Page 21 - Sphere No.28 (Mar 2011)

19
Sphere
Last October, Telstra and VHA
agreed to conclude their network
sharing deal next year. Following
that resolution, the network assets
and the spectrum from the shared
2100MHz network will be incor-
porated into other networks that
Telstra and VHA operate.
Booz Allen Hamilton said: “Both
fixed-line and mobile operators
should consider infrastructure-shar-
ing as a medium to save costs and
focus more attention on customer-
facing activities, in which innovation
and differentiation are the main
competitive advantages.”
Amid discussions on how difficult it will be to get funding
for constructing multiple 4G networks worldwide, market
research firm Ovum has urged the telecommunications in-
dustry to start contemplating a future where network sharing
is the norm.
ABI Research indicated that there were more than 500
3G network commitments, and over 300 4G announcements
(both LTE and WiMAX) worldwide as of November last year.
That equates to more than two billion of the world’s popula-
tion being covered by high-speed data networks.
In a report, management consulting firm Oliver Wyman
provided five operating models typically considered by carri-
ers looking to forge network-sharing deals. These are:
1) A joint venture (for assets) between operators, in
which carriers consolidate their existing networks in a joint
asset company, whose day-to-day operations and staff are
retained by the two operators.
2) A joint venture plus common service company, in
which the carriers jointly build or combine their existing
networks in a joint company like the first model. Day-to-
day operations and staff, however, are transferred to a single
service company, also a joint venture.
3) Vendor-led network sharing and operations and
maintenance outsourcing, in which operations and staff of
a joint-asset company are the responsibility of an outside
contractor or managed-services vendor.
4) Managed capacity, in which network ownership is
transferred to a vendor. Operators pay the vendor on a usage
or capacity provision basis. Operations and staff are out-
sourced.
5) One operator becomes a mobile virtual network op-
erator, in which one of the carriers in a joint-asset company
relinquishes its operations and becomes an MVNO. This is
an operator that does not have its own licensed frequency
allocation or radio spectrum. Instead, it buys capacity and
services wholesale from an existing
carrier and resells them under its
own brand.
According to Oliver Wyman, no
network-sharing operating model
is perfect as each model comes with
trade-offs. “Differences in these
trade-offs originate from choices
about who in the new partnership
will own which assets, handle opera-
tions and maintenance services, and
be responsible for employment of the
staff teams,” it said in a report.
A creative deal was forged on 15
December last year between Chi-
nese telecommunications equipment manufacturer ZTE,
Hutchison Whampoa and CDB Leasing Co, a unit of China
Development Bank for the network assets of mobile operator
3 Austria.
Under this arrangement, CDB Leasing and ZTE would
take the 3G network and modernise it, while 3 Austria will
lease back the infrastructure and operate it. “This step helps
us to reduce costs long-term and at the same time improves
our capacity,” Jan Trionow, CEO of 3 Austria said. “We are
convinced that this model will give us an advantage over our
competitors and massively benefit our customers.”
With this deal, 3 Austria will be able to pass back the
reduced costs in terms of lower tariffs to its customers and
3 Austria users will also have state-of-the-art technologies at
their disposal.
According to Ovum senior analyst Emeka Obiodu, net-
work sharing is the inevitable way forward: “If taken to its
logical conclusion, this new scenario can lead to the prospect
of a single mobile network which is then shared by multiple
service providers in the market – effectively the same format
used for utility services in other infrastructure-heavy sectors
such as fixed-line telephones, railways, electricity and gas
networks.”
“3 Austria has entered
a deal whereby
other companies will
modernise their 3 G
network then they
will lease back the
infrastructure and
operate it.”