Telefonica (O2) and Vodafone have this morning announced what they're calling a shared 'national grid' in the UK to support their existing 2G/3G and (whenever it comes) LTE services. By Ian Scales.
They are to develop their joint venture company to enable the pooling of infrastructure and the establishment of a shared RAN (Radio Access Network), but they will continue to compete over spectrum and, of course, over their individual services.
The objective is to clamp down on backhaul and infrastructure costs as both companies need to expand their mobile broadband capacity to meet demand.
Their major rivals, Orange and T-Mobile, already have an infrastructure-sharing joint venture in Everything Everywhere, and are poised to launch LTE services on their existing 1800 bands.
In a press call this morning company representatives said they were setting out to strengthen their existing Cornerstone infrastructure cost-sharing partnership, established in 2009.
Under that arrangement new infrastructure was selected by the joint venture and the two networks put their kit on each site - then one or other of the operators owned and managed the site on behalf of both.
The new joint venture 'Cornerstone Telecommunications Infrastructure' takes the caring and sharing a step further: there will be just one Radio Access Network (RAN) run on an amalgamated 'grid' of towers. Everything is pooled on the network side, although the companies say they will still be owning and 'managing' their own spectrum
By amalgamating their towers they will able to weed out 10 per cent of the total (where they simply duplicate facilities) and still end up with 18,000 cell sites. This will give both networks a much denser reach and, they claim, they will be able to achieve the magic 98 per cent indoor coverage of the entire UK two years earlier than planned (by end 2015).
Instead of a total infrastructure merger, though, they have decided to split the country down the middle with Telefonica managing the RAN (on behalf of both itself and Vodafone) in the East of Britain, North London, Scotland and in Northern Ireland; and Vodafone doing the same in the West of Britain, Wales and the South of London.
They are looking to replace all the equipment with a single shared RAN capable of handling 2 and 3G and LTE when spectrum is assigned. Small cell deployments are not explicit parts of the agreement at the moment but can presumably be woven in when the time is right.
The companies deny that there are any competition problems with the arrangement. They will continue to "compete vigorously" for spectrum and over customer services, they claim. All the intelligent bits that define the services are, they say, in the core of the network and that is still under the control of each of the partners.
Telefonica and Vodafone claims that everybody wins - the total number of sites comes down by about 10 per cent while the operators can lower costs and improve coverage at the same time.
Neither do they rule out "ever deeper union" to coin a phrase from another ambitious joint venture. They spoke of a "property co" arrangement in the future where the physical network might be spun off; and the possibility of developing a national aggregation network as well.
But while the locus of competition may no longer be centred on the cellular RAN in mobile, there's no doubt too that these arrangements make it nearly impossible for any to take place should it ever need to - at least between these two dominant networks in the UK.
The joint venture arrangements - especially the geographic split with one company managing and defining the quality of the other's RAN on half its coverage area - puts them both in 'lock-step' on the RAN and the introduction of its new technologies, by definition, will afford little opportunity for one company to differentiate itself against the other in terms of reach and RAN management - services are, of course, a different story.
Perhaps this is a competitive risk worth paying for all that broadband goodness?
See Guy Daniels live tweeting of the press conference on @guydaniels and @telecomtv
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