& cplSiteName &

Time for a Mobile NetCo?

LR Mobile Column
LR Mobile Column
LR Mobile Column
5/24/2007
50%
50%

With voice revenue growth stalled, and with extra costs inherent in providing emerging data services, the mobile industry is facing unprecedented pressure on profitability.

In response, operators are engaged in cost-reduction initiatives targeting every part of their technical operations, with radio access network (RAN) sharing emerging as the single most significant opportunity to restructure wireless industry economics, according to the latest Unstrung Insider report, RAN Sharing: Cutting the Cost of Mobile Broadband.

RAN sharing is about taking the most expensive pieces of an operator's network – the cell sites and towers, base station equipment, and the transmission network – and sharing this infrastructure with competitors. The idea is that, by reducing duplication of network assets, operators can deliver better services for less money.

Underlying this renewed wave of interest in network sharing is the realization that most mobile networks offer about the same quality of service as one another. The argument was made by Vodafone UK CEO Nick Read, speaking at a recent investor event about his firm's agreement with Orange UK to consolidate and share RANs. "Five, six years from now, it is our belief that coverage will not be a differentiator," noted Read.

He has a point, even if carrier personnel aren't supposed to talk like that. It makes the news these days when people can't get a signal. You can even make calls from the top of Mount Everest. (See Mobile Bench Mark and Success for Everest mobile effort).

For mobile carriers that have for years sold subscribers on the "unique" coverage and reliability attributes of their networks, this is a hard concept to come to terms with. But potential savings of up to 30 percent available on combined capex/opex make it hard to ignore the allure of RAN sharing, forcing carriers around the world to assess how it could work for them.

Other multinational carriers either involved in, or potentially evaluating, RAN sharing include Telefónica Móviles SA , Telecom Italia Mobile SpA (Milan: TIM), T-Mobile International AG , and Telefónica Europe plc (O2) . And it's not just Western European 3G operators in on the act: "Extensive network sharing will become the norm," said Sunil Mittal, chairman and managing director of India's largest carrier, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), following a huge network sharing agreement with Vodafone Essar announced earlier this year.

From most perspectives, this is a logical way for the industry to evolve. After all, it doesn't pay to build two competing railways or highways along the same route, and "build it and they will come" has long been discredited as a sensible philosophy for investing in wireline network capacity. So why build and maintain two RANs to cover exactly the same area?

Instead, says Read, who used to run Vodafone's portal business, the focus should be on seeking competitive advantage in services: "We believe it is in the core network that we will drive long-term sustainable differentiation, and so we need to make sure that as [coverage] becomes less important, we have corrected our cost base and got the lowest unit cost possible to be successful."

Where RAN equipment and sites are shared, the next logical step is to consolidate these assets under a single management structure, perhaps set up as an independent network operating company, or "NetCo," that would provide access to higher-layer services companies, or "ServCos." Such a model would make at least theoretical sense. After all, selecting which ringtone to advertise on a mobile portal is a million miles from installing and maintaining coaxial feeder cable to a cell-site antenna.

Vendors, of course, have mixed feelings about the consolidation of customer networks. One example of positive thinking comes from Simon Beresford-Wylie, CEO of Nokia Networks , who has explicitly identified the likelihood of increasing separation between service provision and "bit pipe" provision, suggesting that operators would increasingly adopt the NetCo/ServCo business model.

"If you're an operator in Europe at the moment, starting to think about Long Term Evolution, and you think, 'Boy, there are four or five physical wideband CDMA operators in a given country,' how on Earth can [you] build a business case that justifies [being] one of five [LTE operators]?" Beresford-Wylie asked at Nokia's last capital markets day. "The question is whether there are going to be two or three [operators], and then behind that are some very strategic questions for the operator: 'What is my business? Is it brand? Is it channel? Is it service provision? Is it providing the plumbing?' Very big questions are coming."

– Gabriel Brown, Chief Analyst, Unstrung Insider


The report, RAN Sharing: Cutting the Cost of Mobile Broadband, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
More Blogs from LR Mobile Column
Mobile operators are coming to terms with their supporting role in the mobile apps world
Radio access networks are set for radical change
After a sluggish start, mobile banking will grow exponentially in the US market through 2015
LTE mobile device sales are expected to reach anywhere from 500,000 to 1M units in 2011
China's ranks of 3G subscribers will more than double this year, reaching 40M units
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, July 27, 1:00PM EDT
The Changing Face of the Data Center World
Rodney M. Elder, Senior Solutions Architect, Equinix
UPCOMING COURSE SCHEDULE
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
in association with:
From The Founder
In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments


Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments


CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
LRTV Interviews
AT&T Launches Network Functions on Demand

7|17|16   |   05:26   |   (0) comments


Roman Pacewicz, Senior Vice President, Offer Management & Service Integration, AT&T Business Solutions, discusses the operator's launch of its Network Functions on Demand service.
LRTV Interviews
Enterprise Pitch for Ciscosson

7|14|16   |   04:43   |   (0) comments


After seven months of near silence, Cisco and Ericsson executives publicly discussed details on their extensive partnership. Among the tidbits shared by Martin Zander, VP, group strategy programs, Ericsson, and Doug Webster, VP service provider marketing, Cisco: The partnership was initially launched to serve the service provider market, but is already gaining ...
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
September 27, 2016, Philadelphia, PA
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Kevin Lo's Move to Facebook: Sign of Things to Come?
Patrick Donegan, Chief Analyst, Heavy Reading, 7/20/2016
Verizon's Next With VNFs
Carol Wilson, Editor-at-large, 7/21/2016
Facebook Gets Its Drone On
Ray Le Maistre, Editor-in-chief, 7/22/2016
Ericsson Ejects CEO Vestberg
Ray Le Maistre, Editor-in-chief, 7/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.