• Greater flexibility injected in new terms.
  • London partnership rolled back, as O2 presses on with City of London deal.
  • Vodafone-led rejig expected to see the O2 rival accelerate its own network development beyond delay-hit Project Beacon.

As first reported by Market Mettle’s Vodafonewatch, Telefónica UK (O2 UK) and Vodafone UK have claimed their network-sharing partnership has been “strengthened” after revisiting the terms and scope of their Cornerstone Telecommunications Infrastructure joint venture (JV).

Although both parties provided a bland ‘straight bat’ comment on the changes, focused on improving customer experience in anticipation of 5G rollout, the overhaul appears to entail a more radical realignment of the partnership, and suggests earlier reports of growing friction between the two were not far off the mark (Telefónicawatch, #113).

The new agreement was reached in spring 2017, and is to run for an undisclosed period. It will see continued cooperation beyond Project Beacon – the long-term network consolidation programme managed by Cornerstone – and see a planned winding down of active sharing arrangements in London.

“ We can confirm that Vodafone UK and Telefónica UK have strengthened their network-sharing partnership. It will mean customers are offered even better coverage, greater speeds, and reliability now, as well as future-proofed networks in readiness for 5G. ” – O2/Vodafone statement.

  • The move is effectively the second major reboot of the O2-Vodafone relationship, after Cornerstone was moved from a partnership to a JV, with new terms and vision, in 2012 (Telefónicawatch, #66). Signals of a realignment had emerged earlier in 2017, with Cornerstone being flagged as working with O2 UK on wireless network infrastructure projects in the City of London, suggesting greater independence, and additional reports of eagerness within Vodafone for an overhaul of the JV’s terms (Telefónicawatch, #151 and #154).
  • The changes also come as Vodafone UK works with Ericsson on upgrades to the OpCo’s mobile data infrastructure, seemingly tied in with the Cornerstone rejig (Vodafonewatch, #156).

Greater agility a key incentive

Outside London, where O2 and Vodafone are each responsible for managing active and passive network elements in different parts of the country (see table), new, “stringent”, performance measures have been built into service level agreements to improve performance for both O2 and Vodafone customers.

To add greater flexibility to the partnership, a “faster process” for improving network capacity has also been introduced. While Project Beacon involves the sharing of tower infrastructure and radio antennae, it does not include pooling of spectrum. Under the new arrangement, if either O2 or Vodafone want to re-farm their existing spectrum and install new radio kit, the other must make sure it is available, in places where they are in charge, in accordance with the faster timescales agreed.

Unlike the JV arrangement in London, which is restricted to 4G, Project Beacon in the rest of the country covers 2G, 3G, and 4G. Through more agile and flexible processes, both O2 and Vodafone aim to take control of their own spectrum re-farming strategy.

The “repurposed” agreement also puts Cornerstone on a more solid footing to deal with future growth and 5G. The volume of cell sites and capacity required to support 5G in the UK is expected to be significantly higher than with 4G, and the repurposing of the agreement is intended to enable faster delivery of capacity, and to bring on new sites more quickly.

Inner city pressure

The strength of the renewed partnership was not sufficient to enable a deal to cover London.

According to comments made to Vodafonewatch, the two parties will “disentangle” their active-sharing arrangements in the capital in order to give each other greater autonomy, and to “better differentiate on customer experience, service, and technology choices”. The process is expected to take a “number of years”, but the sharing of passive infrastructure will continue.

  • Beacon 1”, the Cornerstone project that involves the decommissioning and consolidation of sites to achieve near-nationwide 4G coverage for both partners, is in line for completion by end-March 2018, according to Vodafone. The current run-rate of site consolidation is now apparently between 200 and 400 per month, and the JV is set to have a total of around 18, 500 sites under its wing by end-March 2018. Originally, when the refashioned JV was announced in 2012, completion of the network meld was mooted for 2015.
  • Table 2: Cornerstone JV: overview (see full report)

Image: Bloomberg.

Table of Contents

EXECUTIVE BRIEF

GROUP

6 Management update
6 Álvarez-Pallete shows conviction with in-depth interview
6 Living in a digital world…
7 Low debt and plenty of cash remain strategic priorities
8 Management update
8 Latin America the key driver for the future
9 Management update
9 One year in, Álvarez-Pallete has his top team in place
9 Head of iconic Spanish network institution calls for political neutrality
11 Management update
11 Acquisitions and disposals
11 Telefónica finally offloads Mediaset stake
12 People
12 Table 1 People movement highlights
12 Acquisitions and disposals

GLOBAL RESOURCES

14 Awards and accreditations
14 5G
14 Telefónica joins 5G PPP project for verticals
15 5G-TRANSFORMER project in detail
16 Telxius
16 Cloud services
16 Telefónica cloud gathers in LatAm


DIGITAL SERVICES

19 Big data
19 Telefónica puts Synergic Partners to work
19 Research pact with Microsoft underway in Spain
20 IoT
20 Telefónica and Huawei talk up NB-IoT lab in Chile
21 eSports
21 Research and development
21 Chile R&D: commercialising ahead of schedule
22 Suppliers
22 Concern over NB-IoT interoperability?
24 Partners
24 Stingray Music has Telefónica deal in its sights
25 Security
25 ElevenPaths trumpets partnership with BitSight

LATIN AMERICA

27 Regional
27 Terra portal shuts, spirit remains in Brazil
27 Telefónica extends Grey Juice deal to Ecuador and Peru
28 Argentina
28 Argentina
28 Telefónica mulls Argentina IPO amid Cablevisión threat
29 Argentina may embrace belief that sharing is caring
29 Group strategic priorities being juggled in Argentina
29 Cablevisión and Telecom leading the way on convergence
30 Brazil
30 Guatemala
30 Open Cloud availability heralded in Argentina
32 Brazil
32 Vivo to use small cells in JCDecaux’s street furniture
33 Vivo goes live with VDC-based Cloud Plus 3.0
33 Cloud Foundation set for imminent launch
33 New cloud reseller in Brazil
34 Mexico
34 Telefónica falls to fourth in spectrum holdings
34 Telefónica’s position raises incentives for sharing deals
35 Peru
35 América Móvil reform appeal exposes Telefónica to back-charges

EUROPE

37 Germany
37 Spain
37 Telefónica enterprise cloud portfolio builds
39 Germany
39 Spain
39 New replicability test proposed by CNMC
40 Spain
40 United Kingdom
40 Cornerstone overhauled by JV partners
41 Spain
41 United Kingdom
41 Greater agility a key incentive
42 Inner city pressure
42 Table 2 Cornerstone JV: overview
43 Ofcom unveils updated 5G auction plans
44 United Kingdom
44 All over by Christmas, unless Three opens new front
44 O2 decides to shut up and put up

FURTHER READING

INDEX

Index

Symbols

3GPP 20, 22
5G Automotive Association 14
21st Century Fox
Sky plc 37

A

ABC 44
Advanced 5G Network Infrastructure for Future Internet Public-Private Partnership (5G PPP) 14, 15
AI 19
Altán Redes 34
América Móvil 8, 29, 35
Claro 29, 35
– Slim, Carlos 35
– Telcel 34
– Anatel 30
Apple 24
Arqiva 42
Atos Origin 15
AT&T 21, 24, 34
Audi 15

B

Beachcroft 42
BitSight 25
BMW 15
British Broadcasting Corporation 15
BT Group 15, 37, 43, 44

C

Cellnex 32
China Mobile 20
Citrix Systems 12
CK Hutchison 29, 43, 44
H3G
– UK 43, 44
– – Cluttons 42
CNMC 39

D

Daimler 15
Deutsche Telekom 15, 22, 37

E

EMC
VMware 33, 37
– Empresa Brasileira de Telecomunicações S.A. (EMBRATEL) 30
Entel 35
Ericsson 15, 22, 40
5G-ConnectedMobility 15
– European Union 37
European Commission 14
– F
Facebook 16
Fiat SpA 15
Football Association 21
Fujitsu 15

G

Gilat Satellite Networks Ltd 35
Google 24
Grey Juice Lab 27
Grupo Clarín 28, 29
Cablevisión 28, 29
– GSM Association (GSMA)
Mobile World Congress 20, 41
– H
Huawei 14, 15, 16, 20, 22, 30, 33
Hutchinson Engineering 42

I

Iberbanda 39
IFT (Mexico) 35
Intel 15, 22
InterDigital 15

J

JCDecaux 32

K

Kamstrup 20
KPMG 27

L

LV= 44

M

Marcatel 30
Aldea Solutions 30
– McAfee 39
McKinsey 19
Mediaset 11
Mediaset Premium 11
– Microsoft 16, 19, 37
Millicom 34
Mirantis 15
MIT 21
MVNOs 30

N

NBC 27
NEC 15
Nokia 15, 22, 34
Nokia Networks 34
– O
Ofcom (UK) 43, 44
Oi SA 30
Ono 34
Orange 15
Osiptel 35

P

ProInversión (Peru) 35

Q

Qualcomm 15, 22

R

Regions
APAC
– Australia 22
– – China 20
– – Taiwan 15
– – EMEA
– Europe 12, 14, 16, 20, 22, 32, 36, 37, 39, 41, 42
– – France 15, 32
– – Germany 8, 12, 15, 19, 21, 37, 39, 41
– – Ireland 12, 42
– – Italy 11, 15, 21, 32
– – Spain 6, 8, 9, 11, 12, 15, 16, 19, 21, 24, 32, 33, 34, 37, 39, 40, 41
– – UK 8, 11, 12, 29, 33, 40, 41, 43, 44
– – Latin America 8, 12, 16, 20, 24, 26, 27, 28, 29, 30, 33, 34, 41
– Argentina 8, 16, 20, 27, 28, 29, 30, 33, 41
– – Brazil 8, 12, 16, 20, 27, 30, 32, 33, 41
– – Chile 8, 16, 20, 21, 27, 30, 33, 41
– – Colombia 20, 27, 28, 30, 33, 34
– – Costa Rica 20
– – Ecuador 11, 27, 30
– – Guatemala 30
– – Mexico 8, 16, 20, 27, 28, 30, 33, 34, 35
– – Panama 30, 32
– – Peru 8, 20, 27, 30, 33, 35, 41
– – Uruguay 20
– – Venezuela 8, 27, 30
– – North America
– Canada 24, 30
– – USA 16, 22, 27, 30, 32, 33
– – S
Samsung 15, 41
Sercomtel 30
Sigfox 20, 22
SK Telecom 15
Sony 39
Spotify 24
Stingray 24

T

Technologies
2G 41
– 3G 21, 22, 32, 39, 41
– 4G
– LTE 14, 22, 32, 34, 39, 41, 42
– – WiMAX 39
– – 5G 14, 15, 40, 41, 43
– Broadband 22, 28, 30, 39, 44
– Cloud computing 33
– eHealth 15
– ICT 40
– Internet of Things 14, 19, 20, 22
– LPWA 22
– M2M 22, 32
– MIMO 14, 15
– NB-IoT 20, 21, 22
– Network functions virtualisation (NFV) 14, 15
– OpenStack 15, 16, 30
– R&D 14, 15, 20, 21
– SIM 30
– Smart metering 20
– Software defined networking (SDN) 14, 15, 37
– Telematics 15, 44
– TV 21, 28, 29, 39
– VoD 27, 28
– Web Services 37
– Telecom Argentina 28, 29
Telefónica Group 6, 11, 14, 15, 19, 20, 22, 24, 27, 29, 34, 41
Associates and investments
– Iberbanda 39
– – Sigfox 20, 22
– – Digital 12
– Digital services
– Data Transparency Lab 21
– – ElevenPaths 25, 37
– – LUCA 19
– – M2M 22
– – OTT 27
– – Synergic Partners 19
– – Telefónica I+D 14, 15, 21
– – Terra 27
– – Tuenti 30
– – Europe
– Germany 37, 39
– – O2 11, 37, 39, 40, 41, 42, 43, 44
– – Spain 12, 21, 37, 39, 40, 41
– – Telefónica Deutschland 14, 15, 19, 39
– – Telefónica NEXT 19
– – UK 12, 29, 40, 42, 43, 44
– – Executives
– Alierta, César 6, 9
– – Alonso, Chema 21
– – Álvarez-Pallete Lopez, José María 6, 7, 8, 9, 11, 29, 34
– – Blanco, Enrique 41
– – Carbajo, Cayetano 14
– – Casas, José Luis 12
– – Castro, Gustavo 28
– – Claros, Juan 32
– – Evans, Mark 42, 44
– – Jordan, Phil 9
– – Muñoz, Claudio 21
– – Pullen, Tim 42
– – Salgado, Alex 33
– – Tsouroulas, Nikolaos 25
– – Ward, Peter 42
– – Global Resources
– 5TONIC 15
– – BRUSA 16
– – Cornerstone Telecommunications Infrastructure 40, 41, 42
– – Seguros de Vida y Pensiones Antares 12
– – Telefónica Business Solutions 16
– – Telxius 11, 16, 29
– – Latin America
– Brazil 27, 32, 33
– – Chile 20, 21
– – Mexico 34
– – Vivo 32, 33
– – Movistar+ 21, 41
– Products and services
– Fusi 41
– – Living Cloud 33, 37
– – Movistar+ 21, 41
– – Movistar Play 27
– – Movistar Video 27
– – O2 Drive 44
– – O2 o 41
– – On Video 27, 28
– – pay-TV 11, 27, 28, 37, 41
– – SmartM2M 22
– – VDC 3.0 33
– – Vivo Cloud Plus 33
– – Tuenti 30
Twitter 8

U

University of Surrey 15
5G Innovation Centre 15
– V
Verizon Communications 32
Virgin Group 35
Virgin Mobile 35
– Vivendi SA 11
Universal Music Group (UMG) 27
– VMware 33, 37
Vodafone Group 12, 15, 22, 32, 37, 40, 41, 42, 43, 44
Spain 40
– UK 40, 42
– W
Walt Disney 27
Warner Music Group (WMG) 27
WND 20
WPP plc 12

Z

Zegona
Telecable 40
– ZTE 15, 39

About

About Telefónicawatch

Report: #118
Covering: July 2017
Published: July 2017
Next report: September 2017
For more information visit: Telefónicawatch