Thursday, June 07, 2012

Telefónica and Vodafone: UK infrastructure sharing agreement


An interesting announcement from Telefónica UK and Vodafone UK today: the two companies intend to enter into a network sharing agreement to improve existing coverage and to speed up the roll-out of superfast 4G services (coverage from the BBC here with comment from technology correspondent Rory Cellan-Jones here).

From Vodafone's press release:
"The plan will deliver real benefits for today’s mobile phone users by creating two competing networks that will be able to offer indoor 2G and 3G coverage targeting 98% of the UK population by 2015, delivering mobile coverage and mobile internet services to the vast majority of UK households. It will also ensure that the capability for the next generation of 4G mobile services is rolled out as widely and rapidly as possible, helping to close the digital divide between rural and urban areas. The partnership will lay the foundations for two competing 4G networks to deliver a nationwide 4G service faster than could be achieved independently and up to two years before the anticipated regulatory requirement of 98% population coverage by 2017."
A footnote acknowledges that this is subject to the outcome of Ofcom’s forthcoming auction of the wireless spectrum required for 4G services. According to Ronan Dunne, CEO of Telefónica UK, "this partnership is about working smarter as an industry, so that we can focus on what really matters to our customers  – delivering a superfast network up to two years faster than Ofcom envisages and to as many people as possible." Similarly, Guy Laurence, CEO of Vodafone UK commented that the partnership "will create two stronger players who will compete with each other and with other operators to bring the benefits of mobile internet services to consumers and businesses across the country."

Operationally, the partnership will work as follows (again from Vodafone's press release):
"Telefónica UK and Vodafone UK propose jointly to operate and manage a single network grid in the UK that will run two competing nationwide mobile internet and voice networks. Both companies will retain complete control over their wireless spectrum, intelligent core networks and customer data. They will continue to actively compete with each other in all products and services, enabled through the ‘intelligent’ parts of their networks. A new 50/50 joint venture company will be created through the consolidation of both Telefónica UK and Vodafone UK’s existing basic network infrastructure, including towers and masts, which will be transferred to the joint venture or decommissioned over time. Under the proposals, both companies will have access to a single grid of 18,500 masts representing an increase in sites of more than 40% for each operator. The joint venture will also be responsible for the building of new sites needed to extend coverage into rural and remote areas."
Discussions are currently underway with Ofcom; the companies hope to establish their joint venture and network sharing arrangement  later this year. Telefónica's press release is here with additional comment here.  ISP Review offer this analysis:
"...the move could make Ofcom’s life a little more complicated as it would have to reconsider its assessment of the market and any knock-on impact for the forthcoming (Q4-2012) auction of 4G spectrum (800MHz and 2.6GHz). Both Vodafone and O2 UK are unhappy that Three UK could be gifted a slice of 800MHz spectrum and that Everything Everywhere (Orange UK and T-Mobile) could launch 4G in 2012 if allowed to repurpose the 1800MHz band."
I wonder if today's announcement indicates that Everything Everywhere's request to deploy 4G services this year in advance of the forthcoming spectrum auction (see here and also here) will be approved, with Telefónica  and Vodafone joining forces to compete as a consequence? Ofcom are due to make a statement on Everything Everywhere's request shortly.

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