Tuesday 15 December 2009

Is Network Sharing and Joint Ventures the Best Model for LTE Deployment?

With the joint venture announced between Telenor and Tele2 in Sweden, is it just too expensive for operators to be building their own LTE networks?

Operators such as
Orange and T-Mobile in the UK are already looking to merge their 3G networks, at great cost. £600m-£800m is the estimated cost that will be taken up by decommissioning redundant duplicate radio network infrastructure, as well as reducing the number of retail outlets and combining the customer service centres and general administration functions. T-Mobile will contribute the 50% share of their joint radio network with Hutchinson 3G to the pot, (who incidentally already use Orange’s 2G network for fill-in coverage). Assuming T-Mobile and 3 put both their radio networks into the joint venture, you’ll end up with the interesting situation of 3 using a joint 3G network shared with Orange and T-Mobile, and a GSM network operated by Orange and T-Mobile.

So what does a joint venture between two operators look like? The Telenor and Tele2 merger seems a lot more simple. They have created Net4Mobility, a company that is a product of the joint venture that will build and manage the joint network for the two operators, have a competely new infrastructure (radio, backhaul, core, OSS etc). The joint venture will be 50/50 between the two operators. Net4Mobilty will be using its own 2.6GHz spectrum and will also use both Telenor's and Tele2's 900MHz spectrum.

Sharing spectrum and network infrastructure massively reduces the CAPEX and OPEX when compared to the investment that would need to made if the two operators deployed LTE seperately. But is this also a move to compete on customer experience and product differentiation? The Swedish market is one of the most competitive for mobile broadband and perhaps the operators have decided that they simply cannot continue to compete on who has the cheapest flat rate plan for data.

2 comments:

  1. That would be the good article certainly made this segment amazing.I liked your post. Keep posting interesting matters here. Keep it up!

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  2. What would be the benefit for a major service provider which owns 35% of the spectrum and 83 percent of national network coverage? active sharing seems to be of no consequence as far as network deployment cost, and spectrum licenses.
    it seems to benefit only small operators with very limited capex.
    the regulators seem to be more concerned with the popping of redundant sites and wants to improve the overall skyline image.

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