Operators slug it out for £4.5bn Government contract

Operators slug it out for £4.5bn Government contract

Vodafone, O2 and Everything Everywhere are battling it out for a share of a massive £4.5bn contract to deliver the communications network for the Government’s smart meter programme.

The programme aims to fit 30 million homes and businesses with smart energy meters by 2019. The size of the contract and its potential for generating future revenues makes it a ‘game-changer for mobile operators’, analysts said this week.

The contract runs for between nine to 15 years with a five-year renewal option. It is divided into three regional lots covering Scotland, Wales and the rest of Britain, each worth up to £1.5bn. Bidders can pitch for all three lots. 

Mobile understands that eight consortia are in the running for the contracts, including Airwave, Arqiva, Balfour Beatty, Cable & Wireless, Ericsson, Everything Everywhere, O2 and Vodafone. The Department of Energy and Climate Change (DECC) will whittle the long list down next month and again in November, selecting preferred bidders for the three lots by April 2013.

Smart metering expert Eddie Murphy, MD of Priory Consulting, said the effects of winning the contract could be transformational for the three mobile operators. He said: ‘It is a game-changer.

Winning one or more of these lots would change the economy of a network, giving the winner a huge advantage over its rivals. If only one operator wins one or more lots it would put the others at a significant disadvantage.’

Murphy said operators offer a competitive solution since their networks are already up and running. He added that delivery costs would be low since the volume of data traffic generated is not expected to necessitate major network capacity upgrades.

Strategy Analytics director Neil Mawston said: ‘As networks move away from their core activity and look for new growth areas, smart meters open up new areas in the machine-to-machine (M2M) and Smart Grid markets via millions of households across the UK.’

Ovum energy analyst Stuart Ravens agreed that cellular solutions offer the cheapest option with low capital expenditure. However, he warned security issues could threaten operators’ chances. ‘Cellular networks are not 100% reliable. If you look at what happened during 9/11, cellular networks tanked. Yet it is times like this, or during natural disasters, that you want close monitoring of your networks. It is all about securing supply and having a robust supply.’

A DECC spokesman said: ‘Following the initial stage of the communications procurement we have invited eight bidders to propose their outline solutions.’

All three bidding operators currently run smart meter programmes. Vodafone is part of a joint venture with British Gas to trial smart meters in one million households. O2 has a three-year M2M deal with smart meter operations service provider G4S Solutions to provide 200,000 Sim cards to connect meters to G4S’s data centre. In September last year, Everything Everywhere launched an M2M platform with Transatel, targeting smart metering, the Smart Grid and other vertical markets.

Written by Mobile Today
Mobile Today


It should be remembered that "game changing" can go one of two ways, and given the uncertain nature of the requirements - both now and in the future; ...
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