Vodafone and O2 are to merge their transmitter infrastructure, creating a new joint venture called Cornerstone. It means the two networks will share access to a total of 18,500 mobile phone masts in Britain, resulting in an increase in sites of 40 per cent for both providers.
The new joint venture builds on the network sharing arrangement that the companies made in 2009 in order to cut operating costs. However it is not a merger – Vodafone and O2 will remain as separate businesses competing with each other for mobile customers.
While the grid of masts and transmitters will be shared, they will not pool their allocation of mobile bandwidth. However, by joining forces for running the crucial back-end infrastructure, the companies will be in a stronger position to officially roll out a next-generation 4G/LTE network. O2 has been running a limited 4G service in parts of London.
O2’s Ronan Dunne said, “This partnership is about working smarter as an industry, so that we can focus on what really matters to our customers – delivering a superfast network up to two years faster than Ofcom envisages and to as many people as possible. One physical grid, running independent networks, will mean greater efficiency, fewer site builds, broader coverage and, crucially, investment in innovation and better competition for the customer.”
According to GigaOM, “This essentially relies on the two companies being able to prepare the ground for 4G together — meaning that once the spectrum auction finally takes place, maybe late next year, they’ll be able to switch on faster than they could individually. In the meantime, it will also give them broader and deeper penetration of 2G and 3G networks.”
The arrangement mirrors what T-Mobile and Orange have already done with their merger to become Everything Everywhere. That operation has been granted permission by Ofcom to create a 4G network using some of its existing 3G spectrum, which means 4G would become available for T-Mobile and Orange users much sooner (and possibly 3, which has a network sharing arrangement with T-Mobile).
Ofcom’s decision upset Everything Everywhere’s biggest rivals and is almost certainly a motivating factor behind the new Cornerstone deal.