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Vodafone and Orange to share fibre-to-the-home network in Spain

The move is a further sign that the European big five telcos are chasing consolidation and network sharing as away to drive down capital expenditure costs. And it illustrates the strategic necessity of ensuring access to fixed (wire and fibre) infrastructure for mobile telcos as the importance of indoor coverage grows. Having a strong fibre access component (or building one when outside your home territory) is critical as mobile and fixed networks effectively converge around small cell, WiFi and broadband access for both enterprise and residential customers.

The deal between Vodafone and Orange in Spain will see each company co-invest in parallel networks, along the lines of the EE arrangement in the UK between Orange and T-Mobile.

Rather than build a jointly-owned network, in the EE deal the territory is divided up between the two entities who deploy and run their half, ensuring equal access to the partner and vice-versa. This sort of arrangement allows the regulator to sleep slightly easier at night since each partner is incentivised to continually improve network efficiency and reduce costs on their bit of network whereas a jointly owned alternative could encourage sloth, lack of transparency and uncompetitiveness.

In the EE case in the UK the two operators run highly compatible RAN and backhaul networks. In Spain the nature of the fibre network - "street-level fibre" or horizontal infrastructure, the companies call it - may make it easier to run and connect coherently at the wholesale level.

The fibre is to be owned independently but will share the same technical specifications to ensure compatibility as a single network, and each partner will have guaranteed access to the whole infrastructure, says the press release.

"The companies will also each deploy their own in-building fibre (“vertical” infrastructure), guaranteeing access to each other, and will together request access to any third party vertical infrastructure," it's claimed. And other third parties are invited to co-invest in the network sharing arrangement.

Vodafone and Orange claim the network will commercially available from January 2014, with the following progress markers:

- 800,000 households and workplaces by March 2014;

- 3 million households and workplaces by September 2015; and

- 6 million households and workplaces by 2017 – a residential penetration level of around 40 per cent.

The combined capital expenditure required to reach 6 million households and workplaces is expected to reach €1 billion.

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