O2 and Vodafone will build one consolidated network grid across the United Kingdom, sharing cell site equipment and backhaul infrastructure at 18,500 locations.
O2 will run the grid in Northern Ireland, Scotland, the East of England and North London. Vodafone will take responsibility for the West of England, South London and Wales. That will mean that each operator will be specifying the network its own area of responsibility, producing its own RFQs and running procurement separately. But the deployment and capabilities of both operating companies will be brought to bear within each geographic area, under the management of the lead operator, which the operators hope will deliver much faster rollouts.
Although network sharing will extend to active RAN elements, each operator will run its own independent network in its own spectrum – ie there will be no spectrum sharing. "Intelligent" elements, core network elements, and the ability to create, control and provide services will also remain separate, with each operator "competing fiercely", according to Vodafone UK CEO Guy Laurence.
Both operator CEOs were keen to emphasise that the model will be of two separate "competing" networks running on one consolidated grid. "Most of our differentiation comes in the core network," Laurence said. Ronan Dunne, Telefonica UK CEO said, "Building networks is vaguely interesting to customers, but putting services on them is very interesting."
There will be some network consolidation as a result of the combined grid rollout, with an estimated 10% of the existing sites currently owned by O2 and Vodafone being decommissioned. But the shared deployment will also result in network expansion, with new sites providing coverage to previous notspots, specifically in terms of indoor coverage. Both operators said they would offer 2G and 3G indoor coverage to 98% of the UK population by 2015 – for 2G, 3G and LTE services.
That would bring many people who currently have no coverage into coverage, Laurence said. At the moment the operators' licence conditions mandates 2G indoor coverage at around 65% of population, and indoor 3G coverage at around 80%, the operator CEOs stated. Combining the capabilities of both companies would enable greater coverage more cost-efficiently than if each individual company had pursued such an expansion, Laurence said.
"What we're committed to doing is rolling out coverage where we wouldn't otherwise have it," Dunne said. Laurence added that the rollout would take some areas "from zero to hero".
Ofcom is likely to attach a 98% population coverage mandate to one 800MHz LTE licence. With both operators in a position to meet that requirement more cost-effectively, they will both be in a strong position to bid for that license. There is the possibility that the approach will see 800MHz spectrum become more important to the two operators. Neither operator is likely to want to see the other have a significant chunk of spectrum that it cannot mirror.
The operators said that the upcoming RAN refresh, driven by LTE deployment, was the right time to consolidate the network grid. A multi-RAN architecture would enable them to bring similar coverage to different services. They shied away from providing any detail of the cost savings they intend to generate by forming the JV.
SLAs and commercial agreements would support the ability for operators to provide end to end QoS across the network, Laurence told Mobile Europe. Similar arrangements would be made for backhaul – where Vodafone hopes to significantly boost its capabilities with the pending acquisition of Cable & Wireless. The ability to manage services on a separate basis across the combined network will be key for both operators.
One are that still seems to be up for grabs is whether small cell deployments would be open for shared access. Clearly corporate or enterprise-type indoor deployments will be made on an individual basis, but with the industry predicting a requirement for metro area small cell investments, a shared approach could have a significant effect on the economics of providing dense, urban coverage. For now, though, the operators confirmed that the JV adresses the macro network, with small cell deployments being addressed on a case by case basis.
The joint venture will build on the current Cornerstone property management partnership, with currently owns 4,000 sites. It will be called Cornerstone Infrastructure JV.