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Cultural and integration problems hamper network sharing deals

Vodafone's Peter Kelly will take on the role of managing director at Virgin Media Business

Operators embarking on network sharing deals are being challenged by cultural and integration problems, according to an industry analyst.

A number of operators have announced network sharing deals in recent weeks, such as Vodafone and O2 in the UK, and Telia and Telenor in Denmark. Meanwhile, Vodafone and Three are understood to be in advanced negotiations over a network sharing deal in Ireland.

However, Dimitris Mavrakis, principal analyst at Informa Telecoms & Media, believes that a major challenge many operators should anticipate when embarking upon network sharing deals is the extent to which cultural and integration problems can slow down their progress and success.

Mavrakis said that one such deal that he is aware of saw two operators spending several months holding meetings on a frequent basis in order to tackle cultural issues. And with some key figures in the industry, such as Orange Spain’s CTO Eduard Duato, calling for multiple vendors to share networks for cost-effective LTE rollout, cultural and integration problems will be vast.

“If two operators cannot agree, what happens when there are three or four? The cultural problems and integration problems increase dramatically with the number of operators involved,” he said.

He explained that there are multiple types of integration issues affecting operators in this scenario.

“One vendor’s equipment may be compatible with the core network but with another one, it may require considerable effort to integrate. But there is a danger that after the equipment has been integrated the core network, it may still need considerable reconfiguration to work efficiently. This is just the tip of the iceberg; it could be that the billing system is not interoperable, or that the personnel are not trained to handle certain problems – there could be a million different problems.”

Mavrakis noted the words of Graham Payne, managing director for the MBNL project, as evidence of the tribulations involved in setting up a shared network. Payne said that, unless the companies embarking on a sharing project were fully committed from board level on down, the results could be disastrous.

“[Payne] said that the integration of the three networks was the biggest achievement of his career, and he’s a seasoned veteran – he’s not a newbie. So that speaks volumes about how difficult it can be,” said Mavrakis.

He added that even by taking the path that Vodafone and O2 have in the UK, and splitting the market by geographic area, is not a sure-fire way to prevent such integration and cultural problems.

“There’s no silver bullet; it really depends on each operator. In the case of Vodafone and O2 it may be a better solution, but if we’re talking about a shared network for LTE, from a cost perspective, the more operators involved, the better. The problem is working with the culture and the competitive nature of each operator.”

However, Mavrakis did admit that because cost savings are the biggest driver for network sharing, the benefits that operators will see from such deals should be sufficient incentive to overcome any integration and cultural problems.


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