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Wednesday, June 13, 2012

Shared 4G Grid from Vodafone & Telefonica

Two British companies have recently decided to join forces with the goal of creating a shared 4G grid in the United Kingdom. Vodafone and Telefonica hope to improve coverage and speed out 4G rollout within the next three years, which is 2 years ahead of Ofcom's 98% coverage requirement. Those who are not aware of the Ofcom’s plans should know that this requirement was initially set for 2017.

Undoubtedly, Vodafone and Telefonica will keep competing, at the same time sharing the same network infrastructure. In might seem strange, but this deal will cut costs for both companies, and this is great if you take into account weak consumer spending in EU.

The industry experts confirm that the shared grid is a good idea, and it is a really sensible move by Vodafone and Telefonica in the United Kingdom: most countries would end up with only 2 physical LTE networks.

It all started from the merger of T-Mobile and Orange in the United Kingdom into Everything Everywhere, and if Vodafone and Telefonica hadn’t also joined their efforts in this way, they would have certainly been at a competitive disadvantage. Therefore, they could build on and extend the relationship they already had via Cornerstone – their existing joint venture. This makes them ready for the 4G rollout and will help catch up on 2/3G rollout as well.

Both Vodafone and Telefonica emphasize that it won’t have any implications for their relationship elsewhere, and let them continue to compete on services they provide. This decision follows the logic of network economics and technological possibility, and is exactly what the near future will look like.

Despite the fact that 4G is becoming the next big thing stateside, the EU doesn’t seem to be that interested, because there’s still much clinging to 3G and there is little demand to upgrade for the time being. This is probably because 3G coverage in the EU is mostly great, but 4G is quite limited. As for the United Kingdom, the 4G rollout out there is dragging its heels and has been criticized by many. In the other part of world, unlike their European fellows, most of American consumers prefer pricey unlimited data plans on high-end devices.

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