Telefónica, Vodafone U.K. Network Sharing Approved

The sharing of the mobile networks belonging to Telefónica, branded “O2” in the U.K. and Vodafone can go ahead,  the U.K. Office of Fair Trading and Ofcom regulator has ruled.  The two telco giants will now create a 50-50 joint venture called “Cornerstone Telecommunications Infrastructure” (CTI), according to Total Telecom.

Using this shared infrastructure, Vodafone and Telefónica aim to provide indoor 2G, 3G and, subject to the outcome of Ofcom’s forthcoming spectrum auction, 4G coverage to 98% of the U.K. population by 2015—two years ahead of the telco regulator’s 2017 deadline. To achieve this, the companies will divide the country in half, with each one taking responsibility for the design, management and maintenance of radio equipment and local transmission networks in its designated regions.
When Vodafone and Telefónica first announced plans in June to combine their networks, both were keen to stress that competition between the two would be preserved, with each company maintaining responsibility for its own spectrum, core network and services.

Giga Om goes into more detail as to how this deal will affect the roll out of 4G services in the U.K. This had, until fairly recently, been going quite slowly. Then last month Everything Everywhere, or “EE” as it is in the process of being branded more succinctly, received approval to launch 4G services almost immediately. The company, formed by a merger of Orange UK and T-Mobile UK, has plenty of 1800 MHz band spectrum it can “refarm” for 4G.

Handily for EE, 1800MHz happens to work with the iPhone 5 for providing 4G services. Telefónica and Vodafone don’t have enough 1800MHz spectrum to use viably for LTE. They do both have 2100MHz spectrum, which can theoretically be used for iPhone 5-friendly 4G services, but that spectrum is currently being taken up by 3G services and there’s no scope for refarming it just yet.
So, to cut that long story short, both Vodafone and Telefónica desperately need to get their hands on the 4G spectrum that is on offer, namely the tranches of 800MHz and 2.6GHz spectrum that will go on auction at the end of this year.

The BBC, however, suggests that this timetable might change following a meeting this evening between the U.K. government and network operators.

[The] meeting, to be chaired by new Culture Secretary Maria Miller, is designed to prevent mobile operators from launching an appeal against communications regulator Ofcom’s decision to allow EE to use its existing bandwidth to provide 4G…
The BBC understands the most likely deal… will involve a commitment from Ofcom to bring forward the auction to sell those frequencies.
The auction, which has been repeatedly pushed back, is currently scheduled to take place early in the new year—but would be held back further should the likes of O2 or Vodafone were to mount a legal challenge against EE’s early start.