Mobile network sharing: a post-recession reality

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1 Mobile network sharing: a post-recession reality Sections extracted on: 20 October 2010 Reference Code: OVUM Publication Date: 14 September Unauthorised reproduction prohibited The information in this document has been extracted from published Ovum research by a registered user of Ovum s Knowledge Centers. Ovum holds no responsibility for the loss of original context and for any changes made to information following its extraction. Ovum does not endorse companies or their products. Ovum operates under an Independence Charter. For full details please see For full details of Ovum's citation policy, see All information was current at the time of extraction although the original content may have been subsequently updated. Please refer back to the website to view the most recent content and the original source of the information Executive summary Page 1

2 Mobile network sharing: a post-recession reality Sections extracted on: 20 October 2010 Reference Code: OVUM Publication Date: 14 September Unauthorised reproduction prohibited The information in this document has been extracted from published Ovum research by a registered user of Ovum s Knowledge Centers. Ovum holds no responsibility for the loss of original context and for any changes made to information following its extraction. Ovum does not endorse companies or their products. Ovum operates under an Independence Charter. For full details please see For full details of Ovum's citation policy, see All information was current at the time of extraction although the original content may have been subsequently updated. Please refer back to the website to view the most recent content and the original source of the information Executive summary EXECUTIVE SUMMARY In a nutshell Mobile network sharing whether it is sharing tower sites or radio access network (RAN) components is not a new concept in the industry. Despite the challenges associated, its merit as a cost-effective way to deploy or operate a mobile network has been evident for years. As operators look for ways to cut costs following the recession, they are showing increased interest in some form of network sharing, and as interest increases, the scale of announced network sharing deals is becoming larger. This report updates Ovum s previous report on network sharing, and explores how the concept is gradually changing the structure of the industry. Ovum view Since Ovum s last report on mobile network sharing in June 2008, there have been rapid developments in the industry as the scale of network sharing has boomed. Passive network sharing (involving tower sites, masts, and power supplies) is now widely adopted, while active sharing (involving passive components as well as RAN assets and even the core of the network) remains rare. As operators revenues struggled during the recession, network sharing emerged as a means to cut costs and improve profitability. Network sharing is the logical thing to do During the mobile phone boom of the past two decades, the industry accepted the infrastructure competition model pushed by most regulators. And that model has proved to be extremely successful, helping to make mobile phone services affordable to the mass-market. Page 2

3 But in many mature markets, infrastructure-based competition can no longer boost consumer uptake, especially in the 2G market. Most people can now get access to mobile voice services, and it isn t easy for consumers to differentiate between operators in terms of network coverage. Even in emerging markets where infrastructure-based competition should still be a means to ensure competition, there is now evidence that it may be causing harm to the market (for more information, see Ovum s report Indian mobile telco performance highlights need for consolidation ). Markets such as those in India and Uganda have been aggressive in licensing new operators and mandating them to build new mobile networks. While this may initially spur lower prices, it is unduly harming an important stakeholder in the mobile industry ecosystem the operator. It s time to rethink the structure of the mobile industry Sharing tower sites or RAN assets gives operators the opportunity to combine their networks to cut costs and deliver services at appropriate levels of performance. Cost savings are much higher with active sharing than with passive sharing as it further reduces duplication of network components, and many vendors are now producing equipment to facilitate this type of sharing. However, the industry still needs to convince regulators to allow active network sharing for the next generation of mobile networks. As the benefits of active network sharing are now evident at the 2G and 3G level, it would be self-defeating for the industry to duplicate 4G and post-4g networks. Sharing tower sites is likely to be standard practice for LTE, but operators will save a lot more money by also sharing the active components of their LTE networks as Telenor and Tele2 have done by agreeing to build a joint LTE network in Sweden. In the long run, it is unlikely that many operators, especially those rolling out LTE networks in rural regions on the 800MHz band, will be able to justify going it alone on LTE rollouts. Ovum expects that at least 30% of all LTE network rollouts in the next five years will involve some sort of active network sharing deal. Ultimately, increased network sharing leads to one question. Can the mobile industry function with a single national network? A radical new structure could see a single mobile network in a country, which then resells capacity to all the mobile operators in a similar manner to an MVNO relationship. In our report What mobile operators can learn from utilities, we demonstrated how the utility industries (electricity, gas, and water) are able to operate with a single network. All it requires for the mobile industry to do the same is for competition to be moved up the ladder; from infrastructure-based competition to service-based competition. Key messages The impact of the recession strengthens the case for network sharing. Many operators in mature markets have seen their revenues drop during the recession, and many emerging market operators are struggling with low ARPU. Network sharing offers an opportunity for operators to reduce their operational costs while still maintaining appropriate levels of service. Page 3

4 Passive network sharing is now widely adopted, and most regulators encourage operators to share tower sites. Under passive network sharing, operators share their tower sites, masts, racks, and power supplies. This makes sense from an environmental point of view and could be the only way to roll out new sites in urban areas. Active network sharing remains rare, but interest is rising as potential cost savings become clearer. Under active sharing deals, operators share their RAN, antenna, and sometimes their spectrum. A deeper level of active sharing will also include the core network. RAN sharing brings significantly higher savings than passive network sharing, but the biggest savings will come if operators also share their core network. Given that both passive and active network sharing have now been proven at the 2G and 3G level, there should be no concern about network sharing for LTE. We expect passive network sharing to be common for LTE, but active network sharing will also play a role. Ovum expects that at least 30% of all LTE networks in the next five years will involve some form of active network sharing, especially networks in rural areas that will use the 800MHz band. As more network sharing deals are signed, the question will arise: can a single mobile network serve a country? This already happens for most other utility services and the model can be extended to the mobile sector. A single national network would provide shared infrastructure, where operators would rent capacity under an agreement that is similar to current MVNO arrangements. The role of vendors will come under increasing focus as network sharing grows. Vendors play a crucial role in the network sharing process, and the mainstream vendors have already positioned themselves to provide sharing services to operators. Smaller vendors offer niche services in areas where the main vendors are not interested. Infrastructure companies are playing a greater role and are initially focusing on towers but some of them, such as Arqiva, are articulating a framework that could see them run a full mobile network. Page 4

5 Chapter 1 extracted from source document chapter EXECUTIVE SUMMARY (the entire source chapter has been extracted) Page 5

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SEPTEMBER 2014 NATIONAL BROADBAND NETWORK AND SCHOOLS CONNECTIVITY

SEPTEMBER 2014 NATIONAL BROADBAND NETWORK AND SCHOOLS CONNECTIVITY EXECUTIVE SUMMARY The objective of the National Broadband Network Company ( NBNCo ) is to provide genuine National Broadband Coverage