Telefónica and Vodafone said Thursday they planned to combine their wireless phone networks in Britain and jointly build a new, LTE network to keep pace with the market leader, Everything Everywhere, itself a joint venture between Deutsche Telekom and France Télécom, reports the NY Times.
The No. 2 British operator, O2, owned by Telefónica, and Vodafone U.K., the No. 3, will enable the carriers to split the costs of building a nationwide LTE network next year. The British government plans to sell broadcast spectrum for LTE service by the end of this year.
At a press conference in London, the Vodafone U.K. chief executive, Guy Laurence, and the Telefónica U.K. chief executive, Ronan Dunne, said the carriers would continue to operate competing services and would even bid against each other in Britain’s upcoming 4G spectrum auction. But the combination will let both save on operating and equipment costs.
“One physical grid running independent networks will mean greater efficiency, fewer site builds, broader coverage and, crucially, investment in innovation and better competition for the customer,” Mr. Dunne said.
Ofcom’s auction of 800 MHz and 2.6 GHz spectrum is expected late this year or early next year.
It includes proposals for one of the 4G licenses at 800MHz to have an indoor coverage obligation of 98% of the population (at a speed of at least 2Mbps) by 2017.
Subject to the outcome of the forthcoming spectrum auction, Vodafone and Telefónica intend to offer indoor 4G coverage targeting 98% of the UK population at speeds of at least 2Mbps by 2015.
- A sub 1GHz safeguard cap of 2×27.5 MHz, which will mean that no one competitor can obtain more than this amount of sub 1 GHz spectrum.
- An overall spectrum holdings cap of 2×105 MHz, which will mean that no one competitor can obtain more than this amount of spectrum overall.
United Kingdom has a total of 80 million subscribers, with a 130.55% penetration rate. Mobile operators in the UK include:
- Everything Everywhere: 27.2 million subs, owned by France Télécom (50%) and Deutsche Telekom (50%).
- O2: 22.3 million subs, owned by Telefónica, a Spanish broadband and telecommunications provider
- Vodafone: 19.2 million subs, owned by Vodafone, headquartered in London.
- 3: 8.2 million subs, owned by Hong Kong-based Hutchison Whampoa
The 50-50 venture of Vodafone and Telefónica will encompass a combined 18,500 cell tower masts, an increase of roughly 40 percent for each operator. Telefónica already shares its network with Vodafone in Spain and with T-Mobile in the Czech Republic.
The costs of building LTE networks in saturated European markets has also prompted Telenor, a Norwegian operator, and Tele2, a Swedish operator, to merger their networks in Sweden. In Germany, both O2, the nation’s No. 3 mobile operator, and E-Plus, the No. 4 owned by KPN of the Netherlands, are examing venture options for their businesses.
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