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India's Carriers Edge Toward Network Sharing

Shrinking margins coupled with the financial burden of this year's 3G and BWA (broadband wireless access) spectrum auctions have forced India's operators to explore network sharing opportunities as one way to help cut costs. (See India's Mobile ARPU on the Slide, Indian Operators Battle Brutal Market, and India's 3G Auction Ends, Raises $14.6B)

The Indian operators are giving particular thought to the option of sharing network infrastructure for the rollout of 3G networks in Tier 2 and Tier 3 cities, mainly because 3G is unlikely to be profitable in these markets initially, suggests an industry source who requested anonymity. "The ecosystem is just right for network sharing in the country… the spectrum is limited, everybody is deploying 3G at the same time, and lastly, all the operators are under pressure and are looking at various methods to reduce OPEX [operating expenditure]," says the source.

Currently, India's operators are sharing their active infrastructure, though multi-tenant use of passive infrastructure, such as mobile towers, is common. That experience in the tower market could now lead to broader sharing agreements, though the operators are not allowed by law to share their spectrum.

Some vendors have spotted the potential, and are already positioning themselves to be key partners in the process. "We have suggested this to the operators because technology allows it. It is very much possible and all the operators are looking at reducing their costs," Gowton Achaibar, president of Ericsson AB (Nasdaq: ERIC)'s India and Sri Lanka operations, tells Light Reading Asia.

If network sharing was to become commonplace in India, though, it would be another blow to the vendor community in general. The initial 3G infrastructure market was a bit of a disappointment for the infrastructure suppliers, and collective network rollouts would further reduce the revenue opportunities from the sale of radio access network (RAN) and backhaul products. (See Ericsson's India Crown Under Threat and India's 3G Equipment Market a 'Bloodbath'.)

However, as one vendor explained (on condition of anonymity), "The RAN is just one part of the network -- the managed services and OSS/BSS revenue potential would receive a boost" from network sharing strategies.

Technology and support opportunities and issues are only part of the challenge. "The challenge is in aligning the business strategy, and not from the technology standpoint. [Network sharing] has been done in other parts of the world, and can easily be done here as well," said one industry source.

One model that has already been tried and tested in the UK involves the formation of a separate joint venture by the interested operators, which then team up with a managed services supplier. In the UK, T-Mobile (UK) and Three UK formed a joint venture called MBNL, which outsourced the operation and management of their shared network to Ericsson, even though the network has been built using infrastructure from Nokia Networks . (See MBNL Completes Network Consolidation , NSN Delivers for MBNL, and Ericsson Touts UK 3G Network Sharing.)

Commenting on the kind of savings possible for an operator, Kanika Atri, head of marketing and communications for Nokia Siemens Network India, says: "NSN's network sharing solution offers significant network capex and opex savings for the operators along with a reduced time to market. Depending on the different network sharing methods, savings of up to 40 percent can be achieved… the savings can go up to 55 percent in cases where managed services are also included."

— Gagandeep Kaur, India Editor, Light Reading

Vishnu Goel 12/5/2012 | 4:16:27 PM
re: India's Carriers Edge Toward Network Sharing

Usually whenever there is a war, the businesses which tend to do well are either the Arm Merchants ,or the Coffin Suppliers later.A similar situation is likely to occur on mass scale 3G rollout in India.While the sharing of network infrastructure and other assets is seemingly coopetition activity,every operator has to find a niche for itself for creating unique,differentiated,and sustainable business over this medium timeframe.Physical infrastructure sharing can be aided by T&M Services (Engineering Services) in terms of technology and operating cost model.Reason is T&M technologies-Test & Measurement can be unique platform for virtualisation and network optimisation ,as these have impact on all parts of the network infrastructure.Vishnu Goel T&M +919810101238    

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