Are LTE NetCos on the Horizon?
Amidst discussions about Long Term Evolution (LTE) networks, network sharing, and the questionable investment appetite that's left for operators to build out multiple, parallel, almost identical radio access networks all over again, one of the questions that came up was whether or not mobile operators should be considered natural monopolies.
Instead of biting nails and wringing hands over the potential relegation to "dumb bit pipes," should mobile carriers embrace that trend and become really good bit pipes for other service providers?
From an investment point of view, that kind of strategy could make sense, according to Richard Kramer, managing director of Arete Research LLC , who spoke at the conference.
"I don't think there's any shame in operators breaking ranks and saying, 'I'm going to be a terrific-quality bit stream'," he said. "Investors will welcome that sort of capital discipline; they can value that kind of utility. No one is willing to fund three or four LTE operators in the UK."
This is the NetCo/ServeCo concept for mobile operators, which isn't exactly earth-shatteringly new. Heavy Reading senior analyst Gabriel Brown wrote about this back in 2007. (See Time for a Mobile NetCo? and Will More Mobile Operators Dare to Share?)
But network sharing, particularly for next-generation LTE networks, can be seen as the first rumblings of this kind of seismic change in the mobile industry. What if in Germany, for instance, the mobile operators got together in a joint venture to build out one LTE network in the country? Then the operators would compete with each other on a services level.
Net4Mobility -- the Swedish joint venture between Tele2 AB (Nasdaq: TLTO) and Telenor Group (Nasdaq: TELN) Sweden -- already does this for LTE. And several European mobile operators already share parts of their 3G networks. The question is, how far are they prepared to go with these network sharing relationships? (See Swedish Operators Join Forces in LTE Race, 3 & T-Mobile Share 3G in the UK, and Vodafone, Orange Revamp Network Share Deal.)
So, does the transition to LTE mark a good time for mobile operators adopt the NetCo/ServeCo model? Why or why not? Discuss…
— Michelle Donegan, European Editor, Light Reading Mobile