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Vodafone and T-Mobile: 1800MHz bad, 900MHz good

Your thoughts on the big buy-up

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Our recent opinion piece on the possible takeover of T-Mobile by Vodafone generated considerable comment. Given the strength of feeling, we thought we'd present some of our thinking.

The piece was intended to present an argument that spectrum ownership was key in understanding why Vodafone, or anyone else, would be interested in buying T-Mobile. Unfortunately, it seems some details were lost in the attempt to paint the bigger picture, so we're happy to fill in those details where we can.

Starting with the easy stuff, from Gordon 17, comes a question about who owns what:

"I thought it was and, still is T-Mobile with Virgin piggy backing and, 3 had its own network."

This is accurate, though T-Mobile and 3 are in the process of merging their networks, which we obviously failed to convey. On the subject of network sharing comes a comment from Mobile Boy, who thinks Vodafone would be happy to have 3 camped on its network:

"Vodafone entered a network share scenario with Orange in the past and are now doing similar with O2. They clearly see this as a viable route to cost reduction."

Which would be a more compelling argument if Vodafone and Orange hadn't quietly shelved their network sharing arrangement as soon as the press stopped looking, explaining that it turned out to be more complicated and less economic than they had expected.

We'd also like to clarify, for the benefit of Jón Frímann Jónsson, that all modern GSM phones happily support 900 and 1800MHz: so the result of a merger could equally be T-Mobile customers switching to 900MHz rather than Vodafone users retuning to 1800MHz..

In fact, we originally considered that the likely outcome: Vodafone shifting all the T-Mobile customers to 900MHz and then deploying LTE at 1800MHz in cities, where the most value is. But we decided that the annual AIP* payment that Ofcom is going to demand for 900MHz would put Vodafone off when they could get some 800MHz (or lower) spectrum for a one-off payment. 1800MHz is an asset on T-Mobile's books, while 900MHz is about to become an operational expenditure of the kind hated by big companies.

We'd also like to remind readers that while existing licences for 900MHz, 1800MHZ and 2.1GHz are all technology-specific, Ofcom has made it abundantly clear that all such restrictions will disappear over time, so we didn't consider them important in this discussion.

Which brings us to the question of frequency range and the assertion that we never venture far enough from Vulture Central to experience rural network conditions. Some of us do manage to get out and about on occasion, and your correspondent lives in the Highlands of Scotland, where T-Mobile coverage (at 1800MHz) is absolutely fine, as shown by the operator's StreetCheck service**. It's true that it's a lot easier to build a network operating at 900MHz, but T-Mobile has already built a countrywide 1800MHz network. Vodafone could even hold on to a small slice of 900MHz to fill the really rural areas, if necessary.

Anton Ivanov suggests that T-Mobile's 1800MHz network lacks any kind of coverage in the north of the UK. StreetCheck, and our own experience, would seem to belie that - but feel free to chip in if you feel differently.

One aspect of the discussion we did gloss over is the Competition Commission, as pointed out by DavCrav, who hopes the Commission hasn't become completely toothless in that regard.

A Vodafone/T-Mobile combination would certainly upset the competitive marketplace, and probably prompt further consolidation. Ofcom's latest report predicts that by 2022 there will only be two operators in the UK anyway, so perhaps that regulator knows more than we thought. ®

* Administrated Incentive Pricing - Ofcom's best guess as to what the spectrum would be worth, charged annually.

** Combined with SiteFinder to confirm the frequency.

The smart choice: opportunity from uncertainty

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