Last week we reported that Vodafone and Telstra had teamed up to share infrastructure in rural and regional Australia. This is not the first deal with another carrier Vodafone has signed: Customers of Hutchison's 3G network roam on Vodafone's 2G network when they are out of range of Hutchison's towers. It won't be the last deal with another carrier Vodafone signs either: MD Grahame Maher has already made it clear his preferred strategy to launch a 3G network is to partner with someone.
Maher views partnering as critical for Vodafone's future, and that of the industry as a whole. "The industry needs to take a different view on competition when it comes to infrastructure," he told ZDNet Australia. Basically, Maher thinks the mobile industry should share infrastructure and compete on service.
This is a different tack to the combative approach taken by the carriers to date, and may appease those commentators who insist the Australian mobile market is too small to support the number of carriers it has, and who issue dire predictions of imminent "industry consolidation" on a regular basis. In fact, it may indicate the answer to the markets' problems is more companies offering mobile services, not fewer.
Jason Ross, a telco analyst at amr interactive, sees the deal as a win for consumers as well as the companies. "The more [Telstra] can [get] other telcos to provide front-end customers for their back-end the better," said Ross. "It makes sense and it's a continuing trend that devices will access a range of networks, become more transparent to the end-user." This strategy could improve competition in the mobile space, according to Ross, who said the Australian Communications Authority has been less than successful in promoting said competition.
Virgin Mobile, which recently announced they would charge just 5c for a Virgin-Virgin SMS, is another company for whom partnering is vital. Virgin's customer base seems to come mainly from current customers of other Virgin businesses, such as the music stores.
Virgin launched their mobile business by joint-partnering with Optus back in 2000. And this is where more companies selling mobile services could not only improve competition in the industry, but the bottom line of the established telcos. Customer acquisition and customer service are significant costs, and some large companies seem incapable of providing the service level demanded by their customers, with obvious negative consequences.
Large carriers should welcome smaller players who can't afford to set up nation-wide infrastructure, but could bring in a couple of hundred thousand new mobile customers. Admittedly this is different from network sharing deals between carriers, but the concept is the same. As Ross said, the more people using a network the better and more stable that network is, since greater funds can be committed to its upkeep.
It's a win-win-win situation.
