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Vodafone granted access to Telefónica's entire fibreoptic network
28/03/2017
AN HISTORIC deal between Vodafone and Spanish communications company Telefónica will allow the British network provider to access its entire fibreoptic network.
Reportedly, this includes the so-called 'non-regulated zone' – the 66 most heavily-populated cities and towns where Telefónica is not obliged to share its fibreoptic system, but has chosen to do so anyway – as well as a 'significant' chunk of its regulated network.
At present, Telefónica – which once held a monopoly in Spain and is still a major player in an increasingly fiercely-competitive market – has rolled out fibreoptic internet, or FTTH, to over 17 million buildings including apartment blocks and business premises, and Vodafone will be able to offer this extra-fast connection to customers based in a sizeable minority of them.
The deal between the two telecommunications giants will have a considerable impact on the digital connections market, substantially expanding Vodafone's potential slice of the market and rendering it more competitive than ever by multiplying the number of customers it can reach in addition to its own HFC and FTTH direct networks, as well as drastically reducing the investments needed by the British operator in fibreoptic infrastructre.
Instead, Vodafone will be able to give a greater cash injection to other areas of its services, such as its 4G mobile network coverage, in which it is already a market leader.
The benefit to Telefónica comes in the shape of financial stability – Vodafone's blanket access to the FTTH network over the next five years guarantees a fixed income from the British provider, helping to offset Telefónica's investment in the system.
For customers, this means Vodafone will be able to offer more affordable prices.
Telefónica's biggest concern is that the National Markets and Competition Commission (CNMC) will force it to rent out its FTTH system and allow rival internet providers to 'cherry-pick' from its fibreoptic network to offer fast connections to their customers, leaving Telefónica to bear the entire investment risk.
The firm has always stressed that other operators should be expected to commit to a long-term, fixed line rental to contribute towards Telefónica's fibreoptic roll-out costs.
Through its deal with Vodafone, this is exactly what Telefónica has achieved and it looks likely that other providers may follow suit, since the deal between the two companies is not said to be exclusive.
French mobile and internet provider Orange has begun its own fibreoptic roll-out, investing substantial amounts of capital in increasing its coverage from 10 million buildings to 14 million by the year 2019.
But the Vodafone-Telefónica deal means Orange has lost some of its competitive edge, since it will be unable to pass on lower prices to customers corresponding with the cost of FTTH network rental, as it will need to finance its own investment.
This means Orange may well decide to go down the same road as Telefónica and offer other providers unlimited access to its fibreoptic layout.
Related Topics
AN HISTORIC deal between Vodafone and Spanish communications company Telefónica will allow the British network provider to access its entire fibreoptic network.
Reportedly, this includes the so-called 'non-regulated zone' – the 66 most heavily-populated cities and towns where Telefónica is not obliged to share its fibreoptic system, but has chosen to do so anyway – as well as a 'significant' chunk of its regulated network.
At present, Telefónica – which once held a monopoly in Spain and is still a major player in an increasingly fiercely-competitive market – has rolled out fibreoptic internet, or FTTH, to over 17 million buildings including apartment blocks and business premises, and Vodafone will be able to offer this extra-fast connection to customers based in a sizeable minority of them.
The deal between the two telecommunications giants will have a considerable impact on the digital connections market, substantially expanding Vodafone's potential slice of the market and rendering it more competitive than ever by multiplying the number of customers it can reach in addition to its own HFC and FTTH direct networks, as well as drastically reducing the investments needed by the British operator in fibreoptic infrastructre.
Instead, Vodafone will be able to give a greater cash injection to other areas of its services, such as its 4G mobile network coverage, in which it is already a market leader.
The benefit to Telefónica comes in the shape of financial stability – Vodafone's blanket access to the FTTH network over the next five years guarantees a fixed income from the British provider, helping to offset Telefónica's investment in the system.
For customers, this means Vodafone will be able to offer more affordable prices.
Telefónica's biggest concern is that the National Markets and Competition Commission (CNMC) will force it to rent out its FTTH system and allow rival internet providers to 'cherry-pick' from its fibreoptic network to offer fast connections to their customers, leaving Telefónica to bear the entire investment risk.
The firm has always stressed that other operators should be expected to commit to a long-term, fixed line rental to contribute towards Telefónica's fibreoptic roll-out costs.
Through its deal with Vodafone, this is exactly what Telefónica has achieved and it looks likely that other providers may follow suit, since the deal between the two companies is not said to be exclusive.
French mobile and internet provider Orange has begun its own fibreoptic roll-out, investing substantial amounts of capital in increasing its coverage from 10 million buildings to 14 million by the year 2019.
But the Vodafone-Telefónica deal means Orange has lost some of its competitive edge, since it will be unable to pass on lower prices to customers corresponding with the cost of FTTH network rental, as it will need to finance its own investment.
This means Orange may well decide to go down the same road as Telefónica and offer other providers unlimited access to its fibreoptic layout.
Related Topics
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