Orange: Operators Must Share LTE Networks

BARCELONA -- LTE World Summit -- The only way to make the business case work for Long Term Evolution (LTE) is for operators to share radio access networks (RANs), according to Eduardo Duato, CTO of Orange Spain .

Duato kicked off the LTE World Summit here in Barcelona with a sobering reality check on the mobile broadband market in Spain, as well as Europe in general, where revenue growth has stalled.

"In Spain, it's very bad," said Duato. "The growth is not that good. No matter what the technology, mobile broadband revenues per gigabyte are falling faster than costs. We're unable here in Spain to come up with a solid business case -- we only see erosion for years to come."

He noted that Orange needed to roll out LTE to benefit from the technology's better network and spectral efficiency and to keep up with the capacity requirements for mobile data. But to monetize LTE, he said, "it's unfortunate that you have to make massive investments."

To reduce the cost of rolling out an LTE network, Duato made a passionate case for active RAN sharing for LTE -- that is, where operators share not just the cell sites, but also the radio as well as backhaul parts of the network.

Orange estimates that in an active RAN-sharing arrangement between two operators, the operators can save more than 25 percent of the LTE cost per gigabyte compared to the rollout costs in a non-sharing scenario.

"To do a rollout of LTE is massive enough, to make it the success it needs to be, [we must] change the way we roll out networks," he said.

And he urged the Spanish government policymakers as well as the European Commission to pave the way for operators to engage in active RAN sharing. He also called on equipment vendors to adapt their products for network sharing as well. "We need the support of equipment suppliers … need new features to support the rollout."

Why start sharing now?
But operators have been talking about network sharing for years. In fact, in Spain Orange and Vodafone España S.A. have a site-sharing agreement in place for 3G. So, why will the more complex active RAN sharing work for LTE now?The answer, from Orange's perspective, is that the market conditions are bad enough in Europe now to force operators to consider such cost-reduction measures. Also, it's easier to implement network sharing with a new technology rollout, rather than to impose a sharing arrangement on existing networks.

"[Active RAN sharing] is extremely difficult to do," said Duato. "All attempts in the past have collapsed ... probably because the market conditions weren't right. And it's easier for a greenfield [deployment]."

Orange's network-sharing strategy goes beyond Spain, however. The operator is looking to establish LTE network-sharing arrangements in the markets where it's not the incumbent operator. The idea is to create companies responsible for the shared network assets and deployments, and for the operators to remain independent and compete with each other on services.

"There's a huge instruction to create RAN-sharing across the EU," said Duato. "There's pressure to improve EDITDA and cash flow."

— Michelle Donegan, European Editor, Light Reading Mobile