There have been major developments in the UK mobile operator market today with the news that Vodafone and O2, the UK arm of Telefonica, would be coming together and sharing resources in order to build their networks faster.
It’s a direct response, if somewhat delayed, to the threat from Everything Everywhere, a joint venture between Orange (France Telecom) and T-Mobile (Deutsche Telekom ), and Three (Hutchison Whampoa). It’s not an entirely new venture, as the two have been sharing some sites since 2009 in a venture called Cornerstone, but this takes it from 4000 sites up to 18,500 masts and towers shared.
It’s not a full joint venture as with Everything Everywhere – customers won’t be able to choose between Vodafone and O2 signals, and the two companies will continue to compete in every other way.
It’s great news.
The two operators claim that this deal will bring 2G and 3G coverage to 98 per cent of the UK population by 2015, finally dealing with the many notspots that continue to plague this not particularly large country.
What’s particularly welcome is that the pair claim that it will enable them to bring 4G,by which we have to assume means LTE, quicker than they would separately. Ofcom, the UK regulator stipulates that there should be 98 per cent coverage of 4G by 2017 so this should help them meet that claim.
Network sharing does seem to be the way forward, especially in these cash strapped town. It simply makes sense from an efficiency point of view. Is there much sense in having the same areas covered by multiple networks by rival network offering essentially the same service.
The two companies said that the consolidation could also enable them to trim the fat and they could shrink the sites they run by 10 per cent.
Speaking at the LTE World Summit last month, Eduardo Duato, CTO at Orange Spain said as much, pointing out that while the US makes do with just four major networks, Europe, roughly the same size land mass, has over 100. He called on his local regulators and all those across Europe to support operator’s sharing prospects. “It doesn’t make sense to have this many networks [in Europe]” he said “we have to move to LTE network sharing.”
Vodafone and O2 seem to agree with him.
The move will mean that there will essentially two networks running in the UK – the MBNL network that powers Everything Everywhere and 3, and the extended Cornerstone network of Vodafone and O2.
So what do we have here then? Intelligent combining of resources, offering the potential for much improved coverage and accelerated roll out of next gen LTE services, and all with some extra cost cutting thrown in.
It all sounds alarmingly, well, sensible. At this rate, we could have operators making money and even satisfied customers.