3G-Infrastructure Sharing: the future for mobile networks

0. Summary

1. Commercial pressures are reviving interest in 3G-network sharing

• 1.1 Early interest in network sharing subsided, but MNOs have new reasons to reconsider this approach
• 1.2 MNOs are examining ways to reduce costs
• 1.3 MNOs are faced with extensive investment requirements
• 1.4 MNOs must expand 3G coverage to match 2G coverage
• 1.5 3G enhancements will require substantial investment
• 1.6 Infrastructure equipment vendors have been quick to provide network-sharing solutions
• 1.7 Regulators have supported a degree of network sharing
• 1.8 Major MNOs have announced network-sharing agreements

2. MNOs that lead the network-sharing trend will enjoy major benefits

• 2.1 Network sharing can take many forms
• 2.2 Network sharing can have significant cost benefits for MNOs
• 2.3 Network sharing can enable MNOs to accelerate roll-out
• 2.4 Network sharing enables MNOs to deploy LTE, and they could gain additional benefits by pooling spectrum
• 2.5 Network sharing gives MNOs greater influence over network infrastructure vendors
• 2.6 Network sharing provides competitive advantage and avoids competitive disadvantage
• 2.7 Network sharing will become common in developed markets

3. There are nine critical success factors for network sharing

• 3.1 MNOs must heed the lessons from early adopters
• 3.2 Speed is of the essence, but agreements must not be rushed
• 3.3 MNOs need to select appropriate partners, with the optimal strategic match
• 3.4 Partners in a sharing agreement should have clear, common goals
• 3.5 MNOs should have a robust agreement that adequately covers commercial, technical and legal issues
• 3.6 MNOs should adopt a carefully planned, phased approach that minimises risk and maximises short-term benefits
• 3.7 Network-sharing partners need a flexible agreement that allows for service and technological differentiation
• 3.8 MNOs must work with regulators to avoid anti-competitive behaviour
• 3.9 MNOs need an effective strategy towards legacy 2G network infrastructure
• 3.10 Effective vendor support is essential

4. Network sharing has profound implications for MNOs, vendors, regulators and others

• 4.1 The benefits of network sharing are applicable in all markets
• 4.2 Network sharing brings new opportunities for MNOs and increases their focus on service differentiation
• 4.3 Network sharing will radically change the network infrastructure business
• 4.4 Regulators need to prepare for new competition issues and a changing industry structure
• 4.5 There will be new opportunities for third parties to design, build and operate shared networks

Actions

• Figure 0.1: Incremental capex and opex over ten years for a 3G-only MNO and a 2G/3G MNO, with and without 3G RAN sharing
• Figure 1.1: Monthly mobile service ARPU in Western Europe, 1998- 2007
• Figure 1.2: MNOs' investment requirements
• Figure 1.3: Mobile-originated voice traffic as a proportion of total voice traffic in Western Europe, 1Q 2005- 4Q 2008
• Table 1.1: Major enhancements to the UMTS radio interface, defined by 3GPP
• Figure 2.1: Network and business elements that MNOs could share
• Table 2.1: Comparison of the three broad categories of network sharing
• Figure 2.2: Network expansion options for a 3G-only MNO and a 2G/3G MNO
• Figure 2.3: Incremental capex and opex over ten years for a 3G-only MNO and a 2G/3G MNO, with and without 3G RAN sharing
• Figure 2.4: Network expansion options for two 2G/3G MNOs
• Figure 2.5: Incremental capex and opex over ten years for two 2G/3G MNOs, with and without 3G RAN sharing
• Figure 2.6: Comparison of strategic investment options enabled by independent 3G RAN ownership and 3G RAN sharing
• Figure 2.7: Hutchison 3G' s number of 3G base stations in the UK, December 2003- December 2009 (assuming network sharing from 2008)
• Figure 2.8: Estimated downlink data rates achieved by LTE in different radio conditions
• Figure 2.9: Estimated network capacities achieved by LTE in different operating bandwidths with a typical 10 000 base station network deployment
• Figure 3.1: Total incremental cost of different RAN-sharing scenarios for a typical
• 10 000 base station network deployment
• Figure 4.1: Total base station equipment sales over ten years to two typical MNOs for different RAN-sharing scenarios