Vodafone, Telefónica End Network Sharing in London
Vodafone UK is unwinding parts of its network-sharing arrangement with Telefónica as it prepares to launch its first 5G services in urban areas next year, it emerged at a press briefing in London this week.
The two mobile operators have been sharing so-called "active" equipment, which includes electronics used in mobile networks, under the Project Beacon initiative, with Vodafone UK primarily responsible for networks in the west of the UK and Telefónica UK Ltd. managing those in the east.
Project Beacon has also included London, where Telefónica has had responsibility for the north of the capital and Vodafone has looked after the south. But the soaring volumes of data traffic on the London network have prompted the operators to back out of that arrangement, said Kye Prigg, Vodafone UK's head of mobile and fixed networks. (See Vodafone UK Turns Mobile Network Guns on BT/EE.)
"We've decided to unwind the relationship with Telefónica in London," he told reporters. "That means in the north of London, where Telefónica was providing 4G coverage, and in the south, where we were doing the same, each company will put in its own basestation assets."
The network-sharing deal has allowed the operators to quickly roll out services, and led to cost savings. But Vodafone is evidently concerned that service quality could suffer on shared infrastructure as the volume of mobile data traffic continues to rise.
The decision raises questions about the sustainability of Vodafone's relationship with Telefónica in other parts of the country as both operators make preparations for the introduction of 5G, a next-generation mobile technology that will provide even higher-speed network services.
Asked by Light Reading if Vodafone might unwind its relationship with Telefónica in other urban areas, Prigg said that "all options are on the table."
"We're in discussions with Telefónica regarding 5G and whether to share or not," he said. "To unwind everything would be complicated. There could be sharing in rural and a different way forward in densely populated areas."
Prigg emphasized that Vodafone and Telefónica will continue to share "passive" infrastructure in London even as they bring an end to the sharing of "active" equipment.
In mobile networks, passive infrastructure covers assets such as the towers that are used to support antennas and baseband processors. Vodafone and Telefónica will also make separate investments in software used in the radio access network under the new arrangement.
In advance of 5G rollout, the update may cast a cloud over tie-ups in other parts of the world where operators have been sharing active network infrastructure, but may be welcomed by mobile network vendors eyeing a potential sales boost from investment in 5G technology.
Commenting on the progress made with Project Beacon so far, Prigg said the initiative was about 95% complete, up from less than 70% about a year ago.
Scott Petty, Vodafone UK's chief technology officer, said the operator was likely to begin offering commercial 5G services in late 2019, when network equipment and software is ready, but warned against any expectations that services will be widely available in the next couple of years.
The biggest uncertainty is when end-user devices will be ready, he said. "The first city deployments will be seen next year, most likely, but it will be roughly five years from then to get to 50% penetration," he said.
Vodafone picked up 3.5GHz spectrum for use with 5G services during a government auction earlier this year, but is still waiting for authorities to award licenses for the much lower 700MHz band. (See UK's £1.4B '5G' Auction Looks Bad for Industry.)
"The high band spectrum goes fast but doesn't propagate," he said. "There are auctions next year for the low band and it is the combination of the two that is important."
— Iain Morris, International Editor, Light Reading