Vodafone Accelerates 3G

Vodafone (VOD - Analyst Report) reportedly upgraded its 3G mobile broadband network to offer maximum theoretical download speed of 14.4 megabits per second (Mbps). However, users will get a practical download speed of up to 10.8 Mbps. The upgraded service will be initially available to the customers across London, Birmingham and Liverpool and extended to the rest of UK in due course.

The world’s largest revenue-generating wireless carrier launched its 3G services in 13 countries in fiscal 2008. Vodafone’s 3G wireless broadband technology is based on High-Speed Downlink Packet Access (HSDPA) and provides peak data rates of up to 7.2 Mbps. It spent over £14 billion ($28 billion) to obtain 3G wireless licenses in various countries, devoting nearly 40% of capital expenditure to expand its 3G network.

Vodafone continues to outpace major rivals such as Deutsche Telekom’s (DT - Analyst Report) T-Mobile, France Telecom’s (FTE - Analyst Report) Orange and Telefonica’s (TEF - Analyst Report) O2 in the advancement of next-generation cellular deployments. The company is now the first and only operator in the UK to offer theoretical peak download speed of 14.4 Mbps. This compares to the average top speeds of 4.5 Mbps offered by T-Mobile and 3.6 Mbps offered by O2 and Orange. However, O2 and Orange are in the process of upgrading their networks to offer throughput up to 7.2 Mbps.

Vodafone is also upgrading its existing HSDPA based network to the HSPA+ (High Speed Packet Access) 3G mobile broadband standard to offer a throughput of up to 42 Mbps coupled with more efficient data transport management. As a part of this effort, the company has successfully tested an HSPA+ mobile broadband service in Spain with peak downlink speed of up to 20 Mbps, representing one of the fastest 3G data connection speeds available today.

Increased penetration of 3G services remains the primary driver of data revenue growth in Vodafone’s European segment, which grew 37% year over year in fiscal 2009. This was backed by increased adoption of 3G devices (especially iPhone and BlackBerry Storm) and associated data services.

Ongoing efforts to upgrade the existing network infrastructure should result in higher ARPU (average revenue per user), higher minutes of use and improved operating margins through greater network efficiency. Moreover, it is expected to limit customer churn through sustained product differentiation. This represents an encouraging prospect as Vodafone deals with the challenges of stabilizing subscriber count in the highly mature, core European markets.

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