2/20/2008 12:35:00 PM
Love thy neighbour
Despite the positive spin put on the watered-down network share deal between Orange and Vodafone, it is difficult not to contemplate what could’ve been. A highly ambitious and daring project to share the cost of managing the networks immediately had alarm bells ringing at rival operators.
The effect on the market could have been severe. Both networks would potentially open a massive gap over rivals in terms of their finances and the speed at which they could bring mobile internet services to market. The cost savings would not only mean they would be first to market, but they would have faster speeds and be able to cut prices. Well, that was the plan. At the time, the two companies were at pains to say they would remain fierce competitors despite the alliance. As it turned out, the network share project ran into problems not because of the two companies being too cosy, but because they couldn’t shake off their rivalry.
Negotiations went on for months as the two companies haggled over the relative worth of their 2G and 3G networks. So, instead of pulling away from the remaining three rivals, Orange and Vodafone are left with ‘network share lite’. In the meantime, 3 and T-Mobile have forged ahead to thrash out their own network share deal already in operation, scaling their comparatively meagre resources to compete with the big boys. O2 has been seen as horribly exposed by having a network that is miles behind the competition, which is now exacerbated by being left without a partner.
In the current climate of cost-cutting and where mobile internet and data services are critical, these arrangements could go some way in shaping the fortunes of operators over the medium term.