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General

Tele2 Netherlands readies infrastructure for new market push

Monday 20 July 2015 | 12:09 CET | Background

Tele2 Netherlands has signed a wholesale deal with KPN for access to its VDSL network. The company plans to implement quickly the new agreement and start migrating broadband customers to its own VULA platform from December, CEO Jeff Dodds told Telecompaper. Around the same time, Tele2's LTE network should be approaching national coverage. This suggests a new marketing push will get underway at the start of the new year, based on offers over the company's own infrastructure. The fixed-line activities should as a result return to growth, Dodds said. 

Tele2's own networks

Once Tele2 reaches sufficient coverage with its LTE network, its wholesale costs under the MVNO agreement with T-Mobile should start to drop, opening the way for Tele2 to introduce cheaper data bundles. The company is already approaching 80 percent outdoor coverage and 50 percent indoor coverage. How much the company will save from having its own network, as well as the Vula platform, and whether these savings will be passed on to customers, is still an open question. However, given Tele2's long-term targets, some price pressure can be expected. Especially in mobile, Tele2 has seen for sometime a window of opportunity, given the relatively high data costs and low usage in the Netherlands. 

In September 2013 the company set a number of very ambitious targets (without attaching a date to these): a 20 percent share of the mobile market, 15 percent in consumer broadband and 10 percent of the business market. Tele2 also now has the capacity to introduce a quad-play offer, combining its triple-play with mobile. Dodds said the company will provide more details on its plans with the Q3 results in October. One thing is already clear though: an 'unlimited' mobile data offer is not among its plans.

VULA

The backhaul for the new services will be provided as much as possible with Tele2's own fibre infrastructure. The seven-year wholesale agreement with KPN is based on VULA (virtual unbundled local access), a alternative to complete unbundling with the operator's own equipment. VDSL is provided from street cabinets, and these are too small to house equipment both for KPN and potential unbundlers. KPN is also rolling out advanced VDSL techniques (vectoring and pair bonding) that exclude more than one set of operator equipment. VULA offers Tele2 the possibility of offering its own services over the network and allows for more differentiation than the basic resale of services (WBA: wholesale broadband access). Vula also will require changes in Tele2's IT systems. 

KPN network

Tele2 remains dependent on KPN for the maximum speeds. KPN recently updated its targets for the broadband upgrade on its FTTH and DSL networks. By the end of 2016, household coverage should reach:

  • 33 percent of homes with 500 Mbps over FTTH.
  • 70 percent of homes with 200 Mbps over FTTH and VDSL with pair bonding (according to Tele2 this is expected to reach 80% a year later).
  • 85 percent of homes with 100 Mbps over FTTH and VDSL with vectoring. Given the projected FTTH coverage, this puts VDSL with vectoring at around 50 percent of homes.
  • 90 percent of homes with 40 Mbps over FTTH, VDSL and ADSL2+.

Of course the real speeds over VDSL may still vary. A maximum of 100 Mbps means the actual speeds will be lower. Tele2 could not yet say how much it expects to deliver. The question is relevant though given the advent of services such as Ultra HD, for which a single stream needs at least 15 Mbps. Dodds said the company is confident in the quality and speed of the KPN network. The aim is to remain ahead of the demand curve, and the potential speeds of 200 Mbps over copper and 1 Gbps over fibre offer sufficient room, according to Tele2. 



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