Vodafone, Orange form FTTH alliance in Spain

Emeka Obiodu/Ovum
15 Mar 2013

Vodafone and Orange have announced plans to jointly build a nationwide FTTH network in Spain in an effort to strengthen their positions in the converged services space and compete with Telefonica in the Spanish FTTH market.

The plan involves the two partners using the same technical specifications to independently deploy street-level fiber in complementary areas. These complementary networks will then be combined to create a single network, with each partner guaranteed access to the entire infrastructure.

Both companies have stated that they plan to provide FTTH to 800,000 households and workplaces by March 2014, 3 million by September 2015, and 6 million by 2017. By this time, they plan to have covered 50 major cities and expect to have a residential penetration rate of approximately 40%.

While the notion of alternative telcos rolling out FTTH is not necessarily a major revelation, Orange and Vodafone’s deal will influence the trajectory of private sector-driven FTTH network sharing across Europe.

Is this the new model for FTTH rollout in Europe?

If this deal is approved and successful, it will demonstrate that rivals can co-invest to build a FTTH network without government involvement. This will not be the first network sharing deal between Vodafone and Orange in Spain, with both operators already sharing their rural 3G mobile networks in the country. Through this arrangement, the operators must have built up a sufficient understanding of each other to be confident that they can make a shared FTTH network work.

Vodafone has also signed a deal with O2 in the UK to co-invest in the building of a complementary LTE network, which suggests that the company is looking to partner in many of its European markets.

Vodafone and Orange’s FTTH network sharing agreement could have a significant impact on the wider telecoms industry. There are many other models of network sharing for FTTH (e.g. in Sweden and the Netherlands), most of which involve a government entity. However, Vodafone and Orange’s agreement will prove that two large non-incumbents can reach a private commercial deal to build a shared nationwide FTTH in a major European market.

Similar deals to the one between Orange and Vodafone are already present for mobile infrastructure, but such an idea has not gained much traction as a way to build fixed infrastructure across Europe. For more information on the different ways in which market players can come together to build infrastructure, see Ovum’s report The Neutral Host Model: The Devil is in the Detail.

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