Vodafone UK Turns Mobile Network Guns on BT/EE

Iain Morris
News Analysis
Iain Morris, International Editor

Vodafone UK is now boasting a mobile technology lead over chief rival BT/EE as it prepares its networks for a launch of 5G services that could happen as soon as 2019.

Despite last year completing a £2 billion ($2.6 billion), two-year upgrade of its mobile networks, linked to Vodafone Group plc (NYSE: VOD)'s £19 billion ($24 billion) Project Spring investment plan, the operator took some flak after just missing its target of covering 90% of the UK population with 4G technology, and in 2016 had fallen a long way behind BT/EE in the publicity stakes. (See Vodafone Ups 'Project Spring' Capex to $11B+.)

But the operator, which maintains the UK's third-biggest mobile network behind EE and Telefónica UK, has made considerable progress on improving its UK network over the last two years, according to Gabriel Brown, a principal analyst with the Heavy Reading market research and consulting business.

And over the next three fiscal years, including this one, Vodafone UK will pump another £2 billion ($2.6 billion) into the rollout of pre-5G mobile technologies as it looks to compete on the quality of its network offerings.

Among those technologies is a performance-boosting antenna system called massive MIMO that delivers about five to six times more throughput over the same amount of spectrum than older 4G technology, according to Vodafone.

With massive MIMO (which stands for multiple input, multiple output), as many as 64 antennas are included in each of the transmitter and receiver devices, up from a maximum of eight in the most sophisticated older MIMO systems.

The operator claims to have deployed Europe's first massive MIMO sites at its Newbury headquarters and is now planning to introduce the technology at another 30 locations up and down the UK. Those will include bigger cities, and certainly London, as well a major motor racing track.

At about 280 sites covering a large swathe of London, it has already made investments in an older variant of the technology called 4x4 MIMO, which uses four transmitter and four receiver antennas and delivers a 30% improvement in performance, Vodafone claims. "The fruits of Project Spring are here and we have something tangible to speak about," says a spokesperson for the operator. "EE has 4x4 MIMO in a couple of places but that is probably about it."

Those same sites also make use of a more advanced modulation system called 256-QAM, which is also aimed at increasing data throughput, and a technique called carrier aggregation, whereby spectrum channels from different frequency bands are combined to boost bandwidth even more. "We're seeing speeds approaching 500 Mbit/s now on the live network in London," says Kye Prigg, Vodafone UK's head of mobile networks.

Massive MIMO Enthusiast
Kye Prigg, head of mobile networks for Vodafone UK, is getting the operator's mobile network ready for the introduction of 5G technology.
Kye Prigg, head of mobile networks for Vodafone UK, is getting the operator's mobile network ready for the introduction of 5G technology.

All of this moves Vodafone a step closer to the launch of 5G, but the operator has delivered a strong warning that backhaul transmission and architectural changes represent the biggest 5G investment hurdles.

"We're putting 1Gbit/s fiber or microwave into every site we modernize but with 5G you are talking about many gigabits per second per sector and so the limiting factor is going to be getting data from the basestation to the core network," says Prigg. "We're tackling the backhaul part now but we need to work it out on an industrial scale."

That increases the urgency of reaching acceptable terms with BT/EE on access to the incumbent's network of ducts and poles, which Vodafone could use to roll out its own fiber network.

In an effort to spur investment in broadband infrastructure, and level the competitive playing field, regulatory authority Ofcom recently forced BT Group plc (NYSE: BT; London: BTA) into a "legal separation" under which its Openreach infrastructure division is to be managed at arm's length from the rest of the business. (See BT Agrees to Openreach Split.)

The move was less stringent than a complete carve-up of BT that its rivals had called for, but it met with their approval and Vodafone still appears keen to invest under the right conditions. (See BT Split Could Spur Vodafone to Invest in Fiber – Colao and Only BT's Dismemberment Will Sate Rivals.)

"The regulatory picture needs to be clear now that Openreach has been separated," says Vodafone's spokesperson. "We need to see them performing and that the quality of service they keep promising will be delivered, and we need to see their plans as well in a bit more granular detail."

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In terms of the network architecture, the concern is that operators will not be able to support much lower-latency 5G services -- which are deemed critical in vertical sectors such as healthcare and the automotive industry -- unless IT resources are housed much closer to end users and not in large, centralized data centers. (See The Growing Pains of 5G and Does Ericsson's 5G-for-Healthcare Biz Case Need Surgery?.)

"With a more granular core network and nodes all over the place, we can get down to the low turnaround times that 5G is capable of," says Prigg. "We can start to do some of that with massive MIMO and be more prepared for the 5G story."

But the investments needed to build lots of micro data centers will probably be substantial and most operators are focused on using 5G as a mobile broadband technology in the first instance.

Earlier this week, Swedish equipment vendor Ericsson AB (Nasdaq: ERIC) revealed that it is now working with Vodafone UK on the rollout of 4.5G and 5G technologies, including massive MIMO and carrier aggregation. (See Ericsson Seals 4G, 5G Deal With Vodafone UK.)

That announcement prompted analyst speculation that Vodafone is gearing up for an aggressive rollout of 5G services using mid-band spectrum and non-standalone 5G technology, whereby a new 5G radio standard is used in conjunction with an existing 4G network.

Vodafone is expected to participate in a government auction of 3.5GHz spectrum later this year. Asked when 5G could make its first commercial appearance in the UK market, the operator's spokesperson said: "We can't say too much because of the auction coming up this year. It is largely dependent on that but the general opinion is still around 2019."

Next page: Learning from SoftBank

Learning from SoftBank
The recent network transformation owes much to the leadership of Prigg, who joined Vodafone about two years ago from Japan's SoftBank Corp.

Prigg spent time working with 256-QAM and more advanced MIMO technologies during his stint in Japan, and says he was eager to bring his experiences back to the UK on joining Vodafone.

Much of the investment is being driven through Project Beacon, a network-sharing venture with long-time infrastructure partner Telefónica UK, which trades in the UK under the O2 brand.

The basic goal of the network "modernization" is to equip all sites with single radio access network (or S-RAN) technology, which allows Vodafone and O2 to support more than one access technology on the same platform.

About 400 sites are being modernized every month, says Prigg, and around 79% of all sites are now equipped with S-RAN technology. The aim is to complete the overhaul in the next six to nine months.

Vodafone is using its 800MHz spectrum holdings to support 4G services, its 900MHz airwaves with 2G and its 2100MHz frequencies for both 3G and 4G services.

Main Spectrum Holdings of UK Network Operators
Source: Ofcom, operators, Light Reading.
Source: Ofcom, operators, Light Reading.

It is using a 10MHz channel in the 800MHz band to provide wide-area 4G coverage and reckons this gives it a big advantage over BT/EE and Hutchison-owned 3, the smallest of the country's four mobile network operators. "BT/EE and 3 can't really do that because they have only a thin layer of 800MHz spectrum," says Prigg. "That has implications for how much traffic you can carry and we can therefore use it as a primary capacity layer."

The laws of physics mean that signals travel much further in lower frequency bands than in higher ones. The drawback is that lower ranges contain less spectrum and therefore cannot easily support the very highest-speed services.

In more densely populated areas, where traffic demands are greater, Vodafone has been getting around that problem by combining its 800MHz with its 2100MHz spectrum in a two-way carrier aggregation.

And it can go one step further where it needs even more capacity and bring its 2.6GHz spectrum into play in a three-way carrier aggregation. That is exactly what it has been doing at the 280 London sites where it has also deployed 4x4 MIMO and 256-QAM.

As a form of active network sharing, the Beacon initiative means that some network improvements become available to both Vodafone and O2, raising concerns about competition. But Prigg says the platform gives the network partners scope for differentiation, especially on the spectrum front.

Vodafone, for instance, is keen on bringing into use a 20MHz slice of 1400MHz spectrum it bought from US chipmaker Qualcomm Inc. (Nasdaq: QCOM) about two years ago. This downlink-only spectrum could be used in conjunction with 800MHz on the uplink and aggregated with other channels for superfast connectivity. "When you start to think about that, you are basically nudging on gigabit speeds with the right terminals," says Prigg. (See Qualcomm Looks to Sell UK Spectrum Holdings – Report .)

Massive MIMO also holds plenty of promise from a bandwidth perspective and could even help to address the coverage limitations of very high spectrum bands in a 5G setting.

It would do that through an advanced technique called beamforming that allows the antennas to "steer" spectrum to individual users. "It is important because you are reusing the limited amount of spectrum you have over and over again," says Prigg.

Due to the costliness of equipment, massive MIMO is unlikely ever to blanket a national territory, but its beamforming characteristics might in future help Vodafone to improve 5G signal propagation in cities where it is relying on much higher frequency ranges to serve customers.

"As you go higher you won't get the overlapping coverage you need for contiguous data usage and so you will have to start thinking about advanced technologies to bridge the gap," says Prigg.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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