Vodafone and Telefónica, the owner of O2, will create a shared national grid in the UK in a move that they claim will improve network coverage and speed up the delivery of superfast broadband services.
The mobile phone operators said today that by pooling the basic parts of their networks they could roll out 4G services more quickly but still provide independent, competing services.
The companies said the move would lay the foundation for 4G mobile services to be delivered to 98 per cent of the UK up to two years before Ofcom’s 2017 target date.
Guy Laurence, Vodafone UK chief executive, said: “This partnership will close the digital divide for millions of people across the country and power the next phase of the smartphone revolution.”
Demand for smartphones such as the Apple iPhone and the Samsung Galaxy Note have soared in recent years. Ronan Dunne, Telefónica UK’s chief executive, added: “Exceptional customer demand for the mobile internet has challenged the mobile industry to consider innovative solutions to building a nationwide network. This partnership is about working smarter as an industry.”
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Thomas Wehmeier, Principal Analyst at Informa Telecoms & Media, said the deal indicated that the economics of building individual 4G networks did not add up: “Operators are being forced to come up with creative ways to lower the cost of investment into the network, especially now their revenues are threatened not just by traditional competition, regulation and the economic downturn, but also by new forms of competition from internet players.”
The two companies already have an existing network partnership, called Cornerstone, which covers 4,000 mast sites. This will be merged into a new 50:50 joint venture called Cornerstone Telecommunications Infrastructure.
The new arrangement will cover 18,500 mast sites across Britain representing an increase in sites of more than 40 per cent for each operator.
Both companies will retain control over their wireless spectrum and will continue to compete for products and services.
The joint venture will also be responsible for the building of the new sites needed to extend coverage into Britain’s rural and remote areas. It will also decommission duplicate sites and there is likely to be a 10 per cent reduction in the overall number of UK mast sites used by both operators.
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Each operator will be responsible for the design, management and maintenance of the radio equipment and local transmission for one half of the country. Telefónica UK will be in charge of the east of England, Northern Ireland, most of Scotland and north London, and Vodafone will cover the west of England, Wales and south London.
Ofcom is holding discussions with both companies and Telefónica UK and Vodafone said it hoped to establish the joint venture and network sharing arrangement later this year.