Sharing networks

Sharing networks

Sharing resources with your competitor is bound to be a minefield of disagreements, but somehow T-Mobile and 3 have managed to get their network-sharing initiative underway. The two operators have entered into a legally-binding agreement and the rollout of the project has started.

The two operators claim that the combined saving that they will make from the deep network-share project amounts to £2bn over 10 years.

Meanwhile, the competing duo, Vodafone and Orange, are struggling to get their equivalent initiative going. The two operators originally announced the plans to share infrastructure in February 2007, but they still seem to be in disagreement over what exactly it is that they should be sharing.

A spokesman for Orange says: ‘The details [of the network-share agreement] are still being discussed and drawn up. We are looking at the coverage map and deciding which sites we should share.’

However, he confirmed that the first stage of the implementation will begin this year and will see Orange and Vodafone share existing 2G and 3G mast sites, with one site housing the equipment of both operators, where previously two would have been used.

The original plan was to not only share mast sites, but a deeper integration of network technology. A year after the plan was announced, Vodafone and Orange took a step back and watered down the initial agreement to only include mast sharing.

Sylvain Fabre, an analyst at Gartner, says: ‘This is indicative of the fact that network sharing is not easy to do.

‘There’s often a lack of clarity in who is doing what, which sites will be shared and so on. Sharing resources means that you’ll probably have to fire people – will that be your people or mine?’

Furthermore, coverage is not only a physical aspect of building networks, but also has commercial value for marketing. There are fewer ways that operators can differentiate their offering and coverage, and network quality is one of those.
‘Sharing a network means that you are sharing a competitive advantage, you are helping the competition,’ Fabre says.
And the more of the infrastructure that the networks are willing to share, the more they will gain in efficiency.

The done deal
Despite the commercial sensitivities, T-mobile and 3 have managed to come to an agreement on how to share and what to share, in a deal that runs until 2031. The heads of the two companies, Kevin Russell, 3’s CEO, and Jim Hyde, CEO at T-Mobile, were instrumental in brokering the deal.

T-Mobile’s technical director, Emin Gurdenli, is keen to emphasise that, while the joint network is a massive money saver for both parties involved, the consumers are the ones that benefit the most from it.

Gurdenli says: ‘We can deliver a bigger and better 3G network than before. At the end of the two-year project we will have minimum coverage of 99.7%.’

Bringing 3G to remote areas is extremely expensive, but is becoming increasingly important, as services that require more bandwidth, such as mobile broadband, have surged in popularity.

According to analysts, the cost of covering the initial 80% of the population is roughly the same as covering the final 20%, because bringing the signal to more remote areas requires a large number of masts. This is why operators are so keen to split the cost.

Similarly, the phenomenal volume at which USB data dongles are selling has made the issue of broadband speeds more prominent, and T-Mobile and 3 have taken this into consideration in their network-share initiative. The agreement between the two operators includes a joint requirement for network upgrades for bandwidth and broadband speeds.

The project that T-Mobile and 3 have embarked upon involves not only sharing cell sites as Vodafone and Orange are planning to do, but a deeper consolidation of the two companies’ entire infrastructure.

‘We are sharing antennas, electronics, power, transmission, everything that happens before the signal gets to the core network,’ Gurdenli explains.
‘Proposition is not in a space where either of us has competitive advantage, it’s about coverage. This is consolidation in infrastructure. We don’t share core networks or platforms,’ he adds.

The joint network rollout is already underway, negotiation with 3 is finalised, the business model has been drafted and the technical tests are completed.
The idea of the project initially started at the beginning of 2007. T-Mobile and 3 reached Memorandum of Understanding (MoU) in August last year and turned it into a legally-binding contract. All costs were carefully calculated and the process was thoroughly pre-planned, then all of it was incorporated into the business plan.
In early February, the first integrated cell site was commissioned, marking the beginning of the trial conducted in the Leeds and Bradford area covering 30 cell sites.

Since then, T-Mobile and 3 have established a 50:50 joint venture, called Mobile Broadband Networks Limited, to manage the consolidation of the networks. The newly established entity has a headcount of 25 staff, some of whom have come from T-Mobile and 3. Gurdenli sits on the board of the company.

The aim of the network-share project is to reduce the 18,000 towers that T-Mobile and 3 currently have live to 13,000 over the next two years. ‘We have two networks that have been built independently of each other and there is a lot of overlapping coverage,’ says Gurdenli.

The outsider
O2 is the one UK operator that hasn’t jumped on the network-share bandwagon. There has been a lot of speculation as to whether this was out of choice or because O2 couldn’t come to an agreement with the other operators and, as a result, was left without a partner.

O2 maintains that it is not involved in network sharing because the costs of it outweigh the benefits.

A spokesman for O2 says: ‘We looked carefully at the possibility of network sharing in the UK. But at the current time, we see three very clear obstacles. These are cost, complexity and compromise.

‘Specifically, we’ve found that the cost savings aren’t what we’d initially thought they might be. And we found that the potential savings are outweighed by the complexity you create, and by the risk of compromising a customer experience that you no longer fully control. The customer experience on our network is paramount, and one of the key customer satisfaction drivers so we don’t want to lose the ability to differentiate.’

Cost cutting
Cutting costs by sharing infrastructure is not the only way to save money, as infrastructure vendors are coming up with new ways of increasing efficiency.
Fabre says: ‘Things like long-term evolution technologies [4G], antennas that send signals to where people are rather than constantly beaming the signal out everywhere – there are a lot of efficiency gains without having to share networks.’
However, over the next few years network sharing seems to offer operators the biggest opportunity for cost cutting. Vodafone and Orange are both keen to finalise their network-sharing agreement, and get the project underway. How watered down the final deal ends up being remains to be seen.

The environment
The companies involved in the network-sharing agreements are keen to emphasise the positive impact that the initiatives have on the environment.
The Vodafone-Orange roadmap aims to reduce the number of masts by 3,000, while the T-Mobile-3 agreement hopes to decommission 5,000 masts in the next two years.

Gurdenli says: ‘There are considerable environmental benefits. It’s not often that something is good for the customer, is cost saving,

Written by Mobile Today
Mobile Today


Please wait...

Please write code to prove you're human