Following the awards of 3G licences in Western Europe in 2000 and 2001, some mobile network operators considered network sharing. Several operators announced agreements, including O2 (then BT Wireless) and T-Mobile in Germany and the UK, and KPN and Group 3G UMTS (a joint venture between Telefónica Móviles and Sonera) in Germany. Few of these deals came to fruition, however (and Group 3G UMTS handed back its German licence). Interest in network sharing declined, despite its potential for capital and operational cost savings. Almost all operators opted to build and operate their own dedicated 3G networks, but in most cases roll-outs have been slow. As a result, 3G coverage continues to be inferior to 2G coverage, which has contributed to the relatively disappointing take-up of 3G services.
Network sharing is now firmly back on the agenda, as a means of reducing costs and accelerating 3G network roll-out, and this time it will happen on a major scale. We expect most MNOs in developed markets to implement network sharing of some sort during the next five years. Early signs of the trend can be seen in the recent network sharing agreements announced by major MNOs, such as 3, Orange, T-Mobile and Vodafone in the UK.
Network sharing can take many forms, ranging from the sharing of physical radio sites through to full integration of mobile networks. The most likely approach is that operators will share 3G RANs – as well as the associated sites, masts, power and transmission – but will retain separate core networks so that they can differentiate their services. By sharing 3G RANs, operators will be able to make major savings in capex and opex, which will allow them to:
- accelerate coverage roll-out
- increase their influence over equipment vendors
- achieve competitive advantage through early deployment of the latest network technologies.
Modelling demonstrates that network sharing can result in substantial cost savings. For example, Figure 1 considers the case of a typical 3G-only mobile network operator sharing a 3G network with a typical 2G+3G mobile operator. The model indicates that 3G network sharing would enable the two operators to save a combined USD4 billion over ten years, comprising about USD2 billion in capex (by eliminating the need to build new base stations) and USD2 billion in opex (by reducing the number of sites that they need to operate). The specific cost benefits will vary according to the operators’ characteristics, such as whether they have both 2G and 3G networks, and the extent to which they have deployed 3G. As a result, it is important for operators to examine their sharing options early, so that they can identify the most appropriate partners.
Figure 1: Incremental capex and opex over ten years for a 3G-only MNO and a 2G+3G MNO, with and without 3G network sharing [Source: Analysys Mason, 2008]
Network infrastructure sharing constitutes the greatest upheaval to cellular networks since their inception, and will be a considerable undertaking. Network operators considering network sharing will have to co-operate closely with one or more competitors on what could be a multi-billion dollar project. The risks are high and success will depend on the development of: clearly defined, common goals; robust technical, commercial and legal agreements; high-quality project management; and close relationships with partners and suppliers.
3G-infrastructure sharing: the future for mobile networks is available to purchase at research.analysys.com/store priced £1900 (excluding UK VAT) and includes up to five-user access, Excel data annex and half an hour of Analyst Support.
