And, as analyst Henry Lancaster of the BuddeComm group says, the Vodafone CEO recently reiterated that the company has no plans to enter the fixed-line sector – “instead, it is channeling investment to upgrade existing networks”.
What’s more, Lancaster asserts that without a fixed-line network in Australia, Vodafone cannot hope to capitalise on customer attraction to bundled services – while Optus and Telstra both have extensive fixed-line infrastructure, and both are "well positioned to exploit the efforts of NBN Co" to extend the reach, and capabilities, of copper.
“Both companies came to an agreement with NBN Co in December 2014 to incorporate their copper and HFC assets within the NBN. NBN Co now plans to connect another 1.5 million premises with HFC within a couple of years. These premises are passed by Telstra and Optus infrastructure, but not connected. In addition, NBN Co hoped to trial DOCSIS 3.1 technology, potentially in 2017.
“Since early 2015 Telstra and Optus have been able to make use of their 700MHz concessions. Although Vodafone is emphasising its metro coverage with LTE using existing 800MHz and 1800MHz holdings, Optus and Telstra have national ambitions (98% population coverage by late 2017).”
“Thus Optus and Telstra are well positioned to be retail ISPs on this upgraded and extended IP network.”
Lancaster says Vodafone is the weaker of the three telcos in mobile assets as well as fixed-line, surmising that if the telco will not enter the fixed-line business despite the opportunities, it may be that the “larger fixed-line players, in an increasingly consolidated market, will try to acquire Vodafone itself, and so add mobile voice and data to their existing offerings”.
“This would provide Australia with three competing quad players with national reach.”
Lancaster maintains that Vodafone is at a “formidable disadvantage”, on several levels, to rivals Telstra and Optus and, while acknowledging that customers are still leaving the telco, says it is not at the “alarming rate seen in most quarters during the last two years”.
Vodafone customer loyalty is also questioned by Lancaster.
“As the paucity of Vodafone’s LTE reach becomes increasingly evident in the wake of continuing customer migration from 3G to LTE, further churn to Vodafone’s competitors must be anticipated,” he speculates.
On the global market for telcos, Lancaster compares Vodafone’s ‘mobile-only’ strategy in Australia to its own full quad-play approach internationally, and that of other telcos.
“In recent years Vodafone Group has successfully expanded its interests from mobile voice and data services to a full quad-play offering. This is an obvious strategy to enable large international operators to compete with one another for customers who are increasingly fluid in the use of multiple platforms for their telecom and media services needs,” Lancaster points out.
“The contrast with Vodafone Australia is stark,” Lancaster says, pointing out what the company is doing in several other countries:
• “In the UK, Vodafone launched a quad-play offering as early as 2011, relying on BT Wholesale for the fixed-line components of voice, broadband and IPTV. Since then the company has invested heavily in Europe’s fixed-line sector
• “Vodafone’s fixed-line ambitions are particularly notable in Spain. The company paid €7.2 billion to acquire the country’s largest cableco Ono in July 2014. At the time, Vodafone had already teamed up with Orange in a €1 billion joint fibre network covering 50 of the largest cities.
• “In Germany, Vodafone is busily migrating mobile backhaul to KDG’s fibre infrastructure, while its own DSL subscriber base has been integrated with that of KDG.