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Vodafone fixed-line broadband - good start, much, much more needed

News everywhere today that Vodafone UK is to sell fixed broadband via BT Wholesale…

So, another big name enters the fray in the UK (after Orange, O2 and Carphone Warehouse). This will put yet more pressure on the minnows (Pipex, Easynet etc.) and continue to drive margins down in the broadband space. The UK comms market is looking crowded again (reminiscent of the fixed market in 2000/1) - everyone is looking to take a piece of someone else’s revenue.

The contract could be worth up to £500 million to BT, depending on take-up. But Vodafone will not be installing its own equipment at local exchanges. Instead it will resell BT’s IP Stream product. This contrasts with the fixed-line broadband strategies adopted by Orange and O2 which use suppliers that set up their own kit at the exchange level.

Unfortunately, there is only so much wallet available so only the leanest will prosper. Vodafone has an advantage with its scale but we don’t see them making a bean out of fixed broadband. Vodafone’s share price had a rise today, but is still trading at a very low level.

Some thoughtful questions here and an initial response from Dean Bubley here

But the key question is still - where’s the money going to be made from providing ‘access’ and how? This is of course the focus of the Day Two workstream on Broadband Connectivity at the Telco 2.0 Industry Brainstorm. We’re getting more and more distressed broadband operators booking into this session (ingoing hypothesis here) right now…

…who will be stimulated by a keynote from James Enck of Daiwa Securities and EuroTelcoBlog. James will start the session by laying bare the facts and trends re broadband. See his extremely useful post today on Illiad and the fibre revolution in France.

From an investors point of view, James would like to see some genuinely ‘out of the box’ thinking from operators. Our challenge is to create some on the 4-5th Oct.

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