Global Economics

Vodafone to Roll out Wired Broadband


Vodafone has finally confirmed it will be aping its competitors with a definitive move into fixed line broadband.

The mobile operator today announced it will be reselling DSL from BT Wholesale under its own brand before the end of the year. It declined to release pricing details.

Under the scheme Vodafone will be able to sell broadband access across the UK without having to invest in local loop unbundling, where companies install their own kit in BT's exchanges - a strategy favoured by the likes of Orange Broadband, n?????e Wanadoo, and Cable & Wireless.

Vodafone has already been selling DSL to its business customers but this is the first time it has offered such services in the notoriously competitive retail market, where both price and speed have become battlegrounds.

Tim Yates, director of Vodafone's consumer business, told silicon.com that Vodafone will not be looking to sign an additional deal with another ISP, so it can match the speeds its competitors can offer. "We're not planning to do that - we're comfortable with what BT can offer. It's comparable if not better than anything else out there," he said.

As well as being saddled with offering average speeds, Vodafone will also have to work hard to compete on price. Several ISPs, including Carphone Warehouse and Sky, are giving away 'free' broadband to customers signing up for bundled services.

Vodafone's mobile competitors have already got in on the broadband act. Orange is doing its own 'free' offer for mobile subscribers, while O2 recently bought high-speed ISP Be, which sells next generation ADSL2+ broadband, capable of giving speeds up to a theoretical maximum of 24Mbps.

Ian Fogg, analyst at JupiterResearch, said Vodafone's broadband manoeuvre was not a simple 'me too' decision.

He said: "Given the massive price pressure and the free broadband offer, the question [for mobile operators doing broadband] is where is the return on investment going to come from. There's a significant risk with capital investment in infrastructure. Vodafone are minimising the risk by not making that infrastructure investment in broadband in the UK."

Ovum analyst John Delaney concurred it makes sense for Vodafone not to go it alone.

He said in a research note: "The regulatory and commercial conditions in the UK are now more favourable than ever to a company wishing to offer ADSL by wholesaling IP streams over telco-owned lines and so it makes sense for Vodafone to enter the market in this way rather than to invest straight away in a facilities-owning approach. Although it would provide more flexibility, it would require both significant capex and a fixed skill set currently not available in-house."

The company's CEO Arun Sarin told journalists in May the operator was categorically uninterested in buying or becoming an ISP in the UK.

Sarin told investors the operator's broadband strategy will be defined country by country. In Germany, one of Vodafone's key markets, the operator has its own fixed line unit, a result of the Mannesmann acquisition.

Links:

Peter Cochrane's Blog: No more copper - fibre rules

The Weekly Round-Up: 08.09.06

Editor's Blog: Some offshoring fallacies

Leader: Ageism in IT - what do you think?


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