Light Reading

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
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
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
LRTV Interviews
TWC Business Looks Beyond $3B

12|10|14   |     |   (0) comments


TWC Business Services chief Phil Meeks explains how his unit has reached $3 billion in annual revenues and what its plans are for next year.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
T-Mobile Lights Up 27 Wideband LTE Cities
Sarah Reedy, Senior Editor, 12/15/2014
Like Us on Facebook
Twitter Feed
Webinar Archive