Telefónica and Vodafone have announced plans to integrate their UK
networks to create one national grid of 18,500 cell sites. A new 50-50
joint venture will manage the combined infrastructure, which is
expected to reach 98% indoor population coverage across 2G and 3G
platforms by 2015. The operators will run independent spectrum,
intelligent core networks and customer data, while continuing to
provide competing services.
Telefónica UK and Vodafone UK today announce their intention to
strengthen their existing network partnership, by pooling the basic
parts of their network infrastructure to create one national grid
running each operator’s independent spectrum.
The plan will deliver real benefits for today’s mobile phone users by
creating two competing networks that will be able to offer indoor 2G
and 3G coverage targeting 98% of the UK population by 2015, delivering
mobile coverage and mobile internet services to the vast majority of UK
It will also ensure that the capability for the next generation of 4G
mobile services is rolled out as widely and rapidly as possible*,
helping to close the digital divide between rural and urban areas. The
partnership will lay the foundations for two competing 4G networks to
deliver a nationwide 4G service faster than could be achieved
independently and up to two years before the anticipated regulatory
requirement of 98% population coverage by 2017**.
Ronan Dunne, CEO Telefónica UK said: “Exceptional customer demand for
the mobile internet has challenged the mobile industry to consider
innovative solutions to building a nationwide network that will be fit
for our customers in the future and support the products and services
that will truly make Britain digital. This partnership is about working
smarter as an industry, so that we can focus on what really matters to
our customers – delivering a superfast network up to two years faster
than Ofcom envisages and to as many people as possible. 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.”
Guy Laurence, CEO Vodafone UK said: “This partnership will close the
digital divide for millions of people across the country and power the
next phase of the smartphone revolution. It will create two stronger
players who will compete with each other and with other operators to
bring the benefits of mobile internet services to consumers and
businesses across the country. We have learned a lot from our existing
network collaboration but now it is time for it to evolve. This
partnership will improve the service that customers receive today and
give Britain the 4G networks that it will need tomorrow.”
One grid, two networks
Telefónica UK and Vodafone UK propose jointly to operate and manage a
single network grid in the UK that will run two competing nationwide
mobile internet and voice networks. Both companies will retain complete
control over their wireless spectrum, intelligent core networks and
customer data. They will continue to actively compete with each other
in all products and services, enabled through the ‘intelligent’ parts
of their networks.
A new 50/50 joint venture company will be created through the
consolidation of both Telefónica UK and Vodafone UK’s existing basic
network infrastructure***, including towers and masts, which will be
transferred to the joint venture or decommissioned over time. Under the
proposals, both companies will have access to a single grid of 18,500
masts representing an increase in sites of more than 40% for each
operator. The joint venture will also be responsible for the building
of new sites needed to extend coverage into rural and remote areas.
There will be opportunities for the decommissioning of duplicate
sites and, as a result, the two companies expect there will be a more
than 10% overall reduction in the total number of sites, in the UK,
used by the two operators.
Each operator will over time take the responsibility for design,
management and maintenance of the radio equipment as well as local
transmission (that connects to each operator’s intelligent backbone
network) in one half of the country. Telefónica UK will manage and
maintain these elements in the East (including Northern Ireland and
most of Scotland) and Vodafone UK in the West (including Wales).
Just as under Cornerstone, the two companies’ existing network
partnership, all shared sites will continue to carry Telefónica UK’s
traffic on Telefónica’s spectrum and Vodafone UK’s traffic on
Both operators will continue to remain responsible for their own
existing spectrum holdings and for fulfilling their own spectrum needs
in the future. The launch of 4G services is subject to the outcome of
the forthcoming Ofcom auction of new spectrum and both companies will
act wholly independently in that auction.
Telefónica UK and Vodafone UK are currently engaged in discussions
with Ofcom and intend to establish the joint venture and network
sharing arrangement later this year, following the satisfactory
conclusion of those discussions.
*Subject to the outcome of Ofcom’s auction of the wireless spectrum required for 4G services.
** Ofcom’s “Second
consultation on assessment of future mobile competition and proposals
for the award of 800 MHz and 2.6 GHz spectrum and related issues”
(January 2012) includes proposals for one of the 4G licences 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, the two operators intend to offer indoor
4G coverage targeting 98% of the UK population at speeds of at least
2Mbps by 2015. The actual speed received by customers is likely to be
many times faster.
*** As at 30 April 2012, the gross asset value of Vodafone UK’s existing basic network infrastructure was £438m.