UPDATE: T-Mobile and 3 UK ceos speak to Mobile Europe
T-Mobile's UK ceo Jim Hyde has told Mobile Europe that he thinks there could be "lots of things" his company and 3 U K could collaborate on in the future.
Following the news that the two operators will form a 50/50 joint venture to manage and operate a combined 3G network, both operators insisted their are no meger plans, but Hyde said, "There's lots of things that could present the opportunity for further partnerships. One would be the further development of services, to collaborate on the development of next generation services."
As for the deal itself, 3 Uk's ceo Kevin Russell, said, "T-Mobile's population coverage for 3G is currently at 85% coverage and 3 at 90% . This takes that up to over 98%, but the real difference is in the depth of the coverage. 3 currently has 7,500 base stations and this will give us up to 13,000 base stations."
The partnership deal does not cover the backhaul network – a key cost factor for mobile operators. And there is a mechanism in place to allocate costs on a use case basis. In other words, if one operator's users are hammering a cell with a bandwidth heavy service, then costs of operation will be allocated on a cost basis to that operator. There will be no degredation to customer experience caused by either of the other operators' customers, Mobile Europe was told.
Naturally such an operation takes software and processes to manage and control the networks. As we and others been saying for some time, the business of network sharing requires policies, technology and processes to ensure parties are happy, and increases the dependance on service innovation and marketing. Orange and Vodafone announced in February 2007 that they plan to share networks, but T-Mobile and 3 UK seem to have stolen a march operationally.
Hyde sad that cost savings from the T-Mobile 3 UK sharing deal will be split 50/50 betweeen opex and capex – which means between them the operators are saving a billion on network operations over the next ten years. Suppliers are aware of the process of selection now – with some likely to miss out as purchasing is consolidated between the two operators.
10:08 am
T-Mobile and 3 UK will save £2 billion between them over the next 10 years by sharing a national, HSPA-enabled 3G network in the UK. T The two operators have signed an agreement to combine their 3G radio access networks, although they will continue to operate their own core networks, and T-Mobile's 2G network will stay T-Mobile's.
The shared network is scheduled to be completed in just over two years and the operators say it will provide "blanket" UK population coverage – taking both operators beyond the 3G licence obligation of 80% population coverage that both T-Mobile and 3 UK already comfortably exceed. The combined 3G access network will share physical assets and offer greater capacity than the two operators’ existing independent 3G networks, the operators said.
A 50:50 joint venture company called Mobile Broadband Network Limited has been set up and will supervise the creation and operation of the joint network on behalf of both companies. The operators plan to decommission over 5,000 duplicate sites from both parties’ combined existing cell site portfolio. Together with the lower future capital expenditure requirement, the combined savings are estimated at £2 billion over 10 years.
Under the joint venture contract, which runs to the end of 2031, both operators will work as equal partners in planning the development and operation of the integrated access network while remaining competitors in the UK mobile wholesale and retail markets.
Jim Hyde, Chief Executive of T-Mobile UK, said: “3G is a transforming technology, but this will be the first time that a 3G access network in this country is able to achieve both the reach and the capacity to meet the needs of the future. Our aim, quite simply, is to ensure the customer is always best connected. From 2008, customers can expect to have access to high-speed 3G services in a greater number of locations than we can currently serve over our existing infrastructure. By collaborating with 3 UK, we can achieve this quicker and with greater economy – that’s a win-win in anyone’s language.”
Network sharing is clearly a boon for operators in helping them meet regulatory requirements, and cutting costs, it also enables them to claim environmental benefits. The challenge, however, will be to differentiate on service innovation and delivery, as there will be little point claiming a benefit on quality of service, or coverage or capacity differences.
The operators will not be sharing transmission capacity on the backhaul to the core network. That is clearly of interest as to how and where they will apply any plans for routing, traffic shaping and prioritisation, and service awareness to data traffic. Nokia, one of 3's key suppliers, has spoken recently on the benefits of increasing service awareness at the GGSN.