Vodafone, Orange Revamp Network Share Deal
The two operators have scrapped plans for a joint venture to operate their shared 3G radio access network (RAN) infrastructure, which was already in the early stages of development and code-named Shared RAN. The operators will announce a revised strategy that will be limited to 3G and 2G base station site sharing instead, according to a report in The Guardian, which Unstrung has verified. (See Vodafone & Orange Share 3G and Vodafone, Orange to Share RANs.)
Technically, the sharing agreement has been scaled back because the operators will not pool their RAN equipment and share active electronics, as originally planned. But in terms of scope, the deal has been expanded to include 2G (GSM network) sites, in addition to new and existing 3G sites.
"If they're not sharing active electronics, that's a significant change in the scope of what they originally set out to do," says Heavy Reading senior analyst Gabriel Brown. "Perhaps there was not enough benefit for the amount of complexity involved."
Vodafone would not comment, but an Orange spokesman emailed the following statement to Unstrung: "We remain completely committed to the UK network share deal with Vodafone. The teams have been working together over the last year to find the best way to deliver the right level of customer, business and environmental benefits, and we expect to give an update regarding the project shortly."
Vodafone and Orange first announced their intentions to share their RANs a year ago. But Unstrung understands that some of the details for the scope of a joint venture were not well formed at that time. It wasn't until September last year that the plans for a new joint venture were first presented to employees.
In the Unstrung Insider report, RAN Sharing: Cutting the Cost of Mobile Broadband, the Vodafone and Orange network sharing deal was hailed as breaking new ground in terms of "technical complexity and business audacity." The deal was considered significant because the operators were going to share not only new 3G RANs -- or UTRANs (UMTS Terrestrial RANs) -- but also existing UTRANs, as well as investigate how 2G infrastructure could also be integrated. (See Will More Mobile Operators Dare to Share? and Time for a Mobile NetCo?.)
Under the new plans, however, the operators will share just the base station sites and not any physical infrastructure, according to The Guardian's report.
Heavy Reading's Brown says the operators' original plan to share active infrastructure, as opposed to passive infrastructure such as base station sites and masts, is tough to accomplish.
"It's very complex to share active equipment," he says. "There is a lot of effort for not much short-term gain. In the right circumstances active sharing can be the best solution, especially over the longer term," adds Brown. "T-Mobile (UK) and Three UK are taking this approach and appear very committed to making it work." (See 3 & T-Mobile Share 3G in the UK and T-Mobile to Bid for 3?.)
Does all this mean Orange and Vodafone will have to recalculate the anticipated cost savings from the original plan? Vodafone had said it expected to save 20 percent to 30 percent over several years on combined 2G and 3G opex and capex through the agreement with Orange in the U.K.
The two operators will still save substantial costs through site sharing, says Brown.
"Of the cost of a typical cell site, the base station equipment accounts for somewhere in the region of 20 percent of the total," he says. "The rest of the cost comprises the site lease, civil works, and passive equipment such as feeders and antennae."
The operators are expected to announce an update on their network sharing arrangement later today or tomorrow.
— Michelle Donegan, European Editor, Unstrung