O2 and Voda join up networks

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The blackening economy and the Government’s interim Digital Britain report has put network sharing high on the agenda of network operators looking to cut costs and accelerate the rollout of mobile broadband.

The multinational agreement between Vodafone and O2-parent Telefónica across four, potentially five, markets stands to save the pair “hundreds of millions” of pounds over the next decade by removing duplicated network infrastructure and roll out costs. 

There is also the clear added benefit, which both have seized upon in the current climate, of easing environmental impact with a lower number of mast sites. The initiative will likely get more than a mention in that context in their next corporate responsibility reports.

Vodafone Europe chief Michel Combes and Telefónica chief Matthew Key called the deal “transformational” on its confirmation last month.

It will expand and speed up their broadening voice and broadband coverage, whilst injecting released funds back into new products and services.

How much of the “hundreds of millions” saved will find its way into consumer pockets, and how much will find its way into shareholder pockets, remains to be seen.

Combes and Key focused instead, repeatedly, on the rollout of broadband and new services and enhancement of existing ones. They also maintain their rivalry will remain fierce, and shared infrastructure will not preclude proper competition of services in the market place.

Says Combes: “The agreement is very straightforward and individually tailored to match local market dynamics. Where we don’t have coverage, it will improve as a result.

“It’s a transformational deal for the industry and it benefits all stakeholders. It will enable us to continue to compete in the market place, and develop new propositions for customers. Both companies will become more efficient.”

Telefónica’s Key adds: “Deals in each market will be driven by local chief executives, backed up by group strategy. It’s based on straightforward contracts and a meeting of minds.

“The time is right. Flat-rate data tariffs are expanding and consumption is increasing. This goes some way to future-proofing the network. The economic situation has been something of a catalyst too.”

Telefónica O2 UK chief Ronan Dunne remarks: “This is an aggressive infrastructure-sharing agreement in the UK, based around cooperation in building out new sites and consolidating existing ones.”

The pair ran trials in Basildon, Essex, to clarify exactly how the UK agreement will work, although no case study is available on the Basildon project.

Vodafone UK chief Guy Laurence points out the pair have put together a joint management team in the UK for the agreement  (if not a joint venture company to manage the initiative) as T-Mobile and 3 have done with their agreement. “We will challenge the joint team to look at this opportunity for sharing,” he says.

Full article in Mobile News issue 436 (April 6, 2009).

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