Okay, good afternoon, everybody. Welcome to the BT Networks investor briefing. I think the last time I stood up and did an investor briefing was in 2019 when it was as technology. You've heard recently from digital, we're sort of completing the technology unit's picture today by talking about networks. I'm Howard Watson. I'm BT's Chief Technology Officer. I'm joined today by many of my team who are in the room here today. You specifically in the agenda that you see here, gonna hear from Neil McRae, who is our chief architect and is responsible for our network strategy. You'll also hear from Greg McCall, who runs what we call service platforms. He builds and runs the technical solutions that our CFUs create into products and then sell to our customers. Tim Whitley will talk to us about applied research and how we're active and remain active in the research area. Emily Clark, who is the CFO of Networks, will talk to you about our financial delivery and outlook. We'll have a Q&A both in the room here and for those joining on Webex. For those of you who are in the room, we have a treat. We're going down to the first floor to show you the future zone, and we're gonna give you a drink as well if you'd like one. Thank you for joining us here this afternoon. What we're gonna cover today, and just to summarize that, on this chart here is, you know, we are very much on the journey that we've laid out before, which is a 20-30 sort of network strategy and vision. That's built upon the unique and unparalleled assets that we have in both fixed and mobile in BT. You know, centered around how we are continuing to invest in converging those networks, creating great services through that, but also making them simpler and therefore easier to run. What's critical for us is continuing to attract, you know, a real great diverse pool of technology talent. We'll talk about that today and why that is important for us. How we use that talent to work with the business and the CFUs to create really great standout solutions that are built on those leading network capabilities, differentiate BT ahead of our competitors in the marketplace here, and contribute towards the growth agenda. We'll also talk about how we're applying research, again, with that same aim, but also targeting sustainability in all of the customer outcomes that we're driving. Critically important, how we are structurally transforming our cost base to deliver sustainable long-term OpEx saving in how we run networks. Just quickly, in terms of what networks underpins in BT, these numbers are all very familiar to you. 30 million consumer customers representing more than 50% of the households in the U.K., supplemented by, you know, 1 million+ enterprise customers enabled with business services, both in the U.K. and across 180 countries globally through BT Global. In terms of where we are, 7.2 million+ 5G-ready customers now. That's grown 120% in the last 12 months. In consumer, we now have well in excess of 1 million FTTP customers. Then back to that important research theme, you know, more than 5,000 patents in our ever-growing portfolio. Then looking at that from a network point of view, if you think about both mobile and fixed access networks, my organization builds the mobile network, both the core and the access part of that. We also, you know, build the fixed network. We are the ISP for downstream BT. And again, really differentiated KPIs, again, compared to the other players in the U.K. market. 99% overall 4G population coverage. By far the largest 4G geographic coverage, some 250,000 sq mi, more than anybody else. First to get beyond the 50% mark on 5G population coverage, and the only really to set a long-term target for getting 5G to 90% geographic coverage of the U.K. by 2028. On the fixed side, you know, we ensure that downstream BT can consume what Openreach are building, so that today's 7.6 million premises available for fiber to the premises, coupled with the existing 29 million plus premises on superfast. Collected together, that's delivering 28 Tbps as a total traffic peak, of which, if you look at the graph below, 25 million is driven by broadband, the rest by Ethernet in the peak. Then another key important part of what networks do is we actually underpin Openreach's rollout of 25 million homes by December 2026, because through the exchange estate, networks play a critical role there in making space for Openreach to build their headends into that infrastructure. Again, the other key thing here is just the breadth of assets that I have at my disposal now, many of which are managed and run by Openreach as the operating entity for those. But just some examples, 20,000 phone boxes. You know, we're sort of in this, are they all gonna go? Which ones are we gonna keep? Which are gonna be turned into defibrillators or libraries? What's critically important is they all have power, they all have some sort of backhaul, and they're all pretty good as a site for small cells. We're gonna see increasingly a use there. Similarly, you know, the Wi-Fi hotspots that we have, 18,000 + also 5.6 million enabled by the hubs in our customers' premises. Then in the future, a lot of work in thinking about the long-term keeper exchanges. You'll hear us talk about, you know, we don't need 5,600 in the future, we will need a thousand. Those will be perfect as sites in which to build edge compute and other infrastructure as our industry evolves. Similarly, as FTTC reduces, then actually some quite significant street-side cabinet furniture that we're thinking about how we would reuse as well. The key thing though about our network, when I sort of look at it in terms of what we deliver to our key, you know, internal customers and then they deliver to end customers, really is the scale of that network and the economics that come with that scale, particularly in our fixed core, for example. But also, you know, the reach of that network, you know, we by far have the furthest reach, for Ethernet, for example, being terminated at the exchanges that we've got across the country. And then increasingly, the one thing that really stood the test of the pandemic was the five nines availability of the core network. Our ability to keep the internet and broadband running for our customers, and we all saw the noise that the cable operator in the U.K. had during that period. Our ability to keep that running was unmatched through that COVID period. You know, and it's not just what we say, we continually benchmark, particularly in mobile, where there's a really mature benchmarking industry, and continue to win the best network awards there. And that network, you know, that credentials that we have that differentiate that network, I think is probably best embodied by how critical we are to the U.K. Critical national infrastructure. And you see some examples of that on this slide here. 99.7% road coverage by mobile for the emergency services network. We underpin the technology that sits in our 999 call centers. 39 million emergency calls handled this year, and it's continuing to grow at the moment. Metropolitan Police, 500 London sites that we provide with their wide area network, and we provide IP telephony solutions for. One of the things that we actually talk to the Ministry of Defence about is we're quite proud that we actually have a 100-year partnership with the Ministry of Defence. There's a wonderful picture somewhere of a horse in the First World War with a radio system on it, described as the first mobile phone. Maybe a slight exaggeration, but it's a good example of how BT were in the trenches, as the Post Office then, helping with communications on the battlefield, and that relationship continues. Last but by no means least, the NHS, where 110 trusts, you know, live trusts with BT, and 80 million smart messages delivered regularly through the vaccination campaign, both COVID and flu. Just moving to our network strategy, and then I'm gonna hand to the team to delve a bit deeper into it. We're all very familiar with this slide, the BT strategy and our purpose and our ambition. What you can see there, bottom right, is how we in networks specifically underpin that strategy. Best converged network, great world-class technologists, standout network experience. We'll work through those over the course of the next 30-40 minutes. Just to sort of really pick a headline for me here, and Neil will talk more about this, but really critical to what we're doing right now is how we evolve this great network we already have, which differentiates ourselves, in our marketplace, into an even greater, you know, simplified, flexible platform for growth. That's very much built on 5G and FTTP being the access technologies. A bit of an assumption that the access bottleneck, that the industry has had for some time starts to be removed. Also, you know, we're doing more than anybody, in the U.K. to think about how we get to those hard-to-reach areas, either with FTTP or with 5G and looking at small cells, Fixed Wireless Access, you know, neutral host solutions for in-building. The Shared Rural Network getting to 88% geo coverage by 2024. We were the only operator in Connected Nations to add significant geographic coverage last year, and we're still building that. But also looking at satellite connectivity, we have a partnership with OneWeb for that. Then also ensuring that that network, you know, can absolutely evolve, and we're well on this journey already, for robust edge computing, and we've also deployed our Network Cloud infrastructure. Through that, we get the key outcomes at the bottom here, you can see, which is really having a great simplified set of APIs that brings Network as a Service to life. Through that, you know, really having a great programmable network and an architecture that gives customers access to that automation and programmability. In doing that and enabling that, leveraging the data that is produced by that network. Once we've got that all in place, it enables. This is the outcome as you can see on here. You know, a simpler network with lower costs, but with greater capability. Connectivity for everything. Remember our ambition and also talking about devices and machines, how we bring a network that is best for machines and best for devices is as critical as best for people. Simple Network as a Service APIs, giving us a much faster time to market through significant increases in automation and through that, driving the ability to really innovate in services. That's what we'll cover during the course of today, plus more. With that, I'm gonna hand to Neil McRae, who'll talk about our strongest foundations. Neil. Thank you, Howard. Thanks everyone for coming. Welcome to BT. For those of you not been here before, this is our new HQ. It's a phenomenal building that really allows our engineers and developers to build what I like to think about as the strongest foundations. I'm gonna talk about our network. I'm gonna talk about how secure it is. I'm gonna talk about how it enables Network as a Service. I'm gonna talk about the edge, and I'm gonna talk about the people that make it happen. Those are the foundations for a strong network. As Howard says, we're on a path to simplicity, and that’s the other key foundation. Today's telco is mired with lots of legacy networks, lots of legacy platforms that over time we're moving away from to move towards a very simple all IP-enabled network. Leveraging cloud technology, using the benefits of new and modern capabilities in optical and in Ethernet to bring a high bandwidth, high available, and importantly secure network. We clearly have a fantastic rollout of 5G, more than 50% across the U.K. We'll continue to augment that with macro and small cells build. FTTP with the fantastic work that Openreach are doing in rolling out FTTP across the country. We're backing that up with a network that's scaled for the ultra-fast world where, you know, a 10 or 20 meg used to be the meter. Now we're in 100, 200, up to 1 gig and beyond. Using that fiber network to connect our 5G cell sites together. Not only are you on 5G with the little badge in your phone, but you're getting that 5G experience. You know, enabling the infrastructure for millions of customers. It's not just about some customers in one place, it's about having a national capability that enables customers wherever they are. Leveraging new technology. Howard mentioned our partnership with OneWeb. That's about connecting people that are in the harder places to connect, but also about connecting devices and other perhaps lower bandwidth services, where the power of satellite enables us to connect them in a way that fiber or mobile might not be able to reach. We do this through our converged IP core. This is a platform that delivers our services for fixed customers and mobile customers, and actually converged customers. Customers who use both our fixed network and our mobile network. We've developed a platform called BT Network Cloud, taking the best out of the hyperscalers, taking their technology and building it into our platform to enable scale up and scale down, and to enable us to get to market with products really quickly. All of that's underpinned with high capacity. BT has a long heritage in optical communications and leveraging the high bandwidth the optical communications brings us. In order to achieve that simplicity, we've also got to tackle the legacy. You'll have heard of many telcos talk about this and, you know, we're really on an aggressive path to close down some of these legacy platforms. 3G. 3G just isn't. With the advent of 4G and now 5G, we just don't need the 3G network anymore, and we're working with our customers to turn that off. Alarm systems. We have a strong heritage in the security industry where we provide connectivity to connect alarms, be it security alarms, fire alarms, many other different types of technology. Again, all copper-based, but we're moving those customers to new modern IP technologies that aren't just about the connectivity, but actually bring analytics and other capabilities as we migrate the customers to them. Then clearly, the PSTN, we're turning off the legacy telephone system, and that's a huge platform. It's actually the only technology that's in every single BT exchange. We're winding that down, we're optimizing it, and we're moving customers, again, to new future communication products, both in residential and in business, that can add value to their experience and add value to their business. That allows us to turn off the platforms. PDH, SDH are huge technology that takes up tons of space, uses loads of power. We're able to turn that off as we turn off all these other products and services. X.25s, still used, actually quite highly by the banking industry. We're working with that industry to migrate away from X.25 onto modern IP services. What's the so what on that? The so what on that is we're able to turn off or close 4,500 exchanges. If you were to build BT today, you'd build it with 1,000 exchanges, 1,000 central offices across the country. That allows a huge win on energy. It allows a huge win in our run costs and clearly, most importantly, allows us to keep the simplicity in the network, which allows us to focus on customers. We're piloting the closure of five exchanges right now, one here in London, to understand the ramifications of that and to make sure that we take customers on that journey with us. Network Cloud, I mentioned this earlier on. When we were looking at how we build the network of the future, one of the things we did is we went out and talked to many different organizations. We also had some learning, things like the Olympics, some of our other big customers that are running highly available technologies or capabilities or need highly available network. What we decided was that one of the great advantages of cloud technology was the ability to automate it, the ability to scale it up, and the ability to keep it running 24/7, so you can take one part of it down, upgrade it and put it back into service without anybody knowing. It also allows us, most importantly, to launch new services and new capabilities very quickly that are fully automated and that our customers can engage with in a digital way. It also enables Network as a Service, and I'll come on to that shortly. We have this platform up and running. It's serving many of our network applications today, we're in 12 locations across the BT network, over 2,000 servers. It's all software driven. We're leveraging the latest in telemetry and API-based technology and cloud-native technology to enable a platform that scales as we need it. It also allows us to effectively run applications under our control, under the demands that we as a telco have, as opposed to what the hyperscalers can offer us. Crucially, it allows us to scale up and down. If you imagine New Year's Eve, when you send that text message to all your friends at 11:59 P.M., hoping that it arrives by midnight. With today's technology, we can just scale up the SMS platforms, get all those messages out, and then scale it down. Further to that, what Network Cloud really allows us to do is create Network as a Service. This is where the network itself becomes an object in programming, so that you can, as a customer or as a developer or as a member inside BT, you can write code to grab a piece of network, create a piece of network that could be a high-speed path from London to Glasgow. It could be an SMS service. It could be a voicemail service. But through APIs, you're able to set up a network capability, leverage it in the way that you want, and then stop using it. That on-demand capability is something that's really important as the whole world moves to a kind of digital on-demand experience. We can give this in real time to customers, and we can do a lot of customization. You can join one piece of our network to another very simply just by thinking about it in a simple piece of code. The Network as a Service platform also gives us instant ability to tackle faults. By understanding what's happening using real-time telemetry, we know instantly if there's a problem in the network and the network itself can then actually understand where that problem is, use the Network as a Service component to create a workaround and to ensure that customers aren't affected by any problems in the network. Then we can bring in telemetry and really crucially, AI and analytics so that we can understand what the network's being used for, how it's performing, and as we want to continue to be the network leader, we can reset the benchmark every day if we choose about what network leadership really means. Then we also can co-locate with the public cloud providers, bringing our network close to them, enabling us to market their services to our customers and work in partnership with the public cloud and public cloud services. That brings us to edge. Edge probably many are thinking is what is the edge? I kind of like to think of it as the place where we bring customers together. We are moving, we're. In the past, we would centralize where customers connected to. It could be in London or it could be in Manchester and Birmingham. In the future, we're bringing the service portion of the capabilities that we offer much more closer to the customer. What does that mean? It means we have lower latency, so applications are much more snappy. Secondly, it means if you're using high-definition video, we can process that and use analytics on-site. So we have a customer that's experimenting with 8K video today. To actually carry all that back to the cloud and process it is largely impossible. It's just too difficult to do it. We can actually work with that customer, use BT Network Cloud on-premises to build a solution that allows him to get out of that video what he wants. In this case, it's a customer building engines, and they wanna understand how all the components come together. The power of edge with private 5G networks really allows us to do that. Also allows us to make things much more secure. We're securing one simple single platform, and we can give out light terminals, thin terminals that allow customers just to run an app on the screen when actually the app's back in the central office or in our exchange, making security much easier for us to manage. As I mentioned it with the example, makes bandwidth optimization really easy. That allows us to monetize that in several ways. Building solutions is clearly one way of us engaging directly with customers, but we can partner with the public clouds companies and offer them edge compute services. We can take our edge platform to wherever we need it for the services of the future as AR and VR become more and more prevalent in industry and in entertainment. We can offer an end-to-end solution, where we are working from a BT site with compute all the way all over the world to wherever that compute requirement is needed and offer customers a consistent and service level aware solution for their applications and what they need to do with their own customers. We're really well-placed. We've got 100 very high bandwidth core sites across the U.K. We have 1,000 Tier 1 exchanges that are also very well-connected and very, very connected close to customers, both from a fixed network point of view, but also from a 5G point of view. All of our interconnects to Openreach with on FTTP and to our 5G network are in these locations. That allows us to have the best service for customers because we've got the strongest FTTP footprint and the best 5G and 4G network. You can't build a network that customers trust unless you can show it's secure. Security is one of the most important fundamental features of our network. I'll start by saying we have 3,000 security experts in BT. Howard mentioned our long relationship with government in this space. That really has built a core foundation of security expertise and skills and knowledge. Not just in defending, but actually understanding how attacks work and building the future security solutions way ahead of the bad guys coming at them with us. We have a number of global security operation centers. We continuously monitor. We have a very in-depth analytics platform that was built up at BT Adastral Park that allows us to really see what's going on in the security space and for us to react ahead of time to any security threat that comes in. We've also started to look at threat assessment. As we work with more partners, as we bring more customers on, understanding what their threat assessment is as we work with them, can allow us to stay on top of any future security issues. Then we do what a number of other organizations do. We continually war game, understanding what's out there and how it might affect us. Red teaming, we have a fantastic team that goes out there and actually tests that what we say that we can deliver, we can actually deliver, and the network is as secure as it should be. Then we balance this with a set of controls so that we are in an area where we are happy with the risks that we are taking. That's something that we continually look at, we continually measure. As world events change, we can adjust what those controls are. It's a phenomenal area where more and more of our customers want to understand what our security capabilities are. Not only do we use them internally, we actually offer these, many of these services and solutions to our customers across the world. Protecting BT is crucial to building that trust that we talk about in our strategy that enables customers to engage with us on with their business and their telecommunication requirements. One of the key foundations, I mentioned this at the start, talent and people. We have 7,000 engineers across networks. Every year, we bring in 400 apprentices and graduates, and we refresh and bring in new people, younger people with different experiences of using the network and what they can bring as we develop our network. We have over 300 researchers in BT Labs in our Adastral Park, and Tim's gonna talk a bit more about them later on. We're looking at everything that's coming down the line that can help us build an even better and more secure network. Also, BT is seen as a really fantastic place to have a technology career. I'm personally proud of this. We're winning people away from organizations like Ericsson, like Google, like NTT, and Cisco, and bringing that fantastic skill base into BT and leveraging their knowledge and their skills to really drive our purpose, which is to connect for good. Something that many of our people here truly believe in. Together with that, it's about teamwork and bringing people together. We're driving an inclusive culture. We're driving a culture where people work together. Any idea that they have, they can bring their viewpoint from their experiences to the sort of network and solutions we need to build for a diverse and work for a diverse customer base and a diverse community. We really empower strong engagement, working with our teams and challenging our teams and supporting them so that they can be the best that they can be. We invest in them with digital and cloud expertise, and I'll talk a little bit about that in a moment. We have world-class technical pathways, so when engineers are learning, they're at their most excited, and we wanna feed that kind of thirst for knowledge and skills, and we invest in training and coaching and many other programs to give our engineers the very latest and best in technical knowledge. Our leaders, it's important as an engineer, I always remember this, having a leader that not only talks the talk, but walks the walk, really inspires our engineers. We're doing a lot to ensure that our leaders have a technical background, a network background, and a commercial background that can drive the right engagement with the teams. Because, as you know, today, it's a real challenge maintaining talent and keeping them engaged and keeping them within your organization. It's important that we attract new talent, but it's also super important that we don't lose any talent as well. That brings me to some of the initiatives that we've got in this space. Re-engage is a program where we're reaching out to mothers that have perhaps paused their career while they have children, and try to bring them back into BT and to engage in technology and that's a fantastic program that we've just kicked off. The Leader Lab, I mentioned this earlier on. We're taking our top leaders to universities and other organizations so that they can learn what's happening in technology, so that they themselves understand it and they can drive that technology in their organizations. The Tech Fellowship, something that I'm super proud of here at BT. This is about giving our engineering community a career path about expertise. As they develop their own expertise, we recognize it both in giving them a standing, but also actually in the pay and rewards that they receive. We create a momentum for this learning and knowledge growth that allows all of our engineers to develop. That, Howard and I were just on a call about that. The momentum behind that is massive. I talked about specific learning programs. Cloud technology is something that is prevalent everywhere right now, and actually there's a lot more to it than most people realize. It's not just about getting a AWS certification. For sure that's valuable, but actually what we want are the engineers that understand how to build a cloud, not just leverage a cloud. We created a network cloud learning platform. It's a massive, massively technical program that allows everybody in BT—actually not just people in networks, but anyone who wants to learn the underlying technology and how it works. We've built this program for them to do that. Actually, that's been hugely important as we migrate from a what we call a TDM or Time Division Multiplexing world, the old voice world, into this all IP world. I just wanna finish off and just reiterate some of the key points. We're building a secure, simple to operate, automatic, highly scalable network platform that's built for the ultra-fast world, 5G and FTTP, that allows our customers to engage at the edge, but also allows them to run applications in the cloud where we can connect them. This is something that we're doing at a fundamental level, looking at every aspect of the network to see how it should be built, understanding the underlying technologies and leveraging our great engineers to build it and put it in place. I'm gonna hand over to Greg, who's gonna talk about some of our customers. Thank you, Neil. Good afternoon, everyone. It's lovely to see you all. My name's Greg McCall, and I run service platforms here in BT. I have to say, whenever I describe my job, I always talk about it as I have the best job in the U.K. You know, I'm delivering products and services to our customers in more than 50% of households across the U.K., and we also deliver those same products and services to enterprises across the globe. I work with some of the best brains in Britain to deliver these services, and I feel really, really proud of that. You know, who couldn't be excited about doing that? I'm gonna start by talking about standouts customer experiences. You know, I think our customers are at the center of everything we do, and I'll try and bring to life some of those experiences that we deliver. I'm gonna start off by talking about what we've framed the new network leadership. I think the new network leadership is all about customer-centric solutions where we deliver both capacity and coverage wherever our customers need it. We'll enable this through a digital API layer that will give our customers the freedom and flexibility to tailor their networks as their business needs change. Imagine being in a business where you can do that at a click of a button rather than have to phone a call center. We honestly believe that the power of our 5G network and our FTTP network, coupled with the converged core that Neil mentioned, puts us in a really, really strong position to give our customers that flexibility to help them to simplify their businesses, and as they do that, not only will they simplify their operations for them, but we can simplify our operations as well. That is what we are calling the new network leadership. I think it's well scripted and well documented that, you know, we've had network leadership as defined currently, for many years. This is something that we are super proud of. It's been externally benchmarked, and we continue to lead the way. We are certainly not complacent. We'll continue to work at that to ensure that we deliver that exceptional service both in fixed and in mobile. We have brilliant assets. We have 12% more spectrum than both Vodafone and Three. We have 24% more spectrum than O2. It's not just about the quantity of the spectrum, it's the kind of spectrum that we've got as well. We've really got spectrum in the sweet spot, which is at the 26 and 1800 MHz band. The reason why this is a sweet spot, 'cause it's great for coverage and capacity. The fantastic thing about the spectrum as well is as technology has moved on, the spectrum is supported by 4x4 MIMO, and many of the new devices today support that technology which will improve both uplink and downlink services to our customers. I think we'll show you some of the uplink kind of solutions that are super important later. Before we get onto that, I think it's probably worth us just mentioning the fantastic work that we've done on our fixed network as well. We've had a relentless focus on ensuring that customers are at the center of everything we do here in networks. As we've built out our fixed network, we are leveraging the great work that Openreach have done in rolling out fiber. We've coupled that with our core. You know, I think it's really important to remember that when people think about their broadband service, they think about what the line is coming into the house, what their Wi-Fi is, but they forget that the reason why they have connectivity is to go and do the great things on the internet. You know, whether that is surfing websites or doing Teams calls or, you know, making voice calls. We have the best fixed core network in the U.K., and that is where we differentiate against our competitors. We also work very, very closely with content providers, who use our network to distribute their content and caching providers to ensure that we can optimize that experience so that every customer gets a brilliant experience at any time of the day that they're trying to use our service. I think over time, the network has become more and more of a utility, especially as more apps and services get delivered that require connectivity. I think we also saw during COVID, many of our behaviors changed. You know, we were all sat at home rather than rooms like this. Every one of you would be dialing into this call rather than, you know, listening to a single person. You know, I think it's really, really important to recognize that we believe that those changes that were introduced during COVID are here to stay. What that's done is it's really changed our traffic profile, where we see a lot more capacity being used in our network during the day than historically, where most of it was used, you know, late at night and during peak hours. The great thing here at BT is we've always dimensioned our network for the peak hour. We wanted to make sure that our customers got a great experience at any time of the day they wanted to use our service. Because we dimension our network for the peak hour, it meant as that extra capacity shifted to early in the day, we didn't have to invest in the extra capacity 'cause our network was ready to take it. In mobile, we've also seen the shift, and what we've seen is people's habits have shifted to late in the day. But the great thing there is we started to roll out our 5G network 3 and a bit years ago, and we've got really, really good traction on rolling out that network. Therefore, that network with the 3.5 GHz spectrum has really enabled us to support that extra capacity later in the day. I think most of us when we think about our connectivity, certainly my kids and my wife, they don't talk about broadband, they talk about Wi-Fi. We think Wi-Fi is a really important ingredient in our new network leadership. We've done a great job of digitizing the country and building great connectivity into the home, you know, up to 1 Gbps speeds. We deliver that to, let's say, the front door of the home. I think our job with Wi-Fi is to ensure that it doesn't matter where in your home you are, you will continue to get that great speed in any room. We believe that Wi-Fi, as it evolves, will deliver similar type experiences, because we've all heard about those ultra-low latency services that 5G private networks will deliver, and we are pushing the new Wi-Fi to deliver similar services. I think that's gonna be super important as our customers start using different use cases. You know, I think virtual reality is something we've all dabbled with. I was on the West Coast a couple of weeks ago, and seeing some companies, what they're developing there is just tremendous. With one of the university, they've already started to do remote learning through virtual reality. They gave an example where, if you're a biology student, rather than having to cut open a rat, which I wasn't a massive fan of, I have to be honest, we did this through virtual reality and, you know, it was pretty awesome. They believe that the marks that the students are getting now, having done one semester through virtual reality has gone up two points. You know, a real opportunity to bring that to life through the networks that we deliver. I think cloud gaming is another one, and what we call enhanced video conferencing. We all spend endless hours every day on video conferences, and I think we probably all berate the fact that we have back-to-back conferences most days. You know, I spare a thought to all of you 'cause I do it, but spare a thought to those poor networks that have to deal with all that extra traffic. As video conferencing gets further enhanced, where what we'll see is photorealistic avatars being used that you know are giving that 3D experience, where the camera will follow your eyes rather than you know when you look aside, people see the side of your face. It's gonna be absolutely so much better for all of us that spend time on that. Just bear in mind that the networks have to be able to cope with that extra traffic and those extra experiences, and that's what we're building. We'll also see a huge growth in the number of devices, applications, sensors connecting to our network, and we need to make sure that we continue to build that as well. We also believe that Wi-Fi, as it evolves, will be an extension of the private network, for those less critical applications, that require connectivity and high bandwidth. As we extend our network platform, we see lots of things evolving, and we'll start with small cells. I think we're gonna see a huge growth in the number of small cells in our network, both within building and outdoor. We need to ensure that as we deliver this, we embrace neutral host solutions, but equally use the assets that Howard spoke about earlier to deliver that connectivity wherever our customers need it. Smart cities, coupled with smart transport networks is another really important area of growth, and it's great to see the standards being ratified now. We're doing a number of trials to think about how we can bring that to life, connecting sensors, managing traffic, and ensuring that is a great experience. Private networks, especially for applications where autonomy and autonomous robots have to work within those factories to optimize the efficiency of a factory. Delivering a five-nines service, we believe we can deliver, and we've already started to deliver through our private networks. We've also seen in some of the ports, so the Belfast Harbour, we've done a number of things. Hopefully you've seen, we've just signed the Port of Tyne deal as well. You know, we are moving away from delivering bits and bytes in our network to delivering containers in a port. That's how important what we are doing is. Finally, I think, if you think about broadcast networks, we have a great set of credentials in BT of delivering broadcasts. More than 90% of linear TV goes over one of our networks and is dealt with by our teams. As we think about broadcasts becoming more IP-based, we are well-placed to be able to deal with that as well. Just to give you a couple of stats, the DTT multiplexers for that linear network, that covers 98.5% of households. We all think TV is everywhere. Doesn't quite get there. Digital radio, we all have those moments. We're driving through our cars, and you get those dead spots. Digital radio covers 97.3%. If you combine all of the four mobile networks in the U.K., you get to about 99% population coverage. If you look at BT's network, where we're delivering fixed network connectivity at 10 Mbps, we are at 99.6%. We are very, very well-placed as broadcast moves to IP to be able to deliver those services as well. I think from our side, you know, 5G, it's really, really important that it's not only about the technology, but it's also the enabler for digitization for all industries, and that we also can drive real growth through 5G as well. I think the good news is the standards worked with industry right from the beginning to ensure that we can meet the kind of use cases that a digital industrialization needs. I think there's loads of exciting things that are happening already in 5G. What we are seeing is, you know, for example, rail and road planning is made a lot better and a lot simpler through 5G services. Warehouse space optimization. I know it sounds really, really boring, but if you've got a warehouse like Amazon Prime that's shipping stuff every single day, every second of every day, making sure that we can optimize that space through a 5G private network. Then, you know, little things that were probably very, very close to us and we all worried about two and half years ago, if you think about the NHS hospitals and ensuring that if you did get sick, there was a bed available for you. Optimizing that bed utilization in hospitals is what we've been working with the NHS on as well. I think there's loads of things around this, and we'll continue to deliver. We've got to bring to life, you know, that real reliability, ultra-low latency, responsiveness of our network and ensuring that we can deliver that in a flexible way to meet the needs of our customers. As I said earlier, I think the real story here is really around growth, and we see, you know, our networks being the fuel of driving that growth within BT. This slide really depicts what we're moving from and moving to. We see ourselves moving away from standalone private networks to a hybrid macro network that utilizes both, private networks and our hybrid, macro network. We also believe we move away from connectivity to the platform plus type service that Neil mentioned earlier. From a standalone set of network components to end-to-end solutions that meet our customers' needs. Moving from bespoke commercial models to ensuring that we deliver as-a-service models, so we can all benefit from driving that productivity, not only within our industry, but into our customers as well. I think that hopefully brings to life why I believe I have the best job in the U.K. You know, I'm super excited about technology and the brilliant things that our fantastic engineers will deliver. You know, I think there's a great opportunity for us to continue to see this evolve over the coming months and years. You know, I think we will definitely be underpinning those standard customer solutions and using our leading network credentials to do that. With that, I'm gonna hand over to Tim. Thank you, Greg, and good afternoon, ladies and gentlemen. I'd love to have a chance to talk to you a little bit about BT's research. Howard started the presentation by noting that BT believes in applied research, but he used a funny phrase, research active. What we mean by that is something quite specific. It means we participate in that world of global research. We publish in peer-reviewed academic journals. We collaborate, we invent, and then we protect those inventions through the patent process globally. In fact, if you were to look up the stats, each year, we'll file something like 100 inventions from our labs that will rank us typically sort of third, fourth or fifth in that sort of ballpark of all U.K. businesses across all sectors, filing patents with the European Patent Office. If you were to inquire at the patent office about some of the things we invented, and in particular in the area of AI, obviously a very important technology segment right now, you'd find that, of all U.K. businesses, BT holds more patents in AI than any British institution, public or private. So it's something we take seriously. But it's very much a team game. It's very much a collaborative process. The hub of that collaboration is the lab I lead, which is out in Suffolk at Adastral Park. It's where we'll work with leading universities around the globe and here in the U.K. It's where we'll work with businesses, large and small, startup businesses, mid-tier, and some of the biggest and best businesses on the planet. We work in contribution to global standards. Neil touched on our efforts in global standards earlier. We'll partner with these academics and businesses to deliver world-firsts. The most important part of this collaboration machine is with customers. The park has evolved into a tech cluster. Over 150 other businesses are now clustered with us on the park, 1,000 non-BT people. Each year, at least prior to COVID, we would convene somewhere between 50,000 and 60,000 non-BT visitors to the park. Essentially, customers looking for technology-born solutions to their business problems or their business opportunities, or companies with a bright idea who think that that technology could help somebody deliver something amazing. The site has specialist facilities, which we share, 5G testbeds. In fact, a 5G testbed across the whole site. Quantum communications testbeds. We have, in fact, those of you who are here in Wanborough will, following this session, have the opportunity to visit our future zone. We have a much larger facility at Adastral Park, an innovation showcase, which is often the place where we will convene with those customers to talk about their businesses and how we can solve them. The model you should have in your mind, and in fact, several of the topics that Greg and Neil have touched upon, such as health, such as digital connected industries, those are facilities we have at the labs where we'll convene with customers essentially to curate solutions. Now, I would love to take you through the full detail of our research program. I can summarize it by saying that there's three things we aim to deliver. The first is essentially to make sure we can always claim with authenticity that we have the best network. The second is about applying that technology across the breadth of what BT does today to do it better, driving better sustainable solutions, taking out inefficiencies, reducing costs, improving everything we do. The third is about growth. Now, I can't give you the full breadth of the program, but I'll give you a few examples here. Under that best network piece, in the nearer term, what we're doing right now is applying some of those AI algorithms, some of that AI expertise to the business of how we plan our radio spectrum. Greg talked about the great spectrum holdings we have. Spectrum, of course, is the fuel of a mobile network, but how you use it also impacts the performance you can get out of that network. That's one thing we're delivering today. Longer term, we're also thinking about another technology Greg touched on, which is MIMO. We obsess about something called the bits per second per hertz per megawatt, which is essentially how much capacity can you get out of the fuel of a mobile network. We're working with academic partners, and those test facilities at the labs to look at something called Ultra MIMO. Really asking fundamental questions around how much information can you convey through this radio spectrum. We're also looking at new types of optical fiber. In university land, there is a technology called hollow-core optical fiber. It's a completely new form of optical fiber. We're the first telco in the world to put that technology through its paces in the telecoms context. We're even thinking about future ways of detecting radio waves. If you can believe it, all optical antennas is one of the things that if you were to come out to Suffolk, I could show you in our labs. Always ensuring that we can combine the best of science, the best of knowledge to make sure we have the best network, short, medium, and long terms. Very important part of what we do. Neil touched on security as a fundamental element of our infrastructure. One of the things we're looking at there is applying quantum physics to securing what I always think of as the very bedrock of our digital world, the optical fiber layer that underpins both fixed and mobile. There's a technology called quantum key distribution, which we've been researching for some time, and some of you may have noticed a few weeks ago, we launched the world's first commercial QKD secured metro network here in London. We're now experimenting and working with customers to understand how that technology can deliver value to their businesses by guaranteeing the security of that fabric. Of course, further up the stack, security is important as well. Cybersecurity is how the defense is a thing we take very seriously. Neil touched on the visual analytics capability that we have in BT. That comes out of our research labs. Some of you may have seen the work, the products launched here out of our BT Global division under the banner of the Eagle-i proposition. That is a sort of best-of-breed integration of brilliant products we find from our partners around the world. Also within that portfolio is some differentiation from algorithms coming out of that expert pool that I have at our labs at Adastral Park. I've touched on AI a few times. AI is clearly one of the key critical technologies of the moment. Of course, being a capability, you can apply it to lots of things. Almost everything you can think of in BT's broad set of operations, we are applying AI to. Just to illustrate that for you for a moment, our Complete Wi-Fi proposition, that Wi-Fi that Greg talked about, delivering market leading capability and coverage across a home, has algorithms that comes out of my labs, essentially making sure you are getting the coverage that you demand and should be receiving. Something completely different, but just as important, applying it to field optimization. Across the BT family we have many field operations, many men and women who essentially are trying to do the right thing at the right time with the right skills, the right tools, at the right place. That's a massive optimization problem. If it's an optimization problem, you can throw math at it. We do. AI is the technique that we power our field operations with, delivering benefit to customers in many, many ways. The final one I'll touch on is really, I mean, Greg again pointed to this with some of his telepresence examples. We're looking in the labs at future of immersive communications and immersive entertainment. One of the technologies we're looking at is something called volumetric video. This is, if you can imagine it, full 360 real-time high-quality capture of content, be that people or action or whatever, and then, relaying that to and playing out to customers. That could either be for consuming brilliant new content. Imagine it as an immersive and engaging way to engage with, BT Sport content, or it can be about access to remote expertise or communication. A brilliant example that we've been looking at recently is, virtual dance classes. We've been working with a nationally renowned dance company and educating and exciting a classroom full of primary school children. Of course, in doing that, we've got a number of goals. We're trying to understand what this technology can mean in terms of its delivery to customers in the real world. We're also looking at the technical details of how you architect a network to deliver that sort of capability, from capture to encoding. Where does that encoding take place? Where does the processing take place? Is it right at the edge? Is it right at the core? What we're doing is using these experiential experiments to understand how in the future we can ensure we deliver the best network to deliver these amazing new experiences. As my colleagues know, I could go on, but I won't. With that, I will hand to Emily. Thank you very much. Good afternoon. My name is Emily Clark. I'm the CFO for the networks organization. I am relatively new in role. But in the few months I have been in networks, I feel as if I've landed in a place that is systemically important to BT and also systemically important to the U.K. And beyond. I hope you're getting a sense of why I feel like that from what you've heard so far. I wanted to talk a little bit about networks within the context of BT more generally, then talk a little bit about our performance, and then round off on transformation. I mean, you've heard that the infrastructure that we build and maintain and the solutions that we are creating, they end up in all of BT's products and services. We account for around about 8% of BT operating costs and just over 20% of the GBP 4.8 billion of group capital expenditure. In terms of our performance, in FY 2022, our total costs were slightly up. That reflected that our more efficient operating costs were outweighed by increased investments. I'll go through both of those. Operating costs were down in FY 2022, and that reflected a pattern, if you like, whereby our transformation impacts outweigh our OpEx headwinds. In fact, OpEx was slightly up because of volume growth, because of capacity upgrades, but we were able to offset that with lower labor costs and in fact, lower energy costs from reduced consumption and also through smart hedging and contracting, which gave us some price upsides. If you look at the pie chart, you can see that labor and energy costs account for quite a significant chunk of our OpEx, as do the shared costs with Three through our MBNL partnership, which gives us significant operational synergies. We also see OpEx, where our vendors provide us with support and maintenance, and we carefully source that. There are the annual license fees for spectrum, which are there as Ofcom fees. Our CapEx was up by 6% in FY 2022, and that was because of investments we made to maintain our position as the number one network, as well as some strategic programs, so delivering on our high-risk vendor swap obligations, our 5G rollout, which we are doing in parallel, and the support that we provide to Openreach to enable FTTP deployment. You can see from the pie chart that the vast majority of our CapEx is capacity and network, which as I said, is targeted towards our network leadership and covers our 5G and FTTP upgrades, as well as Neil mentioned, the converged IP core and Network Cloud. The next slide shows our OpEx dynamics over our planning horizon. OpEx over this period is driven by the run and maintenance for our networks and the run costs associated with legacy closures. Now we do expect headwinds in energy in particular, and in FY 2023 in particular, but they ease as we reduce our consumption over the period and as the price pressures ease. There are also some inflationary headwinds linked to our annual license fees, which are index-linked. We do also expect savings from automation, from strategic sourcing, and from closing platforms to create a simpler network. I'll share more on our transformation ambition in a moment, but overall, I think you can see that our savings are expected to outweigh our OpEx headwinds over the period. Now we, as I said, we're investing significantly to ensure that we maintain the best network and provide unrivaled customer experience. At the same time, our customers are demanding more, and you can see that in the traffic growth chart, which shows our peaks driven last year by Amazon Prime streaming Premier League matches. Despite this, we have a relentless focus on efficiencies so that we are delivering our investment with lower and lower unit cost. The bar chart at the bottom shows the unit cost of deploying a megabit per second of incremental capacity into our core network. You can see very material reductions from 2010 onwards. The scale is important. Although it looks like the majority is done historically, between 2021 and 2026, we expect a further reduction of a third, despite the increase in traffic, as you can see on the top chart. Now, we've achieved a lot through our investments already, but it is a multi-year program, and we have some key milestones ahead of us. In particular, the launch of 5G standalone, the completion of the FTTP rollout, legacy closure, and further out, the 5G differentiated services that Greg described. We do expect our CapEx to be similar over the next few years, but with scope for reductions towards the back end of the decade as we complete the swap and re-refresh program and our planned FTTP rollout. Turning to transformation in networks. We have a number of continuing programs and some new programs, and we broadly categorize into energy, third parties, and operational efficiencies. We expect to deliver over GBP 350 million of gross savings over our planning period, whereby gross I mean that a proportion of those savings is reinvested in technology or in new roles within BT. You've heard already about our move towards more strategic architecture and our focus on closing legacy networks. These are really the key drivers of our cost transformation program. Obviously, mindful of balancing absolute cost reductions with unitary economics. We might, for example, install high-capacity fiber link to a mobile site, which is more expensive, but it gives us better GBP per gigabit, better unit economics. We've also taken the opportunity from our swap program to do that efficiently, so to swap and refresh at the same time, go to the site once. Now, in terms of energy, the impact of world events on energy markets have definitely affected us as it has many other operators in the telco sector. We use hedging in order to protect us from price fluctuations, and we have a BT-wide program to help ensure that we reduce our consumption over time. Our technology upgrade helps with that because more modern and efficient networks use less energy. For third parties, we are always looking at opportunities to in-source from third parties, from sub-subcontractors, and by doing so, avoid the supplier margin and strengthen our internal capability. Where we continue to contract with third parties, then we negotiate using BT Sourced, our procurement organization, to make sure that we get value for money. For labor, we use benchmarking to ensure that our organizational design is optimized. Neil talked about us hiring apprentices and graduates, and they create the pipeline, which will replace the higher earning roles over time and help us reduce labor costs. Many of our planning activities are manual, so we're automating those in order to speed them up, make them more accurate, reduce manual intervention, and that also supports operational efficiencies. We have a really strong track record of delivering on our efficiency and transformation objectives through simplification, through automation, through network optimization. We're very confident that we will continue to make a strong contribution to group on that front going forward. Thank you very much. Back to you, Howard. Thank you, Emily. If I was to just quickly summarize what we've talked about this afternoon. You heard myself and Neil talk about, you know, the differentiation we get through our unparalleled fixed and mobile networks that we have here in the U.K. You've heard how we'll continue to invest in that best network, but actually taking it to a position of fully converged and much simpler, going forward. We do that by continuing to attract industry-leading and diverse pool of technology talent. You heard from Greg about how we'll then use that talent on top of that network to build great new products and services, for our customers. Tim talked about how we are active in research and use that to target sustainability, in particular, in those outcomes for customers. We've just heard from Emily about our plans to structurally transform our cost base. With that's the formal piece of the presentation over. We're now going to go to Q&A. Just some ground rules for Q&A, first of all. I'll attempt to work left to right. If you can wait for the microphone to arrive. Announce yourselves. I'm gonna take, I don't know, half a dozen questions from in the room, and then I'll take a few from the Webex. First of all, in the corner over there. Thanks very much. Nick Delfas from Redburn. Just a quick one on the exchanges, which has obviously been rumbling for a while. What's the likely pace of decline from, I guess it was 5,600 down to 1,000? If you could give us an idea of how that's going to go. And then the second question was on massive MIMO and how well it works. You know, could you tell us a little bit more about how successful it is at propagating it further and what kind of challenges you've had in installing it? Thanks. Okay, I'm gonna cover exchanges, and then I'll ask Tim, possibly Greg, to talk about massive MIMO, but we'll come to that. From an exchange point of view, I mean, there's a number of pieces of transformation we need to complete in order to empty those exchanges. A large one of those is, you know, the chart that Neil showed captured most of it, but the largest one is the PSTN switch off and migrate into Digital Voice. We are working towards the December 2025 target for that. You will have heard recently, we've had to pause in consumer migrations to Digital Voice, and we're looking at how we can restart that quite quickly once we've got the right battery backup solutions in place, such that a Digital Voice network is, you know, as good in storms as an exchange-powered voice network. We'll then see, you know, other parts of the network, such as copper broadband, starting to diminish over time. You know, we won't see significant large numbers of exchanges being completely freed up before the end of the decade. We have actually selected around 100 that we think are some of the prime buildings, i.e., they're the ones that the property team are saying to me, "Please get out of these first. Please get out of these." We do intend to get out of that 100 between now and the end of the decade. Then I think you'll see then, sort of between 2030 and 2035, 2036, the bulk of that change. You know, I mean, we have a vast variety of exchanges from, you know, enormous buildings that you'll see here in London down to really tiny little huts in many respects. So that's that point. That looked like you're about to ask me a follow-up on that. You've got a lease that runs out in 2030, 2031, so you're gonna have to extend that. We have an option. Well, we're still looking at options there. We have a buyback or re-lease option with Telereal Trillium in 2031. Both options are available to us then. On the massive MIMO, Neil, do you wanna talk about massive MIMO first? Tim. I meant Tim, yes. I'm looking at you, so, Neil. Yeah, and I'll maybe come to Greg in a sec. I mean, massive MIMO, it's a technology we're sorta still evolving, right? In the labs, you're getting very, very good performance. If we put this stuff through its paces in the labs, 20 bits per second per hertz would be the sort of figure you can get in the labs. Normal sort of pre-MIMO sort of technology is a couple of bits per second per hertz, so a very material uptick. Theoretically, we should be able to do even better than that. Operationally, I think what we're finding is it very much depends upon the particular deployment, 'cause not all capacity, not all geographic coverage is equal. Therefore, we're in the process of sort of, I guess, tuning the capability to demand. You know, it's a technology that's delivering, but I think we're learning as we deploy this technology exactly where it can deliver most benefits. I mean, Greg, you've got the operational side. Anything you wanna add stuff to that? I think that's spot on, Tim, and I think you also asked a question about how easy it is to deploy as well. I think it's probably fair to say in the U.K., deploying any radios is really hard compared to other countries around the globe. I think, you know, there's two really important things. One is the size of the antenna and the weight of the antenna. We're doing a lot to ensure that that reduces, and we've seen a reduction in both of those since we started deploying massive MIMO, which is helping. Okay. Next, Carl. Next question. Thank you. Carl Murdock-Smith from Berenberg. Two questions, please. First one, Howard, you talked about network resilience quite a lot. Obviously, this week we'll get the results of the CWU strike ballot. You could be losing quite a lot of labor, at least for temporary periods. Can you talk a bit about contingency planning and the potential operational impact on the network if roughly 45,000 people down tools? Secondly, on research and development, you talk about it being applied research. Last year, looking in the annual report, you spent GBP 604 million on R&D. That's down from GBP 720 million the year before, so it's a significant decline. Can you talk about the future trajectory of your R&D budget? Thank you. Okay. I might ask Tim to cover that part of that second one. To the first one, I mean, the first thing let me say is we are disappointed that the CWU are currently balloting their members for potential industrial action. We think that, you know, in the between 3% and 8% increase that we did with the flat rate GBP 1,500, averaging about 4%. Similarly, to our manager population, we averaged an increase of about 4%. We think that that's quite a good, you know, well-benchmarked across what other people are doing in our industry and others. Now to get to the heart of your question, I mean, the first thing I would say is, you know, unlike a production line, networks will run without manual intervention. You know, in many cases, networks can run for quite a long time without significant manual intervention. Now, what we have been doing, however, in our preparedness for potential industrial action, is looking at how we would prioritize work. You know, most of the intervention that we make into the network is to add in capacity. We tend to spread that out throughout the year. You know, it's not. I mean, we did this at the start. We learned a lot in the pandemic because, you know, we've got Andy here who runs the network operations center, and the teams who work 24 hours a day. When we moved them to work from home, we had to prioritize work, and we did that by reducing some of the out of hours capacity uplift work. Then we successfully managed to catch up again on that. You know, we have that robust plan in place, and we're hoping that we will not have a prolonged strike action because we think we've put a good deal on the table. The second point, I mean, the R&D number, and remember, we always talk about R&D, of which a relatively small part is the pure research part. In terms of that transition, I mean, in essence, you know, there has been some shift, and we talk about that amount in terms of, you know, what sort of qualifies as R&D that they, this then gets converted directly into products, and therefore it actually is part of what attracts some tax benefits in our corporation tax. We do see that as continuing to increase. If I look at my budget for development, if I look at Harmeen's budget in digital for development, and if I look at the appetite across the CFUs, there is, you know, as we do the digital transformation in BT, there is. Yeah, I don't see that continuing to decline, certainly not in the short term. Or whatever the mic gets to first. Thank you very much. It's Adam Fox-Rumley from HSBC. First question I had was on over-the-top players. There's been quite a lot of chat around at the moment about getting companies like Netflix and Amazon Prime to contribute to some of your network costs, and I was wondering if we could take the opportunity to just try and find out a little bit about the real costs you incur, specifically kind of related to the peering debate, which is what it seems to be about. I'd love to get a bit of context there. Secondly, we've also heard recently that Sky is thinking about or has the ability now to offer a puck to kind of maybe potentially move away from satellite at some point. We were talking about DTT earlier in the presentation. I'd just be interested to know, kind of as the network sits today, as the network evolves over the course of the coming years, would your network cope with a kind of complete transition to IPTV? Those two questions are quite related. You know, you're right. If we look out at the potential growth in usage of the network, you know, and Emily showed some charts of what we've seen historically. We do see. I think we do see the next era of growth of significant growth, you know, likely to be driven by potential broadcast TV moving onto the network. You know, the key question is ensuring that we have techniques for managing that efficiently. One of those, again, this is one we've been doing quite a lot of research on, is how do we take what would normally be a unicast IP stream, and particularly for a piece of live television, 'cause obviously you can't cache that. For a piece of live television, how would we convert that into multicast? In doing that would significantly lower the burden on the core network. Therefore we, you know, we're confident that through techniques like that, we can consume ultimately a shift from, let's say, digital terrestrial TV into all IP-based TV, and it's something we're putting a lot of thinking into how we would do that. You know, how we would potentially monetize that. You know, I think that there's probably something like a cost of GBP 500 m illion for broadcast TV distribution per annum at the moment in the U.K., if you think of both terrestrial and satellite. You know, what we've got to work through is, as that traffic comes onto our network, how does that fund some of it? That it doesn't all suddenly become a saving, because clearly we've got investment to make for that. We're also thinking through. That does bring us to the point you made about the OTT operators and I guess the net neutrality debate. You know, we welcome the fact that Ofcom are consulting on this. We do think there are parts of that that will need to evolve over time, particularly as some of the new 5G services become commonplace and net neutrality rules and network slicing, things like that will need to change to help accommodate that. The key for us, though, actually is we do think there's a lot of mileage still in how you schedule activity on the network efficiently and Matter of fact, Neil here led with this in the pandemic when we convinced Call of Duty and Fortnite not to co-launch their products at 7 P.M. every evening at the same time, and to help by spreading that across the day. That was successful in doing that. Through scheduling of non-real time traffic, through driving the adoption of multicast, we think there's quite a lot of mileage there. Then also, as Emily showed you in a chart, actually the cost of adding bandwidth is continuing to come down, and we mentioned that it's over the next two years, we see that dropping by a further third. We are probably. You know, that won't carry on down to zero, of course, though, so it is something we spend a lot of time working through. Thank you. Hello. Thank you. This is Xi from Citigroup. I just have a question on Open RAN, and if you can talk about your views on Open RAN, the pros, cons on it. I think one of your competitors has a quite clear roadmap on adopting Open RAN in the U.K., and I wonder whether you're also thinking about potentially introduce Open RAN into your network. Thank you. I'm gonna ask Neil to cover this. Let me just make an opening point on it. The most important factor in networks, if I could summarize them in two ways, is giving great reliable experiences to customers, first and foremost, and being really capital efficient in what we deploy in the infrastructure. You know, we are putting those ahead of you know, needing to be first with Open RAN. You know, in terms of the dynamics in our macro network and the amount of swap we're doing there, that's why we've been on record saying Open RAN in the macro network is probably towards the end of the decade. That may have been interpreted that we're a little bit of laggards in Open RAN. Actually, there are some great things that we see in it, which I'm gonna ask Neil to speak to now. Neil. Yeah. I mean, I think first of all, we joined the O-RAN Alliance, I mean, a long time ago, I think 2017 or 2016. Open technologies and open standards are something we truly believe in, and we've published hundreds of them in the lifetime of BT. I think, we're It's quite difficult when you're midway in a technology cycle to kind of stop and change direction, especially when the proof points of what you might change to are very uncertain. However, we have been doing a massive amount of work in BT Labs on using Open RAN for private networks and using Open RAN for network optimization. We have a pilot running in Hull right now where we're using the RIC, the RAN intelligent controller, to optimize the network, and we feel that that's one of the strongest parts that Open RAN can play. I mean, we've got hundreds of people working on Open RAN and testing it and contributing to the standard as a whole. you know, from a network leadership point of view, we're only gonna deploy it when we know it's 100% as effective, if not more effective than what's available today. that's something that, you know, we don't apologize for, frankly. We're only gonna deploy it when it shows benefits. From a cost point of view, we're very dubious about whether it's gonna bring a cost advantage, 'cause if you take one of these Open RAN boxes and open it up, you see all the same components that you get from a Nokia or from an Ericsson or from a Samsung. the underlying componentry is the same. we mentioned massive MIMO earlier on. That requires acceleration. The notion that Open RAN can be only software, I think is proving to be more difficult than we would all like it to be. We continue to use it. We have a program called Ultra MIMO, where we're trying to use Open RAN to take it to the next level of MIMO in the network as a kind of a longer-term research project. You know, it's a fantastic technology that's got a huge amount of opportunity in it and we're working as aggressively as any other operator on trying to see the benefits of it. Thanks. Just, I mean, it's all about timing. It's a critical point there. I'm gonna take one more in the room, and then I'm gonna go to online, and then we'll come back to the room. If people online, if you want to raise their hands on the Webex feature, then we'll take those. First of all, here. Hi. Ben Sherwood from New Street Research. Firstly, a quick follow-up. I was just wondering your current thinking on the timeline for when you expect linear TV to switch off. Then the second question, about your current thinking on the sort of technology mix within rural areas, how far you expect fiber penetration to go in the U.K., and then for the remaining premises, the extent to which they would be covered by satellite or Fixed Wireless Access, that would be great. Thank you. Okay, on linear TV switch off, as I said, we're in active discussions right now with the main broadcasters. I don't think in terms of actual switch off, we will see that this decade. I think it will be early, you know, maybe just inside or just beyond the end or start of the next decade. As I say, it's important that we start planning for that, 'cause I do think it will clearly inevitably happen, and Greg talked about it. If we come to the rural question, you know, clearly through Openreach, we're building the 25 million homes by December 2026. We're also actively talking to the government about their outside-in gigabit investment and, you know, how we can potentially look at using some of that to extend beyond the commercial build into some of the Type 3 areas. I do think though, ultimately there will be inevitably and whether it's 0.5%-1% of the U.K., you know, 1.5 to, you know, that sort of percentage will, at least in the short term, be uneconomic to reach by an FTTP solution. For that reason, you know, we are looking at numerous solutions. I mean, the OneWeb example is where you could potentially use satellite to get into a neighborhood and then use a smart wireless solution to distribute within that neighborhood. is a solution. Fixed Wireless Access. Again, there may be communities where you can get sufficient bandwidth in to put a tower up and then use Fixed Wireless Access to get to those communities. We're very engaged. We work, you know, in research on opportunities here. We work closely with DCMS. Our goal ultimately is to remove that sort of geographic not spot challenge that all telcos have, 'cause we wanna give everybody the opportunity to experience ultra-fast. I do think it will always be a combination of maybe a bit of satellite, maybe some smart wireless distribution. We are also looking at high altitude platforms, and some of our colleagues in other operators, Deutsche Telekom and Orange, for example, have been doing quite a bit of breakthrough work on that, but it requires hydrogen engines to become economic and the ability to fly an aircraft around for seven days without having to land it. That might sound a bit futuristic, but actually, you know, in the timeframe towards the back end of the decade, we're keeping a good eye on that one as well. Okay, no questions on Webex at the moment. We'll carry on in the room. One at the front here. Thank you very much. It's David Wright from Bank of America. You actually just touched on it, and I think it might have been Greg, your presentation where you talked about the loading of the networks, and it was always pricing of data and capacity on the networks has always been very interesting to me because these are hugely inefficient. To have two spikes in the network usage morning and evening and having to build to the peak, you probably got a third of the day where the return on capital profile is pretty terrible, right? The question is, how can you smooth that capacity? I think COVID might have done you a favor 'cause it brought people working from home, of course. How can you smooth that more, you know, whether it's using the bandwidth to move data from the OTT guys into cache, whatever it is. How can you be better at that? Could we even see different pricing models start to evolve that incentivizes use of net? I mean, it's, you know, it's standard for the electricity networks, right? For us networks guys, you hit a bit of a raw nerve there. I remember when you know when you used to have off-peak for the telephone 6 P.M. onwards. The opposite in that respect. Let me have a go, and then I'll ask Neil to comment on it as well. I mean, first of all, it's great to be a converged operator for this because actually having a single core behind mobile and fixed where you actually have peaks at different times and actually you know there is a significantly less cost in adding a megabit per second of capacity into the core that we use for fixed than historically has been in place in mobile. The mobile piece will always be slightly expensive because you've got to track where you are and, you know, offload you from one tower to another. We think that the economics of capacity mobile is converging now more towards what we've enjoyed more recently in the fixed network. That will help us in driving down the overall cost of incremental capacity. You know, we continue to do some great work on caching. You know, we've been using Qwilt, which is a form of Open Caching, working with content partners there, which means we get a bit of a share in the revenue as well, so that helps to fund that. We are actually quite a large amount. I mean, if we took caching away, the 28 terabits per second that we currently have now would be much higher. That is quite effective today. The challenge is the fact that we, in the households up and down the country, we want to use this the most between 6:30 P.M., 7:00 P.M., and 9:00 P.M. Actually, you know, again, if we can work on the non-real time content during that period, again, we think there is opportunities for smoothing that out. I think there is, you know, there's lots of techniques ahead of us there. But we have to face into the fact it will continue to increase ultimately that usage, in peak period, and that will drive the investment. The other thing I'm trying really hard to do is to reduce the energy consumption when we're not in a peak period. We've done lots on mobile on that. We're looking at what we can do on fixed. I mean, Neil, anything to add? Yeah. I would say we're starting to see that. One of the changes we've observed through COVID is actually the content guys realized that it's not just about kinda chucking it on the network and hoping. They actually wanna ensure that when they put their program, if you're Disney and you're launching Mandalorian season four, you want that to be a phenomenal experience. Disney is actually one of our partners with Qwilt, where they pay us to deliver that traffic. We also see it from the gaming companies where, you know, as they do a big launch, they have a whole lot of kinda noise around it. They want that experience to be good. What we are trying to do and work with them and build is not just dump it on us, but work with us. We'll give you a service where we give you some guarantee about how well we can deliver it by working with them and collaborating with them to deliver it in the best way. You know, we're also working with the big console guys, Microsoft, Sony, so that we can actually, you know, they've got a big title coming out, we can pre-populate it. It's literally press a button, and you can play your game. We've done that with Apple on iOS downloads. You know, back in iOS 6, iPhone 4, the biggest event would be when Apple put out a new iOS launch. Now we never hear about that. Lots of technology going on there. Again, with the multicast stuff that Howard talked about, I think we are gonna start to see that traffic pattern change over time. Clearly, you know, if Scotland are playing England at Wembley and Scotland are 3-1 up, it's clearly gonna be a, you know, a big event that everybody's watching 'cause it doesn't happen that often. Live traffic is where we're gonna have our biggest challenges, and certainly sports is one of them. Yeah. That's super helpful. Wouldn't plan your network for that. The other thing I was just gonna add was, it feels like this is a feeding ground in all the right ways for ESG. Obviously you've got the energy consumption and the improvements that are taking place there with the technology. I guess within the labs, all the things that you're doing are ultimate. You know, we can present those as massively positive drivers of society and the digitalization of society. Could you talk a little bit about maybe the two to three things that you think shout loudest from an ESG perspective, if maybe I mean, that's a great question. For us, it really is, it has to come down to energy consumption. You know, we consume 2.5 TWh of electricity. That's 1%, just slightly higher than 1% of the entire U.K. electricity that's generated. We're at 200 GWh of oil and gas. You saw on the presentation there that when we switch the legacy off, that will remove 550 GWh. That's a really big chunk. Just some other additional statistics. An FTTC line today, you know, 76 Mbps or 70 Mbps broadband, typically uses 2.4 watts per customer. FTTP, 0.3. That migration from copper to FTTC to FTTP, actually just to throw another one in, I think DOCSIS is 5, by the way. 5, 2.5, 0.3. Just to have that in your head. We see that, you know, and again, across the decade, as we migrate ever more customers from the FTTC platform to the FTTP platform, we see great improvements there. We are, as is our track record, a great believer in buying only from renewable sources, either directly, with PPAs. We were one of the early investors in onshore wind through Fallago Rig. You know, we are continuing to increase our PPA portfolio. We actually signed a couple of deals last week. We're not ready to talk about them yet. You know, that direct investment into renewables is important for us, and then ensuring that we're paying the REGOs for the certificates beyond that. The other area, and you'll have heard, Clive Selley talk about this. You know, I think we have, you know, the second-largest fleet of vehicles in the U.K. They're in that sort of mid-sized van range, which hasn't been the first for innovation in all-electric, but is coming now. You know, we're working really closely there as to how we can Openreach are working closely with, you know, car manufacturers as to how we can convert the whole of the Openreach fleet to electric vehicles during the course of this decade. You know, I've got 1,500 vehicles in my organization. We're doing exactly the same thing. Really important for us, and actually, given where we've got on the simplification opportunities, lots of opportunities to talk about that in the future. Another area where we can help our customers be more secure in the digital world. Yeah. We're building that. I think that's a massively untapped area for us as well. Yeah. I agree. Going with that, I think it's also about driving a sustainability mindset into our engineering community as well. You know, so Howard's mentioned about engineering, you know, turning stuff off when we're not using it, so it's very energy. Equally, think about the packages, how we sunset products and how we, you know, get back those products and ensure that we do something with them. Changing that mindset, I think is the third area that's really important. Okay. Any questions? Chris at the front here. Chris Lewis from Lewis Insight and The Great Telco Debate. Thank you very much for the update. The question which keeps occurring to me, and you all keep including this comment about customers and the feedback. How does that customer feedback come to you, given the lines of business organizations, and the way they do? So what are they demanding of you? How are you seeing this customer feedback? And then perhaps more importantly, given the relative role of connectivity in the future, how are you gonna get feedback through your partners who may well be delivering the services to the customers ultimately in the future? I think I mean, great question, and I think that, you know, a networks organization can only be truly successful if it has a really strong commercial mindset. By that, I mean, it's really taking on board what we're hearing from our customers. It's understanding what our competitors are doing and using that to drive the strategy within the company. I spend, as do the rest of the team, you know, significant amount of time with large enterprise customers. I know the CIO of DWP, HMRC. We share. Actually, because we're a large sort of U.K. employer, we have a lot of infrastructure, you know, buildings in the U.K. We have a lot of call centers. We actually share quite a lot in terms of the infrastructure in the U.K. and how we work together on that. Of course, that then feeds into, albeit indirectly, what they're buying from Enterprise and Global. You know, I've got DEFRA tomorrow, for example. Tim and I are hosting up at Adastral Park. We do get quite a lot of direct feedback there. Philip put in a great rule when he joined, which is if you look at the complaints coming into the CEO, each of his team is gonna take at least one a week and ring that customer, and then sort it out. That means not only sort it out for that customer, but prevent it happening again, which is a great way of dealing with consumer customers. Interestingly, my inbox has dried up because we get fewer and fewer complaints these days, which is, you know, a great outcome there. I think as you say, Chris, as we shift connectivity into sort of the connectivity plus area, then that does bring the partners in. Now, again, I think, you know, we've with all of the, you know, the hyperscalers, or some of the large content companies, we have those great relationships. Now, I mentioned Neil's relationships with them that we developed during COVID with the games companies. You know, we have a great relationship with Facebook and looking at how customers use our network, in that respect. They're quite keen to come and tell us how our network performs, compared to others in the U.K. and more globally. We're not short of feedback in that respect. The final point I'd make is the tooling in terms of being able to observe, you know, what's happening in the network and being able to imply from that how customers are experiencing the network has got ever more sophisticated over the recent years. You know, we are much more now customer driven in terms of activity that we take in both the mobile and the fixed network by looking at, you know, are there any blockages? Do we see any slowdown happening for that cohort of customers? That's changed how we add capacity into networks over the last few years. Hi, it's Emmet Kelly from Morgan Stanley. I just was wondering if you could talk a bit more on sustainability and the circularity of your network. You talked briefly about the sunset of your products, maybe that was from a consumer perspective. When you're decommissioning parts of your network, what do you intend to do with those parts afterwards, and what's the plan for the waste? Also when you're rolling out new networks, is any of that repurposed, is any of it refurbished? Just how you're managing it from a sustainability perspective. Thanks. I'll talk a bit about that, and Greg, maybe you can pick up some as well. You know, that circular view, critically important. It's partly, you know, through, you know, doing evermore there that was actually underpinned, as you know, bringing forward net neutrality for us across BT and the timelines for that. Specifically on the networks, and this is a change. I would say historically, if you walk into a BT exchange building and a statistic for you that I might not wanna share, but I'm going to now. You walk into an exchange building, look at electronic equipment inside an exchange. Approaching half of it is powered down because we took the immediate, sort of ESG benefit and the energy saving. What we've now got to do is make sure that we responsibly remove all of that infrastructure. Now, there's a lot of value in doing that, as there is value in the copper infrastructure, in the ground as well. There's an opportunity and a challenge here. The opportunity is to find ways with partners to remove some of that infrastructure, recycle it to the maximum amount possible, and then be really careful about how we dispose of some of the electronics, and some of the rare metals in some of the electronics. We are well aware of that. We've got some great partners. In fact, if you've got a minute afterwards, talk to Andy Sherwin, who's at the back here because he's leading on that for us in how we empty exchanges. I think we have, what is it? 200 million tons of copper. If I've got the right number. 200 tons of copper. 200,000 tons. There you go. Get the zeros in the right place. 200,000 tons. I remember the 200. You know, but how we convert that from a copper cable into, again, in a responsible way, into copper and then, you know, recycle that and monetize that, again, is high on our agenda. It's something that, you know, we have a team very much focused on and continuing to work on. Any final questions? Anything on the Webex? Just got one at the front here. Hello, Rupert Wood from Analysys Mason. I just wondered whether you could say something a little bit more about what the energy headwinds, energy cost headwinds might be. You've said quite a lot about the savings that might be made by removing legacy equipment. Is it just the rising cost of energy or are there other areas that sort of drive that up? I mean. -as well as the- I mean, I'll ask. To counteract some of these savings you're. I'll ask Emily to talk, to give a little bit more insight into some of the numbers in a second. I mean, clearly, energy has become front of mind, over the last, you know, nine to 12 months, really. We were in a really good position with hedging in FY 2022, and actually, as you saw earlier, our energy cost overall reduced FY 2021 to FY 2022, partly driven by reducing overall demand, so overall gigawatt hours by 2%. You know, we're accelerating that trend now, but just a bit more on the numbers would be helpful there, Emily, I think. Yeah. I mean, the main headwind relating to energy is in FY 2023. I mean the main instrument, I suppose, we have to protect us from that is hedging. Yep. In this current year, we're about 84% hedged, which includes the energy purchasing through MBNL. The average cost to us within our sort of hedged portfolio has gone up 80%. Next year, we're hedged for about 50%. We have, as Howard mentioned, long-term power purchase agreements. They accounted for around about 17% of our purchasing last year, and we're increasing that over time. That's a really good way in which we can, you know, help hedge and protect ourselves from the energy situation. I guess I was thinking more in terms of longer term, in terms of what might actually. You talk about decommissioning legacy networks, and these would save potentially 30% of your energy consumption. I was thinking things like how might small cell densification, for example, actually affect that? How might massive MIMO affect that? How might Edge affect that? Are these actually sort of drivers in the other direction rather than- I mean, yes, they are drivers in the other direction, but they are not to the scale of what we're gonna switch off through the legacy removal. You know, we are very confident that that 2.5 TWh that I mentioned earlier is gonna significantly reduce over the next, certainly over the next five years, as we get to complete legacy switch off at the end of that period as well. We are really challenging the supply chain. I mean, the fact that Tim mentioned, you know, bits per hertz per megawatt, you know, that's the real challenge into the supply chain now is it's not, you know, it's not just good enough to give us better spectral efficiency. It has to be also that efficiency measure has to include energy consumption. We think, you know, there's opportunities there. In fact, we've just sponsored a piece of research, you know, and this is again why it's important, we think, to still do applied research. How many photons do you actually need to run a core network in the U.K.? Because at the moment, there are a lot of photons going down a piece of fiber that aren't necessarily needed. I mean, Tim, just an interesting statistic on that would be helpful. Well, I mean, if you actually do take it back to the fundamental level, then you can convince yourself you can run core networks the size of ours for not much energy at all. The work we've been doing there with University of Bristol, they're one of the best universities in the U.K. in terms of communications research, and they're explicitly focusing on low-energy communications. Because I think this is just gonna be for all sorts of reasons, for all the reasons you know, this is gonna be an enduring topic, isn't it? Clearly, one of the things that we're building into our longer term research is just asking those fundamental questions, whether it's in transmission, which is the example Howard's talking about, or indeed, whether it's in switching and routing. You know, we're working with Bristol. We're also working with Cambridge University in their materials lab, essentially querying, you know, what does the world of materials tell us about the ability to effectively not just convey information, but also make routing and switching decisions. I think this is gonna be a topic that certainly we're gonna be pushing hard as part of my research program for the foreseeable future. To just build on that. That's kinda more for the future, but we look constantly at things like the optical transceivers in our network. Today, we use a lot of 100 gig. Actually, now we're gonna start moving to 200 gig because the price of a 200 gig optic with energy is much less than two 100 gig optics. Same for 400 gig. Actually our platform, our partner, Nokia, they're the first to really release a scalable 800 gig platform. By moving to those platforms quickly, we conserve a huge amount of energy and increase the quality of service for customers and reduce the overall total cost of bandwidth. This is something that, you know, we're absolutely actively looking at is well, every single device that we add, how do we control it to power it up, to power it down? This is where we're excited about Open RAN and the controller because we think that could give us a way of powering down devices. Then in the cloud-native network, again, like the hyperscalers, we can turn servers off, we can wind them right down, and then we'll only turn them up when we need to. That's another part of the simplicity of what we're building to allow us to do that. If you've got lots of different devices, it's impossible to do that. If you've got all compute and it's the same architecture, really straightforward to power it down. Thank you, Neil. I think just a final comment from me. I mean, 'cause a lot of the discussion that we've had over the last half an hour has been about, you know, how do we make ourselves and the network more efficient? The great thing about that is actually we spend a lot of time focusing on that because what is great is we're operating in a climate where there is massive demand for the product that we produce. I think that is a great thing for our industry. We'll keep thinking about how we continue to deliver that great product in ever more efficient ways. Thank you for the questions. We're now hopefully going to encourage you to stay with us for a little bit longer. Come down to the first floor, have a look at our customer experience center and in particular at the future zone that we've got there. That closes the formal piece for people online. In the room, we'll now work out how we get down to the first floor. Thank you very much. Thank you.