commitments for Blast 106 (Belfast) Statement on Chorley FM Limited's request to change its Key Commitments (1) 52 Directors’ report Statement on Chorley FM Limited's request to change its Key Commitments (2) 55 Governance statement Review of the approach to Community Radio Key Commitments 64 Remuneration report Statement on ESTV request to change programming commitments 68 Certificate and report of the Comptroller and Auditor General Programmatic: Ensure efficient and effective programme standards enforcement to the Houses of Parliament The Ofcom Broadcasting Code (Incorporating the Cross–promotion Code) Changes to signing arrangements for relevant domestic TV channels D FINANCIAL STATEMENTS Channel 3 networking arrangements: 2015 review 70 Statement of income Non–domestic TV channels: extension of transitional signing arrangements and expenditure The scheduling of television advertising 71 Statement of financial position Review of Ofcom's list of larger parties for elections taking place on 5 May 2016 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

Increased/new regulation Mixed/no-change/ongoing Streamlined/co-regulatory Reduced regulation 120 Glossary

105 REGULATORY STATEMENTS

Promote effective competition and informed choice A OVERVIEW Priority: Ensure effective competition in the provision of communications services for businesses 4 Who we are Request from BT for an exemption from the Undertakings for the Microconnect Distributed Antenna service 6 Chairman’s message Business Connectivity Market Review – draft statement Broadband services for SMEs: assessment and action plan PERFORMANCE REPORT Priority: Improve the process of switching providers for consumers B Consumer Switching: a statement on modifications to General Conditions to effect changes to switching processes for fixed voice and 8 Chief Executive’s report broadband on the KCOM Access Network 12 Overview of the Priority: Undertake a Strategic Review of Digital Communications communications sector Making communications work for everyone: Initial conclusions from the Strategic Review of Digital Communications 14 Progress on delivering against Significant Work Area: Commence the fixed access and narrowband market reviews our annual plan priorities 30 Work in the nations and our Supplementary guidance on assessment of the VULA margin international engagement Significant Work Area: Undertake MIAs in support of Public Value Tests by the BBC Trust 32 Other work to supportour goals Market impact assessment of proposed changes to BBC Three, BBC iPlayer, BBC One and CBBC 37 How we work and who BBC Trust Significance Test – BBC Radio 5 live Sports Extra proposals we work with Significant Work Area: Work to ensure fair and effective competition in broadcasting services 42 Financial review Review of the Pay-TV wholesale must–offer obligation 47 Our employees Programmatic: Implement measures to ensure availability of geographic numbers 48 Corporate responsibility and conduct further work as required on non-geographic numbers 50 Sustainability report A three-digit number for the national power cut and electricity network safety service Telephone number application form C ACCOUNTABILITY REPORT The use of non-geographic numbers in broadcasting Promote opportunities to participate 52 Directors’ report 55 Governance statement Priority: Promote better coverage of fixed and mobile services for residential and business consumers 64 Remuneration report Improving mobile coverage – enabling the benefits of consumer installed mobile repeaters Priority: Review the factors that potentially affect the sustainability of the universal postal service 68 Certificate and report of the Comptroller and Auditor General An Exception to Royal Mail's Universal Service Obligation – no requirement for to the Houses of Parliament deliveries and collections when 26 December falls on a Saturday Modification to Consumer Protection Condition 1 – Collection of qualifying consumer expenses of the Consumer Advocacy Bodies FINANCIAL STATEMENTS Significant Work Area: Carry out other work in light of our duty to secure the provision of the universal postal service D Ofcom's review of complaint handling and redress in the postal market 70 Statement of income and expenditure Significant Work Area: Understand and promote the interests of vulnerable citizens and consumers 71 Statement of financial position Television channels required to provide television access services in 2016 72 Statement of changes in equity Programmatic: Carry out and publish market and consumer research 73 Statement of cash flows PSB Nations and Regions compliance reporting, 2014 74 Notes to the accounts Protect consumers from harm Priority: Protect consumers from harm in a range of priority areas including nuisance calls ANNEX Approval of the PhonepayPlus Code of Practice (thirteenth edition) E Tackling nuisance calls and messages: Update on the ICO and Ofcom Joint Action Plan 102 Ofcom Boards and Committees Metering and billing approval logo 105 Regulatory statements Significant Work Area: Ensure consumers have access to redress for service failures and poor quality of service 110 Investigations programme 2015 Voluntary Code of Practice: broadband speeds 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability Increased/new regulation Mixed/no-change/ongoing Streamlined/co-regulatory Reduced regulation 120 Glossary

106 E Ofcom Annual Report & Accounts 2015/16 ANNEX

Secure optimal use of spectrum A OVERVIEW Priority: Work towards the timely release and effective award of spectrum 4 Who we are VHF radio spectrum for the Internet of Things 6 Chairman’s message Public Sector Spectrum Release: Award of the 2.3 and 3.4GHz spectrum bands Public Sector Spectrum Release (PSSR) – Competition and auction design issues for the 2.3 and 3.4GHz spectrum award, including reserve prices B PERFORMANCE REPORT Priority: Represent the UK in international negotiations to agree how best to use spectrum effectively 8 Chief Executive’s report Final UK Positions on key issues for the World Radiocommunication Conference 2015 (WRC-15) 12 Overview of the Significant Work Area: Conclude our review of spectrum requirements for the programme-making and special events sector communications sector New spectrum for Audio PMSE 14 Progress on delivering against Significant Work Area: Annual licence fees for 900MHz and 1800MHz spectrum our annual plan priorities 30 Work in the nations and our Annual licence fees for 900MHz and 1800MHz spectrum international engagement Significant Work Area: Explore and implement opportunities for spectrum sharing 32 Other work to supportour goals Licensing manually configurable white space devices 37 How we work and who Decision to make the Wireless Telegraphy (White Space Devices) (Exemption) Regulations 2015 we work with Programmatic: Plan spectrum assignments and grant licences 42 Financial review Decision to make the Wireless Telegraphy (Limitations of Number of Licences) (Amendment) Order 47 Our employees Decision to make the Wireless Telegraphy (Licence Charges) (Amendment) Regulations 2015 48 Corporate responsibility Licence Exemption of Wireless Telegraphy Devices: Candidates for 2015 50 Sustainability report Decision to make the Wireless Telegraphy (Licensing Procedures) (Amendment) Regulations 2016 Variation of the Spectrum Access licence for 1452–1492MHz and changes to fixed C ACCOUNTABILITY REPORT link use in the paired bands 1350–1375MHz and 1492–1517MHz Inclusion of the 1452–1492MHz, 2350–2390MHz and 3410–3600MHz bands in the Mobile Trading Regulations 52 Directors’ report Trade of frequencies in the 1452–1492MHz band from Qualcomm UK Spectrum Ltd to Vodafone Limited and Hutchison 3G UK Limited 55 Governance statement Fees for Spectrum Access 28GHz Licences 64 Remuneration report Recognised Spectrum Access (RSA) for Receive Only Earth Stations – statement 68 Certificate and report of the Comptroller and Auditor General Programmatic: Advise and assist in cases of interference and conduct enforcement action where appropriate to the Houses of Parliament Procedures for the Management of Satellite Filings – update on position with regard to proposed changes to the bringing into use of frequency assignments to stations of non–geostationary orbit satellite systems FINANCIAL STATEMENTS Procedures for the Management of Satellite Filings: a statement on amendments to the procedures D Decision to make the Wireless Telegraphy (Control of Interference from Apparatus) Regulations 2016 70 Statement of income and expenditure Other 71 Statement of financial position Annual Plan 2016/17 72 Statement of changes in equity Revising the penalty guidelines 73 Statement of cash flows 74 Notes to the accounts

E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability Increased/new regulation Mixed/no-change/ongoing Streamlined/co-regulatory Reduced regulation 120 Glossary

107 REGULATORY STATEMENTS

Ofcom statements published in 2015/16 where the earlier consultation included an impact assessment A OVERVIEW Request from BT for an exemption from the Undertakings for the Microconnect Distributed Antenna service 4 Who we are The use of non–geographic numbers in broadcasting – statement 6 Chairman’s message

Changes to signing arrangements for relevant domestic TV channels B PERFORMANCE REPORT Public Sector Spectrum Release: award of the 2.3 and 3.4GHz spectrum bands 8 Chief Executive’s report Variation of the Spectrum Access licence for 1452–1492MHz and changes to fixed link use in the paired bands1350–1375MHz and 1492–1517MHz 12 Overview of the communications sector Decision to make the Wireless Telegraphy (Licence Charges) (Amendment) Regulations 2015 14 Progress on delivering against A three–digit number for the national power cut and electricity network safety service our annual plan priorities 30 Work in the nations and our Recognised Spectrum Access (RSA) for Receive Only Earth Stations – statement international engagement Review of music in radio formats: statement 32 Other work to supportour goals

Telephone number application form 37 How we work and who we work with Approval of the PhonepayPlus Code of Practice (thirteenth edition) – final statement 42 Financial review The scheduling of television advertising – statement 47 Our employees

Supplementary guidance on assessment of the VULA margin 48 Corporate responsibility 50 Sustainability report Licensing manually configurable white space devices

An exception to Royal Mail’s universal service obligation – no requirement for deliveries and collections when 26 December falls on a C ACCOUNTABILITY REPORT Saturday – statement 52 Directors’ report Licence Exemption of Wireless Telegraphy Devices: candidates for 2015 55 Governance statement Revising the penalty guidelines – statement 64 Remuneration report Fees for Spectrum Access 28GHz Licences 68 Certificate and report of the Comptroller and Auditor General Non–domestic TV channels: extension of transitional signing arrangements – statement to the Houses of Parliament New spectrum for Audio PMSE D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

108 E Ofcom Annual Report & Accounts 2015/16 ANNEX

Ofcom statements published in 2015/16 where the earlier consultation included an impact assessment A OVERVIEW Review of Ofcom’s list of larger parties for elections taking place on 5 May 2016 4 Who we are Business Connectivity Market Review – draft statement 6 Chairman’s message

Decision to make the Wireless Telegraphy (Licensing Procedures) (Amendment) Regulations 2016 B PERFORMANCE REPORT VHF radio spectrum for the Internet of Things 8 Chief Executive’s report Decision to make the Wireless Telegraphy (Control of Interference from Apparatus) Regulations 2016 12 Overview of the Procedures for the management of satellite filings: a statement on amendments to the procedures communications sector 14 Progress on delivering against Future regulation of on–demand programme services our annual plan priorities Ofcom consultations published in 2015/16 which included an impact assessment and where no statement had been publshed by 30 Work in the nations and our 31 March 2016 international engagement Business Connectivity Market Review: very low bandwidth leased lines 32 Other work to supportour goals

Business Connectivity Market Review: leased lines charge controls and dark fibre pricing 37 How we work and who we work with Review of BT’s cost attribution methodologies (2 consultations) 42 Financial review What’s on the telly? Proposed improvements to EPG accessibility for people with visual impairments 47 Our employees

700MHz clearance – management of transitional coverage issues: consultation on updates to the Code of Practice on changes to existing 48 Corporate responsibility transmission and reception arrangements 50 Sustainability report

Review of how we use our persistent misuse powers: focus on silent and abandoned calls ACCOUNTABILITY REPORT Broadcasting Code Review – Section Three: Crime C 52 Directors’ report Authorisation of terrestrial mobile networks complementary to 2GHz Mobile Satellite Service (MSS) – a consultation on the licensing of 2GHz MSS Complementary Ground Component (CGC) for aeronautical use 55 Governance statement

Maximising the benefits of 700MHz clearance 64 Remuneration report 68 Certificate and report of the Approval of the PhonepayPlus Code of Practice (fourteenth edition) Comptroller and Auditor General to the Houses of Parliament Consumer switching: proposals to reform switching of mobile communications services

Broadcasting Transmission Services: a review of the market D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

109 INVESTIGATIONS PROGRAMME

INVESTIGATIONS PROGRAMME A OVERVIEW 4 Who we are Ofcom’s investigations programme It should be noted that the number The data in the table below covers the 6 Chairman’s message deals with complaints about anti- of cases recorded in the table performance of both the Competition competitive behaviour, breaches of tends to be small and the reported Group Investigations Team and the B PERFORMANCE REPORT certain regulatory rules and regulatory performance indicators can be Consumer Protection Team. disputes. The following table shows volatile as a result. More information 8 Chief Executive’s report Ofcom’s activities in conducting on the investigations programme is 12 Overview of the enquiries and investigations during set out in our six-monthly reports: communications sector 2015/16 and how we have performed Ofcom’s Investigations Activity 14 Progress on delivering against against our statutory and published (http://stakeholders.ofcom.org.uk/ our annual plan priorities targets. This reflects the picture as at enforcement/competition-bulletins/ 30 Work in the nations and our 31 March 2016. six-monthly-roundup-complaints/). international engagement 32 Other work to supportour goals

Activity and target Performance against targets Ongoing 37 How we work and who activity we work with Total handled Total Total not Total closed (as at 42 Financial review accepted for accepted for 31/3/2016) 47 Our employees investigation investigation of which, of which, within target outside of 48 Corporate responsibility target 50 Sustainability report

Enquiries

Disputes (ex ante) 7 2 4 6 0 1 C ACCOUNTABILITY REPORT 15 working days 52 Directors’ report Competition law (ex post) 0 0 0 0 0 0 8 weeks 55 Governance statement Complaints (ex ante) 1 0 1 0 1 0 64 Remuneration report 15 working days 68 Certificate and report of the Own-initiative (ex ante) 4 2 2 0 4 0 Comptroller and Auditor General 15 working days to the Houses of Parliament

Total handled Total opened Total ongoing Total closed D FINANCIAL STATEMENTS from previous reporting period of which, of which, 70 Statement of income within target outside of target and expenditure Disputes 71 Statement of financial position

Completion within 2 2 0 2 0 0 72 Statement of changes in equity 4 months (ex ante) 73 Statement of cash flows 74 Notes to the accounts Competition law investigations

No specific ‘one size 3 0 2 1 2 fits all’ target (ex post) E ANNEX 102 Ofcom Boards and Committees Other investigation and enforcement programmes (ex ante) 105 Regulatory statements Individual investigations 12 10 2 investigations 2 investigations 2 investigation 8 investigations 110 Investigations programme have a target of investigations investigations 8 enforcement 6 enforcement completion (i.e. the 11 enforcement 3 enforcement programmes programmes 111 Broadcasting standards issuing of a first programmes programmes notification or closure) 112 Spectrum engineering within 6 months. and enforcement Enforcement 114 Spectrum licensing programmes are 5 enforcement programmes 118 Sustainability not subject to time targets. (ex ante) 120 Glossary

110 E Ofcom Annual Report & Accounts 2015/16 ANNEX

BROADCASTING STANDARDS A OVERVIEW 4 Who we are Broadcasting complaints, 6 Chairman’s message cases and sanctions B PERFORMANCE REPORT Ofcom has a statutory duty under the Communications Act 2003 to 8 Chief Executive’s report establish procedures for the handling 12 Overview of the and resolution of complaints from communications sector listeners and viewers about radio and 14 Progress on delivering against television programmes broadcast on our annual plan priorities services licensed by Ofcom, and the 30 Work in the nations and our BBC and S4C (with certain exceptions). international engagement All complaints are important to Ofcom 32 Other work to supportour goals as they help us to understand whether 37 How we work and who a broadcaster may be failing to we work with comply with rules in the Broadcasting 42 Financial review Code10 or other Ofcom codes. Ofcom may launch investigations 47 Our employees on its own initiative as well as 48 Corporate responsibility launching investigations following 50 Sustainability report the assessment of complaints. Ofcom handles complaint-led investigations and self-initiated investigations under C ACCOUNTABILITY REPORT the same procedures. 52 Directors’ report Individual complaints received by 55 Governance statement Ofcom are assigned to cases. A case 64 Remuneration report is opened when Ofcom is assessing a and publishes this decision in its Investigations 12 68 Certificate and report of the specific programme or issue and may Broadcast and On-demand Bulletin . If a case raises potentially substantive Comptroller and Auditor General consist of one or more complaints. issues, Ofcom will investigate the A total of 7,080 cases (23,420 to the Houses of Parliament A total of 7,285 cases (comprising complaints) were assessed in this matter further to decide whether a 23,625 complaints) were closed in way during the reporting period. breach of the Broadcasting Code (or the period under review. Ofcom found that: other Ofcom codes) has occurred. D FINANCIAL STATEMENTS An investigation may consist of one • 222 cases (2,236 complaints) raised 70 Statement of income Content standards or more related cases involving the substantive issues that warranted and expenditure same broadcaster. Initial assessment of complaints further investigation; and 71 Statement of financial position A total of 205 investigation cases • 6,858 cases (21,184 complaints) did 72 Statement of changes in equity All complaints about content standards were completed in the period not require further investigation or are handled under Ofcom’s Procedures between 1 April 2015 and 31 March 73 Statement of cash flows fell outside Ofcom’s remit. for investigating breaches of content 2016. Ofcom found that: 74 Notes to the accounts 11 standards for television and radio . Ofcom aims to make an initial • 127 investigated cases resulted in Ofcom assesses every complaint assessment of all complaints within breaches of the Broadcasting Code E ANNEX 15 working days. In the period it receives. Based on an initial (or other Ofcom codes) being between 1 April 2015 and 31 March 102 Ofcom Boards and Committees assessment of the complaint and a recorded; consideration of the related television 2016, Ofcom assessed complaints on 105 Regulatory statements or radio content, Ofcom will consider average within 5.57 working days. • 17 investigated cases were 110 Investigations programme whether there may have been a resolved; and 111 Broadcasting standards breach of the Broadcasting Code (or • 61 investigated cases were not other Ofcom codes). If not, Ofcom in breach of the codes or were 112 Spectrum engineering will decide not to investigate further discontinued. and enforcement 114 Spectrum licensing

10 Available at: http://stakeholders.ofcom.org.uk/broadcasting/broadcast-codes/broadcast-code/. 118 Sustainability 11 Available at: http://stakeholders.ofcom.org.uk/broadcasting/guidance/complaints-sanctions/standards/. 12 Available at: http://stakeholders.ofcom.org.uk/enforcement/broadcast-bulletins/. 120 Glossary

111 BROADCASTING STANDARDS

Ofcom aims to complete those Ofcom aims to assess and decide Sanctions cases that it takes forward for whether to entertain Fairness and A OVERVIEW investigation within 50 working Privacy complaints within 25 working Where Ofcom decides that a 4 Who we are days. In the period between 1 days of receipt of the complaint and broadcaster has breached the April 2015 and 31 March 2016, any further information requested Broadcasting Code or other relevant 6 Chairman’s message Ofcom completed investigations on from the complainant. In the Ofcom code, and it considers the breach to be serious, deliberate, average within 49.7 working days. period between 1 April 2015 and B PERFORMANCE REPORT 31 March 2016, Ofcom assessed repeated and/or reckless, it may Fairness and Privacy and decided whether to entertain consider whether to impose a 8 Chief Executive’s report Fairness and Privacy complaints on statutory sanction on the broadcaster. 12 Overview of the Fairness and Privacy complaints are average within 17.1 working days. The range of sanctions available communications sector complaints about unjust or unfair to Ofcom include a decision to: 14 Progress on delivering against treatment in programmes, or about Adjudications issue a direction not to repeat a our annual plan priorities unwarranted infringements of privacy If a Fairness and Privacy complaint programme or advertisement; issue in programmes (or in connection with 30 Work in the nations and our is entertained by Ofcom, then it a direction to broadcast a correction international engagement the obtaining of material included in will investigate the matter further or a statement of Ofcom’s findings; them). These complaints are normally 32 Other work to supportour goals to decide whether a breach impose a financial penalty14; made by individuals or organisations 37 How we work and who of the Broadcasting Code has shorten or suspend a licence; and participating in or otherwise directly we work with occurred and, if so, it will uphold revoke a licence (not applicable affected by programmes as broadcast, the complaint. Ofcom will then to the BBC, S4C or Channel 4). 42 Financial review or in the making of programmes. make its final adjudication. 47 Our employees During the period between 1 A total of 205 complaints relating to A total of 60 complaints were April 2015 and 31 March 2016, 48 Corporate responsibility Fairness and Privacy were closed. adjudicated upon in the period Ofcom decided to impose the 50 Sustainability report Assessment and entertainment under review. Ofcom decided that: following statutory sanctions: Ofcom assesses every Fairness and • 16 complaints were upheld (of • Asia TV Limited in respect of its C ACCOUNTABILITY REPORT Privacy complaint it receives to which four were partially upheld); service Lamhe TV – £25,000 52 Directors’ report decide whether or not to entertain • 40 complaints were not upheld; • DM Global Media Limited 55 Governance statement the complaint. This assessment is in respect of its service DM • two complaints were resolved based on whether: the complainant News Plus – £25,000 64 Remuneration report (following appropriate action is the “person affected” and able 68 Certificate and report of the taken by the broadcaster); and • International Television Channel to make the complaint; the matter Comptroller and Auditor General Europe Limited in respect of complained of is the subject of • two complaints were discontinued to the Houses of Parliament its service NTV – £20,000 proceedings in a court of law in the after entertainment. UK; or the complaint is frivolous. • Leith Community Mediaworks Ofcom also found that a self- FINANCIAL STATEMENTS Ltd in respect of its service D A total of 205 Fairness and Privacy initiated fairness and privacy Castle FM – £850 70 Statement of income complaints were assessed in the investigation was not in breach and expenditure period between 1 April 2015 and of the Broadcasting Code13. 31 March 2016. Ofcom decided that: 71 Statement of financial position Ofcom aims to complete the 72 Statement of changes in equity • 60 complaints were entertained; and consideration and adjudication of 73 Statement of cash flows • 145 complaints were not Fairness and Privacy complaints entertained or discontinued before within 90 working days of the 74 Notes to the accounts entertainment. complaint being entertained. In the period between 1 April 2015 and 31 ANNEX March 2016, Ofcom completed the E consideration and adjudication of 102 Ofcom Boards and Committees 13 Fairness and Privacy complaints on Ofcom’s Decision on this investigation can be read in full in issue 295 of its Broadcast Bulletin, available at: http:// 105 Regulatory statements average within 89.3 working days. stakeholders.ofcom.org.uk/enforcement/broadcast- bulletins/obb295/. 110 Investigations programme 14 All financial penalties imposed by Ofcom are held in an account with Government Banking Services (GBS) for the benefit of the Exchequer. Funds are transferred to the HM 111 Broadcasting standards Treasury GBS account for direct use by the Exchequer, or distributed to relevant Consolidated Funds. Ofcom neither 112 Spectrum engineering receives financial benefits from nor makes use of any and enforcement financial penalties received. 114 Spectrum licensing 118 Sustainability 120 Glossary

112 E Ofcom Annual Report & Accounts 2015/16 ANNEX

SPECTRUM ENGINEERING A OVERVIEW 4 Who we are AND ENFORCEMENT 6 Chairman’s message

Spectrum engineering and enforcement B PERFORMANCE REPORT Key performance indicators 8 Chief Executive’s report 12 Overview of the Main activities communications sector 14 Progress on delivering against 1 Work programme activity/incident April 15 – March 16 April 14 – March 15 our annual plan priorities Complaints of Interference received2 1,933 1,954 30 Work in the nations and our international engagement Checking radio system licence compliance3 3,873 3,850 32 Other work to supportour goals Fixed penalty notices Issued4 66 67 37 How we work and who Prosecutions for criminal spectrum activity5 19 19 we work with 42 Financial review 47 Our employees Quality of service targets for complaints of interference received 48 Corporate responsibility Key performance indicator Case priority Target Target achieved 50 Sustainability report

April 15 – March 16 April 14 – March 15

Time to first visit: 1 8 hours 100% 100% C ACCOUNTABILITY REPORT

The time taken from reporting a complaint 2 18 hours 100% 100% 52 Directors’ report of interference to the time our engineer 55 Governance statement arrives on site to diagnose the problem (for 3 2 working days 97% 96% those cases where a field visit is required). 64 Remuneration report 4 5 working days 99% 99% 68 Certificate and report of the 5 15 working days 99% 99% Comptroller and Auditor General to the Houses of Parliament 6 No target – –

Resolution: 1 2 calendar days 100% 100% D FINANCIAL STATEMENTS The time taken from reporting a complaint 2 3 calendar days 100% 100% of interference to the time the customer 70 Statement of income is advised that the case is resolved. 3 6 working days 93% 89% and expenditure 71 Statement of financial position 4 20 working days 96% 94% 72 Statement of changes in equity 5 40 working days 98% 95% 73 Statement of cash flows 6 60 working days 96% 94% 74 Notes to the accounts

E ANNEX 102 Ofcom Boards and Committees 1 Processes for managing activities and incidents were revised in 2014-15 and this is reflected in the new table format 105 Regulatory statements 2 Cases of interference reported by the public and businesses 3 Work carried out by Ofcom to ensure licence conditions 110 Investigations programme are adhered to or unlicensed use is not taking place 4 Fixed Penalty Notices (FPN) are usually issued if an initial 111 Broadcasting standards warning by Ofcom is subsequently ignored. Failure to pay a FPN can lead to legal action 112 Spectrum engineering 5 Prosecutions in relation to “Pirate Radio” or failure to and enforcement pay FPNs 114 Spectrum licensing 118 Sustainability 120 Glossary

113 SPECTRUM LICENCING

SPECTRUM LICENCING A OVERVIEW Category A 4 Who we are 6 Chairman’s message Licences that involve no frequency Licences issued Licences issued Total on issue as Total on issue as assignment, site clearance or April 15 – March 16 April 14 – March 15 at 31 March 16 at 31 March 15 international co-ordination B PERFORMANCE REPORT Business Radio Light – Simple 1,777 1786 12,215 11,455 8 Chief Executive’s report UK (no base station) 12 Overview of the Business Radio Simple Site 922 985 7,905 7907 communications sector Business Radio Suppliers Light 99 94 826 751 14 Progress on delivering against Fixed Wireless Access (5.8GHz) 71 82 424 403 our annual plan priorities GNSS Repeater 25 120 206 181 30 Work in the nations and our Police and Fire 1 0 124 124 international engagement Subtotal for Business Radio products 2,895 3,067 21,700 20,821 32 Other work to supportour goals Radar Level Gauge 0 0 124 124 37 How we work and who we work with Amateur & Maritime1 82,312 58,058 232,743 224,372 42 Financial review Total for Category A 85,207 61,125 254,567 245,317 47 Our employees KPI for Category A (100% in 7 days) 100% 100% – – 48 Corporate responsibility KPI for Category A (Amateur & 100% 100% – – Maritime) (100% in 10 days) 50 Sustainability report

Category B C ACCOUNTABILITY REPORT 52 Directors’ report Licences that involve frequency Licences issued Licences issued Total on issue as Total on issue as assignment, but no site clearance April 15 – March 16 April 14 – March 15 at 31 March 16 at 31 March 15 55 Governance statement or international co-ordination 64 Remuneration report Automatic Identification System 53 14 262 210 68 Certificate and report of the Coastal Station Radio (International) 10 1 405 411 Comptroller and Auditor General Coastal Station Radio (UK) 15 16 377 373 to the Houses of Parliament Coastal Station Radio (Marina) 16 22 421 436 Coastal Station Radio (Training School) 19 29 349 330 D FINANCIAL STATEMENTS Maritime Radio (Suppliers & Demonstration) 4 1 94 90 70 Statement of income Maritime Navaids and Radar 4 17 140 142 and expenditure Differential Global Positioning System 0 0 5 5 71 Statement of financial position Subtotal for Deregulation & 121 100 2,042 1,997 72 Statement of changes in equity Contracting–Out products 73 Statement of cash flows Business Radio Technically Assigned 2,542 2,272 27,302 27,202 74 Notes to the accounts Business Radio Area Assigned 40 37 261 245 Coastal Station radio (UK) Area Defined 0 9 2 2 E ANNEX Coastal Station radio 2 2 8 7 (International) Area Defined 102 Ofcom Boards and Committees Ground Probing Radar 27 26 186 173 105 Regulatory statements Scanning Telemetry 3 1 33 32 110 Investigations programme Self co–ordinated links 34 28 107 79 111 Broadcasting standards Subtotal for Business Radio products 2,648 2,375 27,899 27,740 112 Spectrum engineering and enforcement Total for Category B 2,769 2,475 29,952 29,737 114 Spectrum licensing KPI for Category B 90% in 21 days 98% 98% – – 118 Sustainability 100% in 42 days 99% 99% – – 120 Glossary

114 E Ofcom Annual Report & Accounts 2015/16 ANNEX

Category C A OVERVIEW Licences that require frequency Licences issued Licences issued Total on issue as at Total on issue as at assignment, and site clearance and/ April 15 – March 16 April 14 – March 15 31 March 16 31 March 15 4 Who we are or international co-ordination 6 Chairman’s message Fixed Links 2,983 2,333 30,855 30,622 Satellite (Permanent Earth Station) 8 17 152 157 B PERFORMANCE REPORT Satellite (Transportable Earth Station) 101 113 114 118 8 Chief Executive’s report Satellite (Earth Station Network) 6 12 66 66 12 Overview of the Satellite (Non Fixed Earth Station) 2 2 4 2 communications sector Total for Category C 3,100 2,477 31,191 30,965 14 Progress on delivering against our annual plan priorities KPI for Category C 90% in 42 days 100% 99% – – 100% in 60 days 100% 100% – – 30 Work in the nations and our international engagement 32 Other work to supportour goals Programme Making & Special Events (PMSE) 37 How we work and who we work with Licences and authorisations for Licences issued Licences issued Total on issue as at Total on issue as at outside broadcasts and programme- April 15 – March 16 April 14 – March 15 31 March 16 31 March 15 42 Financial review making and special events 47 Our employees PMSE Licences2 33,3803 8,863 2,854 6,461 48 Corporate responsibility

Total for PMSE 33,380 8,863 2,854 6,461 50 Sustainability report

KPI for PMSE (100% in 7 days) 100% 100% – – C ACCOUNTABILITY REPORT

Test and Development (T&D) licences 52 Directors’ report 55 Governance statement Licences issued Licences issued Total on issue as Total on issue as April 15 – March 16 April 14 – March 15 at 31 March 16 at 31 March 15 64 Remuneration report 68 Certificate and report of the Non–Operational Development Licence 332 334 309 282 Comptroller and Auditor General Non–Operational Temporary Licence 242 274 77 90 to the Houses of Parliament Total for T&D 574 608 386 372 KPI for T&D (100% in 60 days) 100% 100% – – D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

E ANNEX 102 Ofcom Boards and Committees 105 Regulatory statements

1 As part of the Public Sector Spectrum Release project and 110 Investigations programme in response to a consultation published in September 2014, a number of changes have been made to Amateur licences. 111 Broadcasting standards Following a formal notification of Ofcom’s proposal to vary licences, all Amateur Radio licences were reissued in March/ 112 Spectrum engineering April 2015. 2 Up until June 2015 PMSE licences were issued by Arqiva and enforcement on Ofcom’s behalf (including for the Glasgow 2014 Commonwealth Games), after that date, PMSE licences have 114 Spectrum licensing been issued by Ofcom. 3 Calculation changed in 2015/16 to include Licence Notice 118 Sustainability of Variations. 120 Glossary

115 SPECTRUM LICENCING

Mobile and Wireless broadband licences1 A OVERVIEW Licences issued through spectrum Licences issued Licences issued Total on issue as Total on issue as auction or award processes April 15 – March 16 April 14 – March 15 at 31 March 16 at 31 March 15 4 Who we are

Public Wireless Networks: 900, 1800MHz – 4 4 6 Chairman’s message Spectrum Access: 2100MHz – 4 4

Spectrum Access: Channel Tunnel2 – 2 2 B PERFORMANCE REPORT Spectrum Access: 800MHz, 2.6GHz – 5 5 8 Chief Executive’s report Spectrum Access: 412 – 414MHz – 1 1 12 Overview of the Spectrum Access: 1452 – 1492MHz 2 (-1) – 2 1 communications sector Concurrent Spectrum Access: – 12 12 14 Progress on delivering against 1781–1785MHz our annual plan priorities Spectrum Access: 1785MHz, – 1 1 30 Work in the nations and our Northern Ireland international engagement Spectrum Access: 3.5, 3.6, 10, 28, 32, 40GHz 63 2 (-1)4 19 28 32 Other work to supportour goals Total for Mobile and Wireless Broadband 8 2 50 58 37 How we work and who we work with 42 Financial review Channel Islands and Isle of Man licences 47 Our employees Licence applications made Licences issued Licences issued Total on issue as Total on issue as 48 Corporate responsibility via local Regulators April 15 – March 16 April 14 – March 15 at 31 March 16 at 31 March 15 50 Sustainability report 2G Cellular Telephones, Channel Islands – (-6) 0 0 3G Cellular Telephones, Channel Islands – (-6) 1 1 C ACCOUNTABILITY REPORT Public Wireless Network: 800, 900, 2 12 (+ 12)5 32 30 1800, 2100, 2600MHz, Channel 52 Directors’ report Islands and Isle of Man 55 Governance statement Spectrum / Wireless Access: 3.4, 3.6, 10, 3 (-2) (-1) 9 8 64 Remuneration report 28GHz, Channel Islands and Isle of Man 68 Certificate and report of the Total for Channel Islands and Isle of Man 5 12 42 39 Comptroller and Auditor General to the Houses of Parliament

1 Licences varied and/or re-issued, or fully traded from one company to another, are not included in these figures. 2 Separate licence for the out-bound (UK-France direction) tunnel. D FINANCIAL STATEMENTS 3 Regional Spectrum Access 28GHz licences consolidated into 6 geographic licences; 1 regional BFWA licence expired. 4 One 32 / 40GHz licence partitioned and traded separately. 70 Statement of income 5 Jersey/Guernsey mobile licences liberalised for 2G/3G/4G in 2014/15 – re-categorised in table. and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

116 E Ofcom Annual Report & Accounts 2015/16 ANNEX

Digital dividend spectrum licences OVERVIEW Spectrum freed up for new uses as a result of digital switchover A 4 Who we are DDR GI Licences issued through Licences issued Licences issued Total on issue as Total on issue as 6 Chairman’s message spectrum award processes April 15 – March 16 April 14 – March 15 at 31 March 16 at 31 March 15

Spectrum Access 541 – 550MHz (Cardiff) – – 1 1 B PERFORMANCE REPORT Spectrum Access 758 – 766MHz – – 1 1 (Manchester) 8 Chief Executive’s report Total for Digital Dividend licences – – 2 2 12 Overview of the communications sector 14 Progress on delivering against our annual plan priorities Non-discretionary spectrum licences 30 Work in the nations and our The Civil Aviation Authority (CAA) issues aircraft licences international engagement 32 Other work to supportour goals Partner’s activity Licences issued Licences issued Total on issue as at Total on issue as at April 15 – March 16 April 14 – March 15 31 March 16 31 March 15 37 How we work and who we work with CAA issues licences for Aeronautical 6,523 4,350 14,826 15,431 42 Financial review KPI for CAA (100% in 7 days) 81% 83% 47 Our employees Total 6,523 4,350 14,826 15,431 48 Corporate responsibility 50 Sustainability report

TOTAL NUMBER OF LICENCES 131,566 79,912 333,850 328,382 – ALL CATEGORIES C ACCOUNTABILITY REPORT 52 Directors’ report 55 Governance statement 64 Remuneration report 68 Certificate and report of the Comptroller and Auditor General to the Houses of Parliament

D FINANCIAL STATEMENTS 70 Statement of income and expenditure 71 Statement of financial position 72 Statement of changes in equity 73 Statement of cash flows 74 Notes to the accounts

117 SUSTAINABILITY

SUSTAINABILITY A OVERVIEW 4 Who we are This section presents sustainability data and financial costs in more detail. Cost and 6 Chairman’s message consumption data for Project Park have been included. This office was closed in March 2015.

Greenhouse gas emissions B PERFORMANCE REPORT 8 Chief Executive’s report 2011/12 2012/13 2013/14 2014/15 2015/16 12 Overview of the Non–financial Scope 1 Gas 107 161 142 134 158 communications sector indicators Oil 22 19 18 14 18 (tonnes CO2e) 14 Progress on delivering against Fleet fuel 224 204 210 200 180 our annual plan priorities Scope 2 Electricity 1,285 1,166 1,129 1,283 1,203 30 Work in the nations and our international engagement Scope 3 Business travel 375 375 346 290 250 32 Other work to supportour goals – Air 173 194 241 182 144 37 How we work and who – Domestic 47 48 100 63 47 we work with – Short haul 102 110 83 71 30 42 Financial review – Long haul 24 37 57 48 67 47 Our employees – Rail/bus/tube 102 103 61 59 59 48 Corporate responsibility – Car/motorbike/cycle 97 75 41 46 44 50 Sustainability report – Taxis 3 3 2 3 3 Gas (kWh) 583,483 869,185 772,668 726,410 855,056 Related Scope 1 ACCOUNTABILITY REPORT consumption data C Gas per FTE (kWh) 749 1,114 975 928 1,070 52 Directors’ report Oil (litres) 8,500 7,500 7,000 5,697 7,001 55 Governance statement Fleet fuel (litres) 87,206 78,923 80,558 76,898 69,596 64 Remuneration report Scope 2 Electricity (kWh) 2,658,244 2,411,198 2,334,436 2,387,352 2,404,949 68 Certificate and report of the Electricity per PTE (kWh) 3,414 3,091 2,945 3,049 2,010 Comptroller and Auditor General Financial indicators Scope 1 Gas £25,432 £34,991 £33,060 £34,677 £27,786 to the Houses of Parliament Oil £6,827 £7,081 £5,317 £3,500 £3,504 Fleet fuel £123,748 £113,770 £113,397 £102,026 £78,996 D FINANCIAL STATEMENTS Electricity £330,763 £301,645 £290,452 £335,058 £329,757 Scope 2 70 Statement of income Scope 3 Business travel £713,021 £705,867 £628,340 £596,116 £569,099 and expenditure – Air £239,772 £280,526 £301,014 £257,364 £197,408 71 Statement of financial position – Rail/bus/tube £297,685 £276,531 £226,171 £227,260 £264,211 72 Statement of changes in equity

– Car/motorbike/cycle £129,466 £104,276 £58,458 £66,876 £67,721 73 Statement of cash flows – Taxis £46,148 £44,534 £42,696 £44,615 £39,759 74 Notes to the accounts

1 We have re-stated our gas and electricity consumption data for 2011/12 and 2012/13 following clarification of the allocation of consumption across our estate E ANNEX Scope 1 – This covers direct Ofcom pays for diesel fuel for its fleet Scope 2 – This covers electricity consumption of gas and oil, and fuel cars using fuel cards, and consumption supplies to Ofcom’s offices. Electricity 102 Ofcom Boards and Committees consumption from Ofcom’s fleet cars. is recorded and monitored on a data across all years cover Ofcom’s 105 Regulatory statements monthly basis. Fuel consumption from main office in London, Baldock, Gas consumption data across all 110 Investigations programme our fleet cars is largely dependent Belfast, Birmingham, Cardiff, Glasgow, years cover Ofcom’s main office in on demand for our enforcement Haydock, Livingston and some 111 Broadcasting standards London, Belfast, Birmingham, Haydock services. Fuel consumption for remote monitoring direction-finding and Livingston. Gas consumption is 112 Spectrum engineering 2012/13 includes fuel used for the sites around the UK. For 2011/12 it dependent on weather conditions. and enforcement purpose of providing spectrum also includes cost and consumption Oil consumption data relate only services for the 2012 Olympic data from an office in Caterham. 114 Spectrum licensing to Ofcom’s office in Baldock. Games and Paralympic Games. For 2011/12 and 2012/13 it also 118 Sustainability includes cost data from an office in Bristol. For the period 2011/12 to 120 Glossary

118 E Ofcom Annual Report & Accounts 2015/16 ANNEX

2014/15 it also includes consumption Waste minimisation and Finite resource from our Project Park office in A OVERVIEW London. Electricity consumption is management consumption 4 Who we are dependent on weather conditions. Waste consumption data for all Water data across all years cover Scope 3 – Business travel financial years relate to Ofcom’s main office in Ofcom’s main office in London, 6 Chairman’s message data have been obtained from our SAP London, and for the period 2011/12 Baldock, Birmingham and Haydock. reporting system and include travel to 2014/15 also includes data from For 2011/12 this includes cost data PERFORMANCE REPORT by all colleagues regardless of where our Project Park office in London. from offices in Bristol, Caterham, Leeds B Accurate waste consumption data are and Peterborough, where applicable. they are located. We have converted 8 Chief Executive’s report taxi and rail travel financial data into not available for other Ofcom offices, For the period 2011/12 to 2014/15 distances using guidance from the but the associated waste disposal it also includes consumption from 12 Overview of the Carbon Trust Standard, and car travel costs have been included. Ofcom our Project Park office in London. communications sector financial data into distances using data pays an overall waste management Water charges for other offices are 14 Progress on delivering against fee which cannot be attributed to included in the service charge and from expense claims for mileage. Air our annual plan priorities travel data have been obtained directly individual waste categories. Ofcom therefore cannot be analysed. Water from our business travel provider, operates on a ‘zero waste to landfill’ consumption is limited to operational 30 Work in the nations and our and categorised into domestic, short basis, and all waste is recycled or use, including a catering facility in international engagement haul and long haul flights as per incinerated with energy recovery. Ofcom’s main office in London. 32 Other work to supportour goals Defra flight distance guidance. 37 How we work and who we work with 2011/12 2012/13 2013/14 2014/15 2015/16 42 Financial review

Non-financial Total waste 159 166 173 168 173 47 Our employees indicators (tonnes) Waste sent to landfill 0 0 0 0 0 48 Corporate responsibility ICT water recycled/ 8 2 9 4 7 50 Sustainability report re–used Waste recycled/re–used 89 91 98 94 111 C ACCOUNTABILITY REPORT Waste composted 9 13 14 14 13 52 Directors’ report Waste incinerated 53 60 51 55 41 with energy recovery 55 Governance statement Waste incinerated 0 0 0 0 0 64 Remuneration report without energy recovery 68 Certificate and report of the Total waste per FTE 0.204 0.213 0.218 0.214 0.216 Comptroller and Auditor General Financial indicators Total waste £53,345 £46,068 £60,796 £45,500 £32,023 to the Houses of Parliament

D FINANCIAL STATEMENTS 2011/12 2012/13 2013/14 2014/15 2015/16 70 Statement of income Non–financial Water consumption (m3) 11,508 11,509 13,694 14,213 10,767 and expenditure indicators Water consumption 14.78 14.76 17.27 18.15 13.48 71 Statement of financial position per FTE 72 Statement of changes in equity Paper reams 9,286 7,623 7,721 5,993 7,545 73 Statement of cash flows – A3 reams 60 121 156 103 80 74 Notes to the accounts – A4 reams 9,226 7,502 7,565 5,890 7,465 – A5 reams 0 0 0 0 0 E ANNEX Financial indicators Water £22,771 £26,610 £20,506 £24,931 £16,784 102 Ofcom Boards and Committees 1 We have re-stated our water consumption figures from 2011/12 following clarification of the allocation of consumption across our estate 105 Regulatory statements 110 Investigations programme Notes 4. Emissions are not weather-corrected. 8. Certain prior-year figures have been restated in 2013/14 5. We only report energy and water consumption in due to revised guidance from HMT. 1. The above tables have been prepared in accordance 111 Broadcasting standards buildings where we are directly billed and responsible 9. Scope 2 electricity emissions have been restated for all with guidelines laid down by the Treasury: for the payment. years to account for material changes to the conversion https://www.gov.uk/government/publications/ 112 Spectrum engineering factors provided by Defra. This conforms to the 2013/14 public-sector-annual-reports-sustainability-reporting- 6. We only report our waste consumption in buildings sustainability reporting guidance. and enforcement guidance-2015-to-2016 where we receive data from a waste management company. 10. Quantity of paper purchased is a new reporting 2. All information conforms to the normal public sector requirement introduced in the 2013/14 sustainability 114 Spectrum licensing financial year of 1 April to 31 March. 7. Where utility bills had not yet been received, cost and consumption data were estimated based on previous reporting guidance. We have only reported on paper 3. Defra conversion factors have been used to calculate years’ data. purchased directly through our stationery suppliers; 118 Sustainability carbon emissions figures. this information is available only for selected offices. 120 Glossary

119 GLOSSARY

GLOSSARY A OVERVIEW 4 Who we are 3G Third generation of mobile Gaining provider led (GPL) A process Next generation core networks 6 Chairman’s message systems. Provides high-speed in which the customer’s new service (NGN) Internet protocol-based core data transmission and supports provider (the gaining provider) takes networks that support a variety of multimedia applications such as full- the lead on switching the service. existing and new services, typically B PERFORMANCE REPORT motion video, video-conferencing replacing multiple, single-service IPTV (internet protocol television) 8 Chief Executive’s report and internet access, alongside legacy networks. Television services delivered through 12 Overview of the conventional voice services. the internet rather than traditional Next generation access networks communications sector 4G Fourth generation of mobile means such as terrestrial, satellite (NGA) New or upgraded access 14 Progress on delivering against phone technology, which follows on or cable. networks that allow substantial our annual plan priorities from 2G and 3G. It allows faster data improvements in broadband speeds ISP Internet service provider. A 30 Work in the nations and our transmission and download speeds and quality of service. They can be company that provides access to international engagement than 3G networks. based on a number of technologies the internet. including cable, fixed wireless and 32 Other work to supportour goals BDUK Broadband Delivery UK, Leased line A transmission facility mobile. Most often used to refer to 37 How we work and who responsible for delivering the Rural leased by an end user from a networks using fibre optic technology. we work with Broadband Programme. public carrier and dedicated to Service provider A provider of 42 Financial review Bit-rates The rate at which digital that user’s traffic. electronic communications services 47 Our employees information is carried within a Linear broadcasting Traditional to third parties, whether over its own specified communication channel. 48 Corporate responsibility scheduled TV broadcasting network or otherwise. Broadband speeds are commonly 50 Sustainability report transmitted to a TV set. measured in Mbit/s. Silent call An incoming telephone LLU (local loop unbundling) The call where there is no-one on the Bill shock A negative reaction that ACCOUNTABILITY REPORT process whereby the incumbent other end of the line. C a person can have if their bill is operators (BT and Kingston 52 Directors’ report unexpectedly high. Superfast broadband Broadband Communications) make their services allowing speeds of 30Mbit/s 55 Governance statement Community radio Radio stations local network (the lines that run and above. that typically cover a small from customers’ premises to the 64 Remuneration report geographical area with a coverage telephone exchange) available to Text relay A service that allows 68 Certificate and report of the radius of up to 5km and are run on other communications providers. people with hearing and speech Comptroller and Auditor General a not-for-profit basis. impairments to communicate to the Houses of Parliament Mobile broadband Various types with others through telephone or DCMS Department for Culture, of wireless high-speed internet textphone equipment. Media & Sport. access through a portable modem, D FINANCIAL STATEMENTS telephone or other device. VoD (video on demand) A service DTT Digital terrestrial television. 70 Statement of income or technology that enables TV The television technology that Multiplex Digital terrestrial and expenditure viewers to watch programmes or carries the Freeview service. television services are transmitted 71 Statement of financial position films whenever they choose to, using a ‘multiplex’ structure, with EU5 France, Germany, Italy, Spain, unrestricted by a linear schedule. 72 Statement of changes in equity each multiplex containing a number the UK. 73 Statement of cash flows of concurrent TV services, as well End-to-end competition Where as radio stations and text services. 74 Notes to the accounts commercial postal operators collect, These services are digitally combined process and deliver mail directly to into a single signal to form the E ANNEX the recipient without using Royal transmitted multiplex. Mail’s network. 102 Ofcom Boards and Committees 105 Regulatory statements 110 Investigations programme 111 Broadcasting standards 112 Spectrum engineering and enforcement 114 Spectrum licensing 118 Sustainability 120 Glossary

120 PROMOTING MAKING COMMUNICATIONS WORK FOR EVERYONE CHOICE

SECURING STANDARDS

PREVENTING HARM

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