Mobile operators in the UK are not known for being the best of friends. Be it fighting for the latest exclusive handset or threatening court action over 4G rollouts, the big guns have never been at the top of each other's Christmas lists.
Yet, even with this animosity boiling away, the UK is heading for a mobile network operator duopoly as companies join forces in a country with an unusually high number of operators in competition with one another – compare the size of the UK and its five operators (six if you include Virgin) with the US and its four such networks.
The first move was made with the founding of Everything Everywhere in 2010. This was a joint venture between Orange and T-Mobile to bring their spectrum under one umbrella and share their networks to give wider coverage to customers on both sides.
Two years down the line Orange and T-Mobile each retain their own branded stores, phones and tariffs, but together they boast the largest market share of any UK operator and are investing pound 1.5bn to fully integrate their networks by 2015.
Now other operators are following suit, albeit not going so far as the Everything Everywhere merger.
Last week, O2 owner Telefonica and Vodafone announced they had combined forces for the UK 4G rollout. This doesn't involve sharing the networks available to customers – as with Everything Everywhere and their full-blown spectrum partnership – but it does mean the operators will use the same infrastructure at the back-end to create what they are calling a "national grid" for running their separate networks.
Accelerating 4G rollout and legislation
Telefonica and Vodafone hope that, by jointly investing in the infrastructure, it will enable them to roll-out their own 4G networks much faster. It is the cost involved in the hardware, on top of the upkeep of current 2G and 3G deployments, that could hold a single operator back from rolling out a 4G network.
Unsurprisingly, the main push for all the operators to work together is not a philosophical standpoint about collaboration, but the hard reality that savings need to be made.
New legislation brought in by the European Union to benefit customers had has a negative impact on operators' profits.
The mobile termination rates ruling, enforce a drop, from 4p to 1p by 2015, of the wholesale fee operators charge other phone companies to complete a call. Everything Everywhere blamed for the ruling for its drop in service revenues last quarter.
Hard on the heels of this came new laws for data roaming charges, another upheaval to hit the operators' bottom line.
Exacerbating the situation are existing tariffs based on cost per minute or single text messages, when most people now use smartphones for mobile data communication. While far from the poverty line, network operators are feeling the effects.
Better coverage for less cost
Sharing network infrastructure and the cost of investing into new technologies – or even going as far as to merge both back-end and customer-facing services – cuts costs dramatically while ensuring customers get the same, if not better, network coverage.
"There appears to be at least a realisation that cooperation at network level is required to support the significant investment required to modernise the UK mobile infrastructure," said a spokeswoman from Everything Everywhere.
But the question of competition must arise at some point. In the broadband market, telecoms regulator Ofcom got heavily involved to try and ensure there are plenty of options for customers looking to get broadband to their homes or business, such as Ofcom's leased-line rulings on BT to force it to opens its dominant infrastructure to rival ISPs.
Now, it could be time for mobile operators to go down this route and they seem to be taking on the task without being forced into it by Ofcom or the EU.
"It used to be thought that having multiple separate nets was essential for mobile competition," said Teresa Cottam, chief analyst at Telesperience. "However, this can actually raise operational costs for operators and thus prices for consumers.
"While the regulator needs to keep a weather-eye out to ensure that reducing the number of networks leads to greater operational efficiency and not monopolistic behaviour, Telesperience believes it could be a very good thing for the UK.
"It makes little sense to unnecessarily duplicate infrastructure. Instead the money should be spent on putting capacity where it's needed to provide a better quality of experience for customers and to refresh technology more frequently."
Rob Bamforth, principal analyst at Quocirca, agreed with Cottam, that money could be saved by going down this route and customers could feel the benefits.
"It will reduce their overall costs and network-sharing should be the natural evolution of mobile networks," Bamforth said.
"Why have several almost overlapping competing ones, when one unified broader one would be better for customers? These networks are expensive to roll out and we all benefit if the coverage is more universal."
Competition between mobile networks
However, Bamforth had his doubts as to whether following the BT model for mobile networks would result in the same level of competition as between ISPs.
"If it ends up as one shared network, like BT Openreach, there may not be sufficient competitive pressure," he added.
"One 'Openreach for the skies' might be a short-term improvement but would need regulatory control to ensure pricing is competitive, otherwise we end up with a mobile virtual monopoly."
If the operators can save money and adhere to competition rules, there is no doubt teaming up will be of great benefit to them. But Cottam concluded that they must keep in mind the best way to make money is to keep their customers happy.
"Most customers want more than just coverage," Cottam said. "From a customer perspective, telecoms prices in the UK are fairly competitive and there's not much to choose between the players – so what do they want?"
"They perceive customer support, services, quality of service and packages as attractive – these are attributes that operate largely at the retail level."
"Business customers are big mobile users and they have needs too. Many businesses are moving towards a mobile enterprise paradigm and need to know that the network will be reliable and deliver against their needs – and they will pay for this."
