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"We think it was the right thing to do for our employees, our shareholders and above all our customers," commented Paul Donovan, chief executive officer, Vodafone Ireland after the company confirmed that it had accepted one of Ireland's four 3G licences. The business will now begin rolling out its 3G network, with portions set to go into operation by early 2004.
Donovan said that the company's delay in taking up the license was based solely on its desire to re-evaluate the actual value of the licence. He also said the decision was made entirely by local management and not by Vodafone Group leadership. "It's not often that you have to make an EUR1 billion decision. It would have been irresponsible of us to make such a decision without re-thinking our bid."
Vodafone now joins Ireland's other two 3G licence owners, mmO2 and Hutchison Whampoa, who own a 'B' licence and an 'A' licence respectively. Over the next few years all three firms will prepare to launch UMTS mobile services that will offer dramatically faster download speeds, allowing for sophisticated applications such as mobile video and teleconferencing.
There had been speculation that Vodafone declined to accept the ODTR's offer because the business was disappointed that it did not receive the 'A' licence, or possibly because the company wanted to pressure the ODTR to lower its price. If Vodafone had not accepted this licence, the permit may have gone to auction with the fourth un-claimed UMTS licence at a later date, and possibly at a lower cost.
However, Donovan denied that either circumstance was the case, highlighting other concerns that made the company review licence acceptance. Among these were regulation of the mobile sector in Ireland, as well as the ODTR's plans for fixed wireless broadband roll out. Additional worries included the ultimate return the business would get on the EUR1 billion that was required for the licence, as well as network infrastructure issues.
In the end however, the company determined that it was in a better position than competitors to deploy 3G services because of its relative size. With more subscribers (1.7 million), Vodafone Ireland will spend less than O2 Ireland and Hutchison Whampoa on a per customer basis over the next 20 years. The company also noted that with the possibility of site sharing on the horizon, as well as recent technological innovations and supplier promises, the actual cost of network deployment could be lower than initially calculated.
Currently the business is considering the implications of site and infrastructure sharing agreements with O2 and Hutchison, but has declined to make any firm commitments.
"As one of the largest companies in Ireland, you have a special responsibility," Donovan added. He said that Vodafone's decision to "invest in Ireland" by taking the permit would serve to encourage further high-tech investment in years to come.
In that vein, he was critical of the ODTR's decision to give greater consideration in awarding licences to new entrants. "Hutchison could operate their network [in Ireland] with just a skeleton staff. Marketing, application development and even management could all take place in the UK and just get shipped over here," Donovan said, hinting that such a set up would do little to boost the Irish economy.
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