O2 and Vodafone up the stakes in UK 4G race via new network sharing deal - Mobile World Live

O2 and Vodafone up the stakes in UK 4G race via new network sharing deal

07 JUN 2012

The CEOs of O2 UK and Vodafone UK told reporters this morning that their new network-sharing deal will provide a “level playing field” for UK operators as they look ahead to rolling-out 4G networks and services. 

The two operators had earlier announced plans to pool their basic network infrastructure into one “national grid” comprising 18,500 sites that will allow them to increase indoor 2G/3G coverage to 98 percent of the UK population by 2015, and achieve the required 4G coverage two years ahead of a deadline set by Ofcom.

The deal will enable Telefonica-owned O2 and Vodafone – currently the second and third-largest UK operators, respectively – to take on market-leader Everything Everywhere, which is attempting to steal a lead in 4G by controversially using its existing 1800MHz spectrum for 4G services ahead of new spectrum auctions.

The market leader also already has a network-sharing deal in place comprising its Orange UK and T-Mobile UK brands – plus 3 UK – as part of a JV known as Mobile Broadband Network Limited (MBNL).

“Why should the French and German runners have a head-start when the British are still on the starting blocks?” asked Vodafone UK CEO Guy Lawrence, a reference to the nationality of Everything Everywhere’s two main shareholders. “MBNL has many of these benefits already.”

However, Lawrence and his O2 opposite number, Ronan Dunne, insisted their partnership would have “no impact” on how each firm will approach the forthcoming UK 4G auctions, and pledged to continue to “ferociously compete” with each other.

A new JV will be created that will house the two operators’ basic network assets, which was described as an "evolution" of O2 and Vodafone’s current network partnership ‘Cornerstone,’ which has built-out 4,000 shared UK sites over the last three years.

The proposed single grid of 18,500 masts would represent an increase in sites of 40 percent for each operator with the decommissioning of overlapping sites expected to lead to a 10 percent overall decrease.

Each operator will take the responsibility for the network in different parts of the country, O2 handling Eastern England, Northern Ireland and Scotland, and Vodafone in charge of Western England and Wales. London is split between the north (O2) and south (Vodafone) of the city. A national aggregation network will be deployed to knit the network together.

Dunne said the impact in terms of improved coverage would be felt “from day one,” as the JV targets so-called ‘not-spot’ areas without adequate coverage, providing many customers with “a basic choice [between O2 and Vodafone] that they don’t have today.”

In terms of 4G coverage, the partnership is targeting 98 percent population coverage by the end of 2015, two years ahead of the proposed 2017 deadline set by Ofcom.

Lawrence said that the deal will allow the two partners to “free up cash in order to compete,” but neither was prepared to detail any specific cost-saving benefits.

“We will be deploying [4G] more cost-effectively but that is not the key driver,” added Dunne.