On Wireless

Edition 12
Extract Article
For operators and manufacturers in wireless telecoms

networksharing
is your marriage made in heaven?

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networksharing
by Mark Neild,
Alex Wright and
Ed Savage

is your marriage
made in heaven?
Most network operators would jump at the chance of saving as
much as 40% of the costs of 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 if this was a quick and easy
win, most people would by now already have decided to do it.
So how do we do it?


 This paper explores some of 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 of the business cases that we have seen for network sharing suggest
that the long term benefits amount to around 25–35% of total network costs.
Of course the achievable savings depend very much on which elements of the
network are shared and this is dealt with later. The following simple example
gives a flavour of what is possible.

Operator A

g
Building a new greenfield Operating and maintaining
Node B site shared Node B Site
• Civil engineering • Field force − 25% saving
− 50% saving • Operations − unchanged
• I&C − 50% saving
• Equipment − 40%
+ • Logistics − unchanged
(unless vendor the same)
x 14,000 sites
• Lease/estates − 30%
• Power − unchanged

Operator B
Identifying a partner A site share will deliver Using the same vendor The joint network can
that has not yet less equipment, lease or managed service be planned to deliver
achieved ubiquitous and logistics savings provider can offer an overall performance
coverage could deliver than equipment sharing additional synergy improvement or to
a return on acquire but at the compromise savings as can minimise future opex...
and build costs... of flexibility... combining operations...

What immediately springs out from these figures is the fact that the higher
the share of new build in the overall costs, the greater the ultimate benefits.
Intuitively this makes sense as it avoids all the messiness of consolidating
legacy infrastructure. However it does raise an important point. The degree
of alignment in the plans of the sharing operators for their network deployment
will have a very significant impact on the ultimate benefits. Choosing your
partner with care and forming the right pre-nuptial agreement is vital to
ultimate success. We will return to these points later on. In reality however,
few operators have the luxury of ignoring the legacy infrastructure so it is
important to strike the right balance between the costs and complexity of
consolidating legacy networks with the higher benefits of full sharing.
Typically we find that sharing around 2/3 of the infrastructure is about the
best that can be sensibly achieved without agreeing a roaming arrangement,
which is not possible everywhere.


 How long should the engagement be?
Several sharing deals that we are aware of have fallen foul of a failure to agree
the governing principles up front. Although this might be a simple error in the
process, we are aware of companies using RAN share discussions for more
sinister purposes, which is why we suggest testing the resolve of each party at the
outset. A simple understanding of what each party wants from the deal and what
each party will contribute is a good start, but in many ways it is more important
to think beyond the honeymoon to life in partnership in the future. Partnerships
require some sacrifices to unlock the benefits and because a network sharing
deal makes for a messy divorce, exploring together the full range of ways of
working is a necessary precursor to shaping the commercial construct.

Based upon our tried and tested Partnering Wheel, we have devised a number
of tests to determine whether or not there is a good strategic fit. These go well
beyond the obvious questions of how many sites? Where are they? and what is
the technology? as shown on page 5.

Following on from an agreement on scope, the chief question is the extent to

which each party shares a common purpose.


 If one is a fervent believer of 3G while the other would prefer to sweat its 2G
assets, the sacrifice 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, fully loaded gadget makes an unhappy bedfellow to the wife
who is careful and considered with her cash preferring the tried and tested to
the new and whizzy.

Who else is in the marriage? Are there parents or other partners who might
interfere with the effective governance of the arrangement or maybe there are legal
impediments such as regulatory authorities? Finally is it a marriage of equals?

At this stage we also need to consider the structure of the service delivery
vehicle. Typically we have found that a Joint Venture with equal shares works
best, so long as it is not dominated by the staff of one side or there is a
pervading sense that only one way of working will be entertained. This is
a bad sign for the future.

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 How many should we invite to the wedding?
Although it may seem blindingly obvious, the question of scope becomes more complex the more you
scratch the surface. It is generally accepted that the RAN is ok to share. Keeping the Core is essential
for preserving future competition and flexibility on VAS. But in deciding how to share the RAN, the first
decision is whether to share the network equipment or just go for a co-location model. Both offer benefits,
but depending upon the time horizons one usually looks more attractive than the other. Sharing sites is
less complex, but potentially delivers less benefits – 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 flip side, sharing equipment has a lot of complexity
attached to it. A flavour of the range of considerations for 2G sharing is illustrated on page 7.

Similar considerations apply to 3G, but the case
is much simpler as for most operators it will have
a longer life, but for many we have spoken to,
the future for 2G is still relatively unclear.
Another constraint is the regulatory environment.
It is arguable that in developed markets very
few operators compete on the basis of coverage
and that because networks largely comprise
components and skills available to all, there is
no real competitive advantage in the network.
Nevertheless regulators and some parts of some
operators still believe that the network is a source
of competitive advantage and that sharing some or
all of 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. After all they may
have a point.
One other area to consider carefully is the scope
of the transmission – whether this is backhaul from
the cell sites or the core network. With the onset
of convergence, in many companies this is not
always very separable. Transmission architecture
can also add significant complexity when it comes
to site rationalisation, particularly if 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 for
that reason.


1 BTS related areas to be considered:
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.
1
BTS
BTS
2 Transmission related areas to be considered:
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 additional
physical links to be installed, possibly
requiring significant installation costs.
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).
BTS
2
Transmission
network TDM
BSC
Operator 1
core network
3 BSC 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/W
or H/W upgrade.
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
Components within scope
of 2G RAN share
Operator 2
core 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.

 If you are thinking that the potential
rewards from network sharing make
it worth pursuing, tackle the issues
head on; there is no easy exit so it
is best to get it right from the outset.


In church or at the registry office?
The process of agreeing the deal is almost important as what
is in the deal itself. It is a big step and there is an awful lot riding
on it. Although in the section covering the engagement we
covered some of the considerations for picking the partner,
it is in this section that we discuss how you actually do that.
As we discussed previously, one of 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?

Mobile Non-sensitive data Mobile

operator operator

Competition
sensitive data

aggregate

Optimised output

Our experience is that the only way is to use a neutral intermediary that
can quickly resolve some of the more contentious issues such as network
valuation. Either party can be open and honest if they know that even if the
deal falls 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 for
the benefit of both parties.

Finally, if you are thinking that the potential rewards from network sharing
make it worth pursuing, tackle the issues head on and don’t expect it to be
easy; there is no easy exit so it is best to get it right from the outset.


For further information:

Wireless broadband services

www.paconsulting.com/wirelessbroadband

Wireless technology consulting and product development

www.paconsulting.com/wireless
e-mail wireless@paconsulting.com

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