Comreg may block Vodafone/3 merger deal

clohamon

http://www.irishexaminer.com/business/comreg-may-block-vodafone3-merger-deal-199737.html

Comreg may block a proposed deal between Vodafone and 3 to merge their Irish telecoms infrastructure in a measure designed to cut costs.

Comreg said they could not comment on the reported plans of two of Ireland’s largest mobile phone operators to develop a shared network.

A spokesperson for the regulator pointed to a previous document produced by ComReg that said the body would have policy concerns about any merger.

"ComReg is aware of the potential policy concerns, particularly in relation to competition," the ComReg policy document said. "In addition, it is not possible for ComReg to give blanket assurances that spectrum sharing and pooling agreements will be permitted because the benefits and disadvantages arising from any particular agreement."

It was reported yesterday that Vodafone and Hutchison Whampoa’s 3 are close to agreeing a deal to merge their Irish telecoms infrastructure. The merger will create a 50-50 joint venture that would result in the biggest network in Ireland while producing "significant" cost savings, one of the sources said without elaborating on the size of the savings.

The Financial Times said the savings for each business could exceed €248m over a five-year period.

There have been a spate of similar deals across Europe, where operators are looking for ways to upgrade their networks at a time when customers are cutting back on spending.

Vodafone announced a deal in June to share a network in Britain with Telefonica’s O2 to help cut the cost of building a new superfast service.

A spokesperson for Ireland offline a lobby group for the mobile phone and broadband industry said the deal would make sense for operators but could hit ComReg. "ComReg have blocked the idea of a shared radio access network in Ireland. They believe that competition will serve the country better. In rural areas this is not true. Comreg get more money if there are more network operators in the country. Basically what is happening here is mobile operators have come to a pragmatic agreement to decide to share there infrastructure."

bealtine

http://www.siliconrepublic.com/comms/item/28141-vodafone-and-3-on-cusp-of-s

Mobile operators Vodafone and 3 are in the final stages of negotiations and are due to sign a deal where both companies will roll out advanced next-generation Long Term Evolution (LTE) infrastructure across Ireland as part of a shared investment.

Sources say that fundamentally the objective is to cut costs when rolling out this infrastructure.

Operators in Ireland are anxiously awaiting telecoms regulator ComReg’s decision to kickstart the wireless spectrum auctions in order to ensure investor certainty for the new LTE networks that could boost wireless broadband speeds to between 40Mbps and 80Mbps in certain locations.

The nature of the deal between Vodafone and Hutchison Whampoa-owned 3 will be primarily site sharing and infrastructure sharing.

The two operators, whose networks in Ireland have been built by BT, will share infrastructure but compete as aggressively as ever at a retail level.

An informed source said that what is key is the ability to build overlapping networks to ensure consistent coverage countrywide, and by operators pooling resources the rollout of advanced 4G networks becomes more practical.

The looming deal between Vodafone and 3 echoes a recent deal between Vodafone and Telefónica (owner of O2) to build a nationwide 4G network in the UK that will cut the costs of deployment by 25pc.

A similar network sharing deal was struck between O2 and Eircom last year.

Mobile industry anxiously awaits ComReg spectrum decision
However, the source also pointed to dissension in the mobile industry at the slow pace with which ComReg is going about launching the crucial spectrum auctions.

Local management are struggling to get signoff on investment decisions but the slow progress means they are fighting against other geographies to prioritise investment.

Another issue that will fundamentally harm Ireland from a regulatory and investment perspective is the failure so far to pave the way for perpetual or indefinite licences for operators.

In the US and UK and certain European countries, perpetual licences for services and geographic coverage provide investor certainty and are a more attractive option for global management.

Otherwise licences that require hundreds of millions of investment to fulfil yet only guarantee coverage rights for five, eight or 10 years are no longer seen as viable in the eyes of senior managers at global operator level, our source explained.

drunkmonkey

I can't see how they can block it if they allowed the 02/Eircom sharing to go ahead.
Does this mean comreg will take a haircut on what they were expecting to make from the spectrum auction?

watty

It's not remotely the same as O2/Eircom.

thegills

If VF / 3 are only sharing masts and transmission then ComReg don't really have a say. The deal will allow VF / 3 to spend less on masts and transmission and focus on their mobile services which can only be good for the consumer. If VF / 3 start sharing base stations / antennas / spectrum then you can see Comreg having a say.

bealtine

http://www.siliconrepublic.com/comms/item/28295-vodafone-and-three-confirm

Vodafone and Three have entered into a 4G network sharing deal that will see them form a new 50/50 joint venture whereby they will pool infrastructure across 2,000 sites across Ireland.

As Silicon Republic reported recently, the two companies will continue to run the ‘intelligent’ elements of the network separately, including their core network capabilities and service platforms, as well as manage their own radio equipment and spectrum independently. 



The new company is expected to be fully operational from the Autumn and will be headquartered in Dublin.

The managing director will be appointed from an independent pool of talent and the new company will have its own management board. Approximately 80 employees will transfer from Vodafone Ireland and Three Ireland to the new joint venture company after a consultation period.

These will include employees that currently work in the radio and transmission teams, the Network Operations Centre, and some support roles. 


Rapid rollout of next generation network
The companies said that this strategic partnership is the first of its kind in Ireland whereby the joint venture company will manage the rapid roll-out of a consolidated portfolio of shared network sites and infrastructure as well as the maintenance and on-going operational service and associated equipment.

The deal between Vodafone and Three echoes a recent deal between Vodafone and Telefónica (owner of O2) to build a nationwide 4G network in the UK that will cut the costs of deployment by 25pc.

Both companies will also benefit from increased purchasing leverage, an increased fibre footprint and the opportunity to expand mobile network coverage for customers.



Consolidation of network sites and the transmission infrastructure of competing telecommunications companies is underway industry-wide, across many markets.

Under this agreement, duplicate sites will be decommissioned, and each company will have access to the other’s sites.

Both companies will continue to remain independently responsible for what technology and spectrum is deployed on a site-by-site basis and what standard of service customers experience. Each operator retains the flexibility to invest in dedicated sites and equally to choose the pace and degree of new technology deployment according to the level of service each company plans to deliver. 



“Securing future investment for technologies in a competitive market is critical to maintaining a sustainable business,” Jeroen Hoencamp, CEO Vodafone Ireland explained.

“This agreement, in which infrastructure is shared between both parties, means we can concentrate investment on the intelligent part of the network that will ultimately deliver a better experience for Vodafone customers. At a retail level we will continue to compete aggressively against one another and with other operators, to offer value and innovative services to consumers and businesses across the country.”



Robert Finnegan CEO of Three Ireland, added: “Around the world, operators are adopting a network sharing and consolidation strategy that delivers cost efficiencies and rapid network expansion with the roll-out of new technologies such as LTE, whilst still competing fiercely on customer service and acquisition.

Today’s announcement is significant for Irish consumers – jointly we’re creating the largest physical network in Ireland with the best network quality and service. As a result of this agreement we expect to be able to deliver the latest technologies to our customers faster than ever before.

“This new joint venture combines the best of both networks and will be the smart choice for the savvy mobile customer,” Finnegan said.

clohamon

http://www.irishexaminer.com/business/vodafone-and-3-to-share-networks-200751.html

The Irish communications regulator ComReg said such joint ventures may have positive benefits.

"ComReg notes the joint venture announcement by Vodafone Ireland and 3 Ireland today of a strategic partnership to share their physical network and site infrastructure at approximately 2,000 locations across the country," the body said.

"While not commenting on the specifics of this particular case, ComReg is — in general and in line with its statutory remit — open to considering collaboration proposals of this kind as potentially such initiatives may have positive benefits."

Not exactly gushing enthusiasm. I wonder if they'll try and kill it.

watty

It would be FAR more beneficial to consumers if Three & Vodafone were OBLIGED to pool spectrum and have 99% GEOGRAPHIC coverage.

We are responsible for promoting competition, for protecting consumers and for encouraging innovation. Our job involves dealing with complex issues of law, economics and technology, and ensuring that our decisions are taken fairly and are clearly explained. ComReg operates as a collegiate body, with decisions taken collectively by the Commissioners. We see this as important in fulfilling the spirit of the Communications Regulation Act, 2002, which established the Commission.

http://www.comreg.ie/about_us/roles_what_we_do.523.html

They need to amend their statement on Competition. Competition was NEVER EVER meant to be an end in itself but solely on basis that it was believed to benefit the Consumer. Where it actually hurts performance and reliability, it's wrong.

Also NOWHERE is it stated Comreg's role to raise revenue from levies on Telcos or licensing spectrum. Nor should it be.

The Russians have just handed out 4G licences without charging anything. Instead they have mandated minimum investments for the roll out period. Yes, no doubt other issues. But the principle isn't actually wrong.

Demand a very high minimum coverage (to be genuinely physically audited, not by looking a Operator paper-work), minimum capacities and a beauty contest. The Government will get FAR more revenue from VAT, Tax etc on the increased economic activity vs high licence fees, Cherry picked coverage and too low Corporation Taxes.

bealtine

watty wrote: »

They need to amend their statement on Competition. Competition was NEVER EVER meant to be an end in itself but solely on basis that it was believed to benefit the Consumer. Where it actually hurts performance and reliability, it's wrong.

Very true, this love affair with competition for competitions sake needs to end and more focus needs to be put on the needs of Ireland Inc and consumers.

After all this is the regulator that couldn't get LLU right for over 10 years...and the regulator that refuses to regulate broadband in any shape of form

watty

Actually it's not even a love affair with competition. But the Civil Service practice of issuing huge documents and actually never deciding anything nor ever changing the Status Quo.

Pete69

Any who thinks this will benefit customers of either network is sorely mistaken. None of the network operators embark on these mergers with the customer in mind.

The aim is to reduce operational expediture, which only ever benefits the shareholders and senior management.

There is an environmental benefit in grouping all the operators on shared infrastructure, however problems arise when technical infrastructure is shared, as is the case in the following link.

http://community.o2online.ie/t5/Coverage-Roaming/Network-problems-in-Navan/td-p/398692/page/2

It took O2 / Meteor weeks to sort this problem out, as you will see from the comments in the above link O2 customers were the only one's affected, yet Meteor are now responsible for operational support to the site where the problem was.

This netsharing is nothing more than a race to the bottom in terms of customer service, as these companies continue to distance themselve from their core business "telephoney - communications" and concentrate on becoming marketing companies.

I'm all for grouping the operators together on shared towers etc. but leave the technical side of the networks alone.

As we move towards 4G, the biggest issue has become backhaul transmission, and all the operators will eventually become more and more dependant on Eircom / BT fibre to provide these services.