Vodafone's WiMax Creep

Vodafone follows through on its threat to use WiMax, with a commercial service launch in Malta

Michelle Donegan

June 26, 2007

3 Min Read
Vodafone's WiMax Creep

WiMax has finally crept into Vodafone Group plc (NYSE: VOD)'s service repertoire. The mobile giant just launched commercial fixed WiMax services in Malta, and has been busy acquiring licenses, testing, and investing in the technology worldwide. (See Vodafone Picks Airspan.)

While Vodafone's small-scale Maltese deployment is unlikely to cause meltdown in the mobile network infrastructure community, it could be seen as a shot across the bows of vendors perceived to be dragging their heels over the development of long-term evolution (LTE), or 4G, products -- especially as Vodafone is now involved in WiMax activities in Bahrain, France, Greece, New Zealand, and South Africa, too, either directly or through affiliates.

And it's not as if the vendors haven't been warned. At this year's 3GSM event in Barcelona, Vodafone CEO Arun Sarin told the infrastructure firms that technologies like LTE were developing at far too slow a pace for his liking. (See 3GSM: Mobile's Fear Factor.)

Vodafone currently uses WiMax for fixed broadband services. The technology is just one element of its Mobile Plus strategy, which it launched about a year ago, along with other broadband technologies such as DSL.

In Malta, Vodafone is deploying WiMax base stations from Airspan Networks Inc. (Nasdaq: AIRN). The fixed wireless broadband network will allow Vodafone to bundle fixed and mobile data and VOIP services for both residential and business customers.

In Bahrain, MTC-Vodafone , the joint venture between Vodafone Group and Kuwait's Mobile Telecommunications Co. (MTC) , will soon launch fixed and nomadic WiMax services. MTC-Vodafone reportedly paid $14.58 million for a national 3.5GHz WiMax license in January this year.

In France, affiliate SFR -- in which Vodafone holds a 43.9 percent stake -- has launched WiMax services through its joint venture with Neuf Cegetel Group (Euronext: NEUF), called Societé Haut Débit (SHD).

Vodafone is also reportedly testing WiMax in New Zealand and South Africa.

"It's logical [for Vodafone]," says Kenneth Ashworth, a director of the WiMax Spectrum Owners Alliance (WiSOA) . "It sees broadband as an important part [of its services] over the next few years."

For now, WiMax is a fixed broadband play for Vodafone: The 3.5GHz license in Malta, like the 3.5GHz license it owns in Greece, does not allow for mobility.

But that's set to change, according to WiSOA's Ashworth.

That's because regulators are considering whether to lift the mobility restrictions on 3.5GHz licenses. In the U.K., for example, the Ofcom is consulting on amending UK Broadband Ltd. 's 3.5GHz license to allow mobility. This decision could set an important precedent that other European countries may follow. (See Ofcom Issues WiMax Consultation.)

And when mobility comes, Vodafone will be ready for it in network terms, because Airspan says its base stations are software upgradeable from fixed to mobile WiMax. Such software upgrades are made possible by the Picochip reference designs Airspan uses. (See PicoChip Secures Funding, PicoChip Intros Wave 2 WiMax, PicoChip Maxes With Airspan, and PicoChip Powers Airspan.)

Vodafone is expanding into wireline and fixed mobile broadband services because it needs new sources of revenues to boost ARPU (average revenue per user) numbers that are under serious strain, especially in saturated European markets. ARPU was down by as much as 9 percent in Germany and Italy at the end of March, on a year-to-year comparison. (See Carrier Scorecard: Vodafone.)

In its full-year results, Vodafone reported fixed-line and DSL revenues of £1.5 billion (US$3 billion) out of £31 billion ($62 billion) total revenues. Most of that fixed-line revenue comes from Arcor AG & Co. KG , the German operator Vodafone owns. (See Vodafone Reports Annual Results.)

In addition to the WiMax launch in Malta, the operator has shown that is prepared to invest in its own infrastructure, where it makes economic sense, to offer fixed broadband services. In general, Vodafone prefers to rebrand existing DSL services or buy and resell wholesale DSL. But in Portugal, Vodafone has launched DSL using local loop unbundling and DSLAMs from Alcatel-Lucent (NYSE: ALU). (See Vodafone Uses AlcaLu DSLAM and Vodafone Portugal Offers DSL.)

— Michelle Donegan, European Editor, Unstrung

About the Author(s)

Michelle Donegan

Michelle Donegan is an independent technology writer who has covered the communications industry for the last 20 years on both sides of the Pond. Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications including Communications Week International, Total Telecom and, most recently, Light Reading.  

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