Vodafone and O2 will ‘share’ 5G networks

Mobile networks Vodafone and O2 will extend their existing network-sharing agreement to include 5G mobile networks at joint cellular sites once 5G becomes available, in theory enabling both operators to deploy advanced mobile services more quickly, over a wider area, and more cheaply.

Besides continuing with their previous arrangement, the two organisations also plan to investigate options to extend network autonomy by deploying separate radio equipment on 2,500 sites to improve flexibility, and to deliver a shared fibre backhaul network – which would improve the overall quality of service they can offer over 5G, and provide both with greater economies of scale and a wider choice of network partners.

“We believe that these plans will generate significant benefits for our business and our customers as we move into the digital era of connected devices, appliances and systems on a mass scale,” said Vodafone UK CEO Nick Jeffery.

“Customers will benefit from the best 5G experience available and we will deliver even faster speeds by using our spectrum holding more effectively.”

Mark Evans, CEO at O2 parent Telefónica UK, added: “I am excited by the potential of these plans to meet the future needs of our customers while delivering value for our business. In addition, these plans would allow us to utilise the spectrum we acquired in the last auction very effectively.”

Going forward, the two firms said they also planned to explore options around their future transmission operating model to explore potential synergies in network investment and operation, and to devolve new powers to their jointly-owned passive tower infrastructure venture, CTIL, to improve efficiency, and potentially to enable third-party tenants to use their towers.

Ingo Flomer, vice-president of technology at mobile network hardware supplier Cobham Wireless, said that when it came to 5G, operators would need to be more accepting of sharing infrastructure to ensure that the industry can live up to the promises being made on capacity and coverage.

“Deploying new 5G networks typically requires operators to install and maintain new antennas, hardware and cables, which requires significant planning, management and expense,” he said. “By using one common architecture, operators can minimise cost and disruption.”

GSMA Intelligence’s Tim Hatt said he expected the UK’s operators to spend at least £4bn on 5G, not including on spectrum, so achieving cost efficiencies would be vital.

“The network sharing partnership means that the two companies can achieve sizeable cost savings by having a single backbone of towers, and through increased buying leverage with their network equipment suppliers,” said Hatt.

“More broadly, the deal reflects a continued and pragmatic shift in telecom businesses towards a more asset-light model of network ownership that balances scale with thrift. The 5G era will see more shared and even leased access models of network operation, given the heterogeneous demands from new high-capacity small cells in dense urban centres to macro sites in suburban and rural areas – the hardest to reach.”

The operators will flesh out detailed, legally binding terms for their future collaboration during 2019, which will also entail seeking approval from sector regulator Ofcom.