Thank you Don and good afternoon.

The main purpose of my presentation today is to give you an up to date report on the readiness of UK telecommunications for Year 2000. My headline message is that, using Action 2000 methodology, Oftel’s current assessment is that the risk of material disruption to telecommunication networks at the millennium is extremely low. But we are not complacent. More work will be done over the coming months. And, as with the other industries you have heard about at this conference, Oftel will be commissioning an independent verification of aspects of the telecom sector’s state of readiness.

Telecom networks in the UK are the main focus of Oftel’s monitoring but I will also say a few words about customer equipment and international services.

But, first a few words about the vital role played by the telecoms sector in the UK economy.

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Role of the Telecomms sector

The UK telecommunications industry is extremely significant. It contributes around 2% to GDP – nearly £24bn in monetary terms. In terms of customers there are 23.5m residential lines, 8.5m business lines, and 13m mobile connections across the UK. On the supply side there are some 130 operators of which 30 are public telecom operators, and 5 cable operators.

But perhaps even more important are the uses to which this infrastructure is put. Uses range from the 999 emergency service to social services, from small businesses to multi-national companies, from local authorities to central government and for all of us in our work and our personal life - talking to friends and family. Telecommunications underpin virtually all commercial and industrial systems and processes - for example financial transactions, equity markets, safety processes, and remote monitoring of equipment not least in the infrastructure industries which are the focus of today’s conference. And applications are growing fast – one only has to think of the increasing importance of the Internet and of electronic commerce. Both are growing at exponential rates.

Underlying these applications are telecommunications networks and terminal equipment. The networks make extensive use of computers and electronic systems with date dependent functionality. Thus tackling and dealing with the millennium bug is essential for the continued operation of telecom networks. And because networks interconnect, Y2K compliance must also involve ensuring end to end connection.

While Oftel’s primary focus is on telecom networks, date-dependent facilities are also present in some equipment connected to such networks. For example IT equipment with communications facilities and private switches. For this equipment to go on working users will need check whether it is millennium compliant and I’ll say a few words later about the help available.

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Oftel focus

Oftel’s role as a regulator is to look after consumers. We have a duty to ensure that all reasonable demands for telecommunication services, in particular the emergency services, are met. Oftel does not run networks. That is the role of the network operators and it is the responsibility of individual telecom companies to ensure that their networks are Y2K complaint. But Oftel shares the objective of no material disruption – business as usual over the millennium, and beyond. And so we have a key role in ensuring that telecom operators providing services to the public are as well prepared as possible. Specifically this means telecom companies providing 999 service and direct access to customers.

A two-part problem – the "bug" and congestion

The objective for the telecom sector is "no material disruption" at the millennium. For the telecom sector there are 2 key elements involved. First, and the main focus of today’s conference, the implications of the millennium bug. Second, recognising the expected huge surge of telecom use at the millennium change, the contingency plans necessary to deal with congestion over the New Year period.

Millennium Bug - how it is being tackled

The targets here are the computers and other date dependent systems in telecommunication networks both fixed and mobile. Each direct access network operator has a programme to identify all the elements that might behave abnormally, to rectify any problems and to test systems. In total the planned spend of the industry to achieve its objective will be in excess of £500m.

However because networks interconnect, operators need to work together to ensure end to end functionality. The telecommunications industry recognised early on that a high degree of cooperation would be required and in 1997, with Oftel involvement, the UK Year 2000 Telecommunication Operators Forum was created. This body has over 40 active companies participating in its work, including all the direct access providers.

The Forum has shared knowledge, expertise and resources in its efforts to create an industry wide approach to Y2K. It has drawn up inventories of systems. It has liaised with common suppliers. It has undertaken inter-operator testing and has verified of the processes used. In a highly competitive industry there has been a very good spirit of cooperation and openness.

Where are we?

So where are we on the bug? Today, 21 January, some 11 months before the day, the state of readiness of the direct access operators, including the four mobile operators, using the colour coding designated by Action 2000, is amber. In Action 2000’s words "some risk of material disruption to infrastructure processes exists, but there is an agreed plan to rectify shortcomings".

But this is only an interim picture. Work already in hand means that there will be significant improvement over the coming months.  And by the end of June our assessment is that the mobile networks will be "blue" that is "the assessment has not identified any risks of material disruption to the infrastructure process". In the same timescale, we expect 90% of the fixed networks companies in Oftel’s focus plan to have Y2K compliant systems. Put another way, over 95% of lines in the UK will have "blue" status at that time. And we expect 100% "blue" status by the end of September. Oftel will be closely monitoring progress towards these targets.

These assessments are based on the companies’ self-assessments which are submitted to the Telecommunications Operators Forum and which have been analysed by other members of the Forum and Oftel. The self assessment scheme was developed by the Forum following the processes used by Action 2000.

This process is now going to be supplemented. Starting later this month this information will be verified through a peer review system developed by the industry in conjunction with Oftel. This should be completed by the end of February. Oftel will also be commissioning an independent assessment of the processes being used for the peer review. This should be completed in March.

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Contingency and Congestion

It would be misleading of me to imply that things cannot go wrong. In real life they do. But telecom companies already invest significantly in problem detection and rectification and in the contingency measures required. Contingency measures are going to be especially important for the millennium given its unusual nature.

brief look at congestion – which I’ve already mentioned. No-one knows how many of us will want to use the phone or send data over the networks during the New Year period. But I can safely predict that use will be many times normal. Those of you who aren’t working over the critical period will all want to phone friends and family. Many people will be withdrawing money from cash machines or buying drinks on credit cards – all of which require use of telecom systems during the special hours.

Some indication can be gleaned from what happened this year. For example BT dealt with 18m million calls over the period 23:00 on 31 December 1998 to 01:00 on 1 January 1999. with a high concentration of these calls in the thirty minutes following midnight. This is considerably greater than a normal peak hour load usually seen on the BT network and overall volumes in this period were around 5% higher than last year. The network coped well and very few people experienced any problems getting through – except of course when calling a friend who was already talking on the phone.

Of course, the network operators are experienced at dealing with the New Year peak. For example, BT provided around 10,000 extra international circuits over this period. What no one yet knows is just how high the peak will be around midnight on 31 December 1999 but I think we can be sure it will be higher than last year. Operators are making extensive preparations as part of their Y2K planning. Oftel is having discussions with them. But congestion may occur. If so, and you cannot get through, don’t panic. It does not mean that the millennium bug has struck but rather something more mundane - too many people trying to use the system at the same time.

And there is always the weather. Contingency plans are also being made for this. For example, power supplies may fail. In these circumstances telephone exchanges and other essential network systems go on operating on their own backup power from batteries and emergency generation plant. In fact a number of exchanges operated in this way over the recent Christmas and New Year period due to adverse weather conditions.

Oftel will be looking in detail at the industry’s contingency plans throughout 1999. These plans will also be reviewed by Telecommunication Operators Forum. The Forum will also be working with Action 2000 on the development of cross industry contingency provisions.

International services

So far I’ve described work in hand and the state of readiness for the UK end of a call. What happens at the other end is -–obviously – not under the direct control of UK telcos nor Oftel.

Nevertheless work is underway to try to tackle potential problems. UK operators are in direct contact with network operators in other countries. And the International Telecommunication Union – ITU – is playing an active part with UK companies playing a leading role in the ITU’s work.

The ITU has established a millennium task force. It is sharing knowledge and expertise, undertaking interoperator testing and communication of information on Y2K. The outputs of this work, including the status of individual operators in ITU member countries, can be found on the ITU web site. The ITU’s work is important. But if you are an essential user of international telecommunications you should talk to your telecommunications suppliers about the millennium status of the services you use.

Internet

A few words about the Internet – an ever growing market. For most, especially domestic users or SMEs, access is achieved by using a fixed telephone or ISDN line. Provided the terminal equipment e.g. PC is millennium compliant there should be no problem within the UK from the millennium bug. However there could be congestion problems for example if everyone wants to send e-mails at the same time. There may also be problems with access to non-UK based sites if content providers have not dealt with the bug. So again my message is, if your business is critical on Internet resources you should check with your suppliers that their services are millennium ready.

Customer equipment

Finally, as promised earlier, customer equipment. A useable end to end service requires customer equipment to be operating correctly. Much equipment, especially that for domestic use, does not have date dependent functions and should continue to work normally. Action 2000 have already provided advice and information through their Homecheck publicity on how to check if equipment is millennium compliant. Oftel will also issue guidance to consumers on customer equipment within the next two weeks. This information is aimed at home users and small businesses and it will concentrate on where consumers can find information to enable them to make the necessary checks on the equipment.

There are two specific issues I want to draw attention to. The first is PCs connected to the Internet. If these machines are not compliant there is the possibility that users will not be able to gain access to or properly use the Internet. A lot of information has been already been published on PCs, including the Homecheck documentation, setting out how to check PCs and where to find further information. The second is small switches and similar equipment used by businesses to provide their in building network. Date dependent software often exists in these installations and it is essential that users should check the status of the equipment with their supplier or maintainer.

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Summary

In summary I would like to make the following points:

• we can be upbeat about the state of millennium readiness of UK telecom networks. They are in good shape now and we believe they will be ready on time;
• The industry and the regulator are working together on a shared the objective of no material disruption;
  
  • further verification and independent assessment of the sector will be undertaken and the results of this work disclosed;
  • there are likely to be huge call volumes next New Year. Industry are actively planning for this and problems should be minimized. But a delay in getting through doesn’t mean that the bug has struck;
  • don’t ignore international connections or customer equipment if your business depends on them. Work is in hand and advice is available. If you are concerned, check with your suppliers.

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