The owners of two UK mobile operators have agreed to combine their 3G access networks in order to boost quality and coverage for end-users, especially in sparsely populated areas of the United Kingdom.
Deutsche Telekom (the owner of T-Mobile UK), and Hutchison Whampoa (the owner of 3), signed on Tuesday what they called the "world's largest known active 3G network sharing agreement."
Networking sharing agreements are not usual, as evidenced by recent agreements between Vodafone and Orange to share their 3G resources in Spain. However this is the first of its type (to share a 3G network) in the UK, and the two operators believe it will accelerate the provision of 3G services and deliver substantial cost savings, as well as environmental benefits.
The agreement in essence means that while T-Mobile and 3 will combine their 3G access networks and their mobile masts, they will not share each other's core network and T-Mobile's 2G network. Indeed, both parties will retain responsibility for the delivery of services to their respective customers and use their own frequency spectrum.
The rollout of 3G has been viewed as something of an expensive white elephant in some quarters, but analyst house IDC, are predicting that 2008 will be the year for mobile broadband. Indeed, the operators remain confident that mobile broadband will become an “individual's primary means of accessing the internet”, and therefore “nationwide 3G coverage is essential to meet this growing demand.”
Yet there is little doubt though that cost saving are the main reason for this agreement, and both admit that "blanket population coverage becomes rapidly achievable if individual operators split the investment required and share operating costs."
"Our aim, quite simply, is to ensure the customer is always best connected," said Jim Hyde, chief executive of T-Mobile UK. "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."
"Network sharing has the potential to change the economic model of operators and make a reality of high-quality, high-speed mobile broadband - better, faster and more economically than could otherwise be achieved," said Martin Garner, Director of Wireless Research at analyst group Ovum.
"Shared opex and capex considerably improves the economics and enables a more practical route to better network coverage, and in particular in-building coverage. Our research shows that the number of 3G users can be expected to grow by over 240 percent over the next four years."
The shared network should be completed in just over two years.
A 50:50 joint venture company called Mobile Broadband Network has been set up and will supervise the creation and operation of the joint network. There are plans to decommission over 5,000 duplicate sites from both parties' combined existing cell site portfolio, which will result in "significant savings in rent, transmission and other cell site operating costs."
Together with the lower future capital expenditure requirement, the combined savings are estimated at £2 billion over 10 years.
The joint venture contract runs to the end of 2031.