The UK mobile market has slimmed down from four to three operators this year, with the combination of Vodafone UK and Three UK. The merger required the operators to divest some spectrum to VMO2, which has paid £343 million to buy nearly 80 MHz. The move leaves VodafoneThree with the vast majority of UK spectrum but will give VMO2 a sizeable boost.
This week, Wireless Watch sat down for a wide-ranging chat with Dr Robert Joyce, Director of Mobile Access Engineering at VMO2, about the operator’s Mobile Transformation Plan and how spectrum is the dealbreaker.
As a reminder, VMO2 was born out of a 50:50 merger in 2021 between Liberty Global’s UK cable operator, Virgin Media, and Telefonica’s O2 brand.
During the UK summer holidays, VMO2 has been publicizing its network improvements, including the use of small cells for improved coverage in holiday hot spots and dense inner-city regions.
The small cell publicity has been matched with a widely promoted speed test from RootMetrics, which showed that EE won or shared every major UK-wide network performance award in the first half of the year.
EE also won the award for overall network speed, with a UK-wide median download speed of 110.8 Mbps, more than twice as fast as Vodafone and Three, and three times faster than VMO2 at 36.2 Mbps.
VMO2 did have some, albeit small, good news from the test, it showed boosted speeds in major cities, often with the use of small cells. It is the largest adopter of the small cells amongst UK MNOs.
Building a reliable network
Yes, VMO2 is not the fastest, but that is not the overall goal, according to Joyce. The operator is aiming for a middle ground, where it is not necessarily winning all of the speed test awards, but it provides customers with a reliable service.
“As I’ve always said to people, customers don’t join you because you’re the fastest, but they’ll leave you if you’re the slowest,” he said. “My mantra with the team is to build a really reliable network that maximizes coverage. I use the three Cs, in priority order: coverage, capacity, and capability.”
“We would love to be able to give everyone a gigabit per second. And the O2 network today does go up to well beyond one gigabit per second. But all most people really want is a decent YouTube video service, and that probably needs only about five megabits per second. Our job is to build coverage everywhere and make sure that the majority of people get 5 Mbps or upwards on our network.”
Small cells have been part of the toolkit to give VMO2’s network a coverage or capacity boost, particularly in dense inner-city areas.
VMO2 has about 20,000 sites in the network, of which around 2,000 are small cells. In terms of subscribers, O2 has more than 20 million customers, and a similar number of wholesale and machine connections on the network (such as smart meters).
BT-owned EE had 15.6 million mobile customers in March this year, and VodafoneThree had 27 million subscribers at the time of the merger.
VMO2’s efforts to boost the network with small cells have been paying off since the RootMetrics report showed better performance in city centers, but ultimately, the solution is more spectrum.
Spectrum will heal-all
Alongside the need to extend 5G coverage, spectrum is key. The operator was pretty happy with this element of the VodafoneThree merger.
The tie-up came with requirements for the merged entity to spend £11 billion on its UK network, although we are not convinced that this is a meaningful improvement on earlier spending.
“The O2 network has had challenges over the years, especially because of the historic spectrum imbalance compared to the competition. That probably started around 2013, and it’s meant the network has struggled to keep up with the Joneses in terms of keeping up with other operators’ spectrum holdings,” said Joyce.
“But if we can get the new spectrum out onto the macro cells this will deliver the capacity of gigabits per second over a much wider area. It’s probably another five years before we get 5G all the way out to the 4G network edge that we have today.”
As part of the merger, Vodafone and Three agreed to sell 78.8 MHz of spectrum to Virgin Media O2. This includes 20 MHz of 1400 MHz supplemental downlink (SDL), 18.8 MHz in the 2100 MHz frequency division duplex (FDD) band, 20 MHz in the 2600 MHz time division duplex (TDD) band, and 20 MHz in the 3400 MHz TDD band.
This move helped rebalance holdings across major UK MNOs, giving VMO2 roughly 30% of total UK spectrum, closer to EE and VodafoneThree.
“The combined VodafoneThree will still have have the largest spectrum holding, but we’ll have about the same amount of spectrum as EE – and that now gives us a much more level playing field,” said Joyce.
“When we upgrade our network to use the new spectrum bands that we’ve acquired, we think we can be on a par in terms of coverage and reliability and deliver what customers want on the network. Our driver is to be the most reliable network.”
VMO2classes the 1400 MHz band as low band and it will be used on macro cells to provide more coverage and more capacity. The 2100 MHz will be used for small cells and 5G. While the 2600 and 3400 TDD band will be used for high capacity 5G.
The TDD bands lend themselves to mMIMO technology, all part of the Mobile Network Transformation Plan.
“We are going to squeeze even more out of the new spectrum with massive MIMO and beamforming techniques. We think we get 75% more capacity out of the new spectrum using these techniques. We are now rolling out 5G across the UK using both 700 MHz and 3.7 GHz spectrum for 5G,” said Joyce.
As part of the Mobile Transformation Plan, VMO2 will spend around £700 million on its mobile network in 2025 on parts of the network that experience the highest levels of demand.
This includes core network upgrades, expansion of 4G and 5G coverage to ‘not-spots’ in rural and coastal areas, a small cells rollout to boost capacity in dense urban areas, and “solutions to address persistent network pain points, including along railway lines, at airports, on motorways, and in stadiums and arenas.”
The telco is investing £2 billion this year in its fixed and mobile networks and services.