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Can network sharing propel LTE?

Emeka Obiodu

Can network sharing propel LTE?

Two recent announcements in France and Sweden have highlighted the importance of network sharing for LTE and the need for a clearer regulatory outlook. While Telenor and Tele2 inked a deal to build and share a 4G network, regulators in France moved forward to articulate a framework for sharing 3G networks. Apart from being in consonance with what Ovum has called for, these announcements proffer an alternative option that could promote a swifter rollout of LTE. Two important announcements

This week's announcement by Tele2 and Telenor to jointly build and own a 4G network in Sweden highlights what might become a trend for future 4G networks. In their announcement, both companies said they will form a 50:50-owned joint venture to roll out a nationwide 4G LTE network in Sweden. Not only will they share their active network components - essentially the RAN - but they are sharing the spectrum too. The deal includes both the 2100MHz and the 900MHz spectrum bands, ensuring that the network will have nationwide coverage. By sharing their RAN and spectrum, Tele2 and Telenor will effectively operate as mobile virtual network operators on their jointly owned network.

In France, the regulator Arcep has articulated a framework for future 3G network sharing. Arcep firstly extolled the merits of its existing support for passive network sharing (i.e. sharing sites, buildings and masts). Then, while acknowledging that it is a recent trend, less common and much more complex, the French watchdog set out its plan for active sharing. Arcep has invited market players to submit framework agreements, along its guidelines, by the end of the year.

The network-sharing agenda is taking shape

While this week's announcements do not holistically address the issue of network sharing for the future, they add new dimensions to the deliberations in this area. In our earlier comment The case for network sharing gets stronger Ovum called for a clearer picture of what, when and how active network sharing should be implemented. Although Arcep's proposal is only for 3G, it confirms that network sharing is now high up the regulatory agenda and we expect other authorities to begin to articulate a clear framework for allowing active network sharing both for 3G and 4G.

But what will such a future present to both mobile operators and regulators? Our comment A whole lotta sharing going on - but where will it lead? showed the different ramifications of increased network sharing on the industry. Will it radically undermine the 'infrastructure competition' ideology in today's mobile regulation? Will there eventually be just one mobile network? Who will own it? Who will run it?

At its basic level, the current tactic of encouraging multiple networks supposes that a decent return on investment for all network owners can be made by charging consumers substantially for mobile services. However, mobile data is already commoditised and there is yet no realistic prospect for a new service that will get consumers to spend generously beyond what they already do. So if mobile data cannot yield the utopian revenues, and mobile voice can still run on GSM, what is the business justification to invest billions for new spectrum and networks for LTE?

Network sharing will inject life into LTE

Faced with the uncertainties of cost and returns for LTE, operators should begin to look at network sharing for a solution. There is bound to be greater call for new LTE networks as governments begin to incorporate mobile broadband in their e-society initiatives. For operators wary of how they will fund their LTE network rollout, Telenor and Tele2 have thrown up a new alternative.

Jointly building out the network lowers the costs and the risks for any individual operator, making the investment more attractive, especially in today's economic downturn. With the likes of Vodafone and Telefonica already on the network-sharing bandwagon, it is likely that a joint network build-out will become the de facto format for 4G.




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