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Edition 12

For operators and manuacturers in wireless telecoms

On WirelessEdition 12

Extract Article

networksharingis your marriage made in heaven?


2/10

networksharing

is your marriagemade in heaven?Most network operators would jump at the chance o saving as

much as 40% o the costs o running their network. Too good to

be true? Well some people that we have spoken to certainly think

so and it goes without saying that i this was a quick and easywin, most people would by now already have decided to do it.

So how do we do it?

by Mark Neild,Alex Wright andEd Savage


3/10

This paper explores some o the challenges involved in making the decision to

share a network with another operator. In particular, it examines such issues as:

Deciding who to share with

Agreeing the most appropriate scope

Structuring the negotiations to achieve a quick agreement.

What are the real benefits?

Most o the business cases that we have seen or network sharing suggest

that the long term benets amount to around 2535% o total network costs.

O course the achievable savings depend very much on which elements o the

network are shared and this is dealt with later. The ollowing simple example

gives a favour o what is possible.

Operator A

Operator B

Building a new greenfield

Node B site

Civil engineering 50% saving

I&C 50% saving

Equipment 40%

Operating and maintaining

shared Node B Site

Field force 25% saving

Operations unchanged

Logistics unchanged

(unless vendor the same) Lease/estates 30%

Power unchanged

Identifying a partnerthat has not yet

achieved ubiquitous

coverage could delivera return on acquire

and build costs...

A site share will deliverless equipment, lease

and logistics savings

than equipment sharingbut at the compromise

of flexibility...

Using the same vendoror managed service

provider can offer

additional synergysavings as can

combining operations...

The joint network canbe planned to deliver

an overall performance

improvement or tominimise future opex...

+ x 14,000 sites

What immediately springs out rom these gures is the act that the higher

the share o new build in the overall costs, the greater the ultimate benets.Intuitively this makes sense as it avoids all the messiness o consolidating

legacy inrastructure. However it does raise an important point. The degree

o alignment in the plans o the sharing operators or their network deployment

will have a very signicant impact on the ultimate benets. Choosing your

partner with care and orming the right pre-nuptial agreement is vital to

ultimate success. We will return to these points later on. In reality however,

ew operators have the luxury o ignoring the legacy inrastructure so it is

important to strike the right balance between the costs and complexity o

consolidating legacy networks with the higher benets o ull sharing.

Typically we nd that sharing around 2/3 o the inrastructure is about the

best that can be sensibly achieved without agreeing a roaming arrangement,

which is not possible everywhere.


4/10

Several sharing deals that we are aware o have allen oul o a ailure to agree

the governing principles up ront. Although this might be a simple error in the

process, we are aware o companies using RAN share discussions or more

sinister purposes, which is why we suggest testing the resolve o each party at the

outset. A simple understanding o what each party wants rom the deal and what

each party will contribute is a good start, but in many ways it is more importantto think beyond the honeymoon to lie in partnership in the uture. Partnerships

require some sacrices to unlock the benets and because a network sharing

deal makes or a messy divorce, exploring together the ull range o ways o

working is a necessary precursor to shaping the commercial construct.

Based upon our tried and tested Partnering Wheel, we have devised a number

o tests to determine whether or not there is a good strategic t. These go well

beyond the obvious questions o how many sites? Where are they? and what is

the technology? as shown on page 5.

Following on rom an agreement on scope, the chie question is the extent to

which each party shares a common purpose.

How long should the engagement be?


5/10

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I one is a ervent believer o 3G while the other would preer to sweat its 2G

assets, the sacrice might just be too great. Likewise a shared commercial

perspective is going to be required. The husband who always has to buy the

latest, shiniest, ully loaded gadget makes an unhappy bedellow to the wie

who is careul and considered with her cash preerring the tried and tested to

the new and whizzy.

Who else is in the marriage? Are there parents or other partners who might

interere with the eective governance o the arrangement or maybe there are legal

impediments such as regulatory authorities? Finally is it a marriage o equals?

At this stage we also need to consider the structure o the service delivery

vehicle. Typically we have ound that a Joint Venture with equal shares works

best, so long as it is not dominated by the sta o one side or there is a

pervading sense that only one way o working will be entertained. This is

a bad sign or the uture.


6/10

How many should we invite to the wedding?Although it may seem blindingly obvious, the question o scope becomes more complex the more youscratch the surace. It is generally accepted that the RAN is ok to share. Keeping the Core is essential

or preserving uture competition and fexibility on VAS. But in deciding how to share the RAN, the rst

decision is whether to share the network equipment or just go or a co-location model. Both oer benets,

but depending upon the time horizons one usually looks more attractive than the other. Sharing sites is

less complex, but potentially delivers less benets and in many cases has already been achieved to

some extent anyway. Site sharing needs more space, which can cost more money and causes problems

where space is in short supply. However on the fip side, sharing equipment has a lot o complexity

attached to it. A favour o the range o considerations or 2G sharing is illustrated on page 7.

Similar considerations apply to 3G, but the case

is much simpler as or most operators it will have

a longer lie, but or many we have spoken to,

the uture or 2G is still relatively unclear.

Another constraint is the regulatory environment.

It is arguable that in developed markets very

ew operators compete on the basis o coverage

and that because networks largely comprise

components and skills available to all, there isno real competitive advantage in the network.

Nevertheless regulators and some parts o some

operators still believe that the network is a source

o competitive advantage and that sharing some or

all o it is tantamount to operating a cartel, aiding

and abetting a competitor or giving away the crown

jewels. These issues need to be worked though in

a rigorous but sympathetic way. Tempting though it

may be, taking the approach that well we will just

have to educate them may not wash with those

in a position to block the deal. Ater all they may

have a point.

One other area to consider careully is the scope

o the transmission whether this is backhaul rom

the cell sites or the core network. With the onset

o convergence, in many companies this is notalways very separable. Transmission architecture

can also add signicant complexity when it comes

to site rationalisation, particularly i the site you

might otherwise choose to shut down just happens

to provide the connectivity hub to a dozen others

and is only located in that awkward position or

that reason.


7/10

BTS equipment

1. If BTS hardware is incapable of supporting

RAN share functionality, then new BTS

equipment will be required; raises the

question of the time over which the

investment can be recovered before

switching off 2G.

2. If BTS hardware is capable of supporting

RAN share functionality, then a S/W

upgrade will be required.

3. If the operators do not operate in the same

bands and the BTS hardware is not capable

of supporting both 900 MHz and 1800 MHz

in the same unit, additional equipment will

be required to support an equipment share

scenario.

BTS equipment

1. If the traffic on a shared BTS increases,

additional transmission capacity within the

BTS unit will be required, either via a S/W

upgrade or H/W expansion to provide the

additional E1 ports.

Transmission equipment

1. If the traffic on the BTS increases,

a proportionate increase in the transmission

backhaul link, either leased line or

microwave, is required. Expansion of

microwave often only requires a S/W

upgrade, however, older units may require

H/W expansion/ replacement. Leased line

expansion usually requires additionalphysical links to be installed, possibly

requiring significant installation costs.

BSC

Components within scope

of 2G RAN share

BTS

BTS BTS

BTS

Transmission

network TDM

Operator 1core network

Operator 2core network

BSC equipment

1. If operators choose to share BSC units,

the equipment will need to be upgraded

to support any additional BTSs, additional

subscribers/ busy hour call attempts,

additional traffic kErlang/MB. Initially this will

be achieved via S/W upgrades and then via

H/W and S/W upgrades to a maximum

configuration.

2. If the maximum configuration is exceeded,

then additional BSC units will be required.

This site expansion will require additional

space and may involve additional significant

ADC activities.

4. If the operators do operate in the same

bands (900 MHz or 1800 MHz), insufficient

TRX expansion capacity may be available

to support the traffic of both operators,

requiring additional BTS units.

5. If the vendor equipment is different for each

operator, there may be issues with the

quality of service experienced by the end

user when handing over between BTS sites.

Antenna equipment

1. If operators choose to share antennas,

additional combiners may be required and

the antennas may need to be replaced with

either dual/tri band models to cover the

required radio frequencies; 900 MHz and

1800 MHz and 2100 MHz (if site is also 3G).

2. If operators choose to use separate

antennas, there may be limitations upon the

site infrastructure in terms of the number of

feeders or antennas that can be supported

by the mast.

Associated site modifications

1. If the BTS unit is required to be replaced/

expanded for additional bands/capacity,

then modifications to the site infrastructure

may need to be carried out; eg additional

reinforcement for roof top installations.

2. If no further space is available on the site for

additional equipment, then a new site may

need to be selected/constructed.

BTS related areas to be considered:

2. If microwave link expansion is required,

the associated link budget may no

longer be capable of supporting the

required bandwidth. Therefore link

re-dimensioning or equipment

replacement may be required to

maintain the transmission link.

3. If operators choose to share E1 links,

this functionality may not be present

in older equipment, requiring either a

multiplexer or new transmission

equipment.

4. If there is an overall increase in the

transmission network requirements,

an associated expansion of aggregation

units may be required; via either a S/Wor H/W upgrade.

Transmission related areas to be considered: BSC related areas to be considered:

1

1

2

2 3

3


8/10

I you are thinking that the potential

rewards rom network sharing make

it worth pursuing, tackle the issueshead on; there is no easy exit so it

is best to get it right rom the outset.


9/10

The process o agreeing the deal is almost important as what

is in the deal itsel. It is a big step and there is an awul lot riding

on it. Although in the section covering the engagement we

covered some o the considerations or picking the partner,

it is in this section that we discuss how you actually do that.

As we discussed previously, one o the key constraints is the

degree to which either organisation or the competition authorities

wish each party to bare their soul to scrutiny by the other party,

at best a complete stranger and at worst a long standing rival.

Yet that is exactly what is required to make these things work.So how do we do this?

Optimised output

Mobile

operator

Mobile

operatorNon-sensitive data

Competition

sensitive data

aggregate

Our experience is that the only way is to use a neutral intermediary that

can quickly resolve some o the more contentious issues such as network

valuation. Either party can be open and honest i they know that even i the

deal alls apart, they have not shared their deepest secrets with a long-standing

competitor. Furthermore in some countries the competition authorities simply

will not allow competitors in the market to share strategic plans and certainly

not the deals that they have struck with suppliers. The picture above illustrates

how a neutral third party might handle such competition-sensitive material or

the benet o both parties.

Finally, i you are thinking that the potential rewards rom network sharing

make it worth pursuing, tackle the issues head on and dont expect it to be

easy; there is no easy exit so it is best to get it right rom the outset.

In church or at the registry ofce?


10/10

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