Case for network sharing gets stronger

In the face of declining voice revenues in mature markets, made worse by the global economic crisis, the argument for European mobile network operators to share their networks has never been stronger. But analysts argue that changes need to be made to the regulatory framework in order for the model to become a success.

While nationwide roaming requirements often play a part, the real reason mobile operators share their networks is to reduce both capex and opex. Some operators are paying to run cell sites that are little used, or used less at evenings and weekends, so a sharing model makes sense in order to drive down costs.

But analysts at Ovum argue that while roaming deals are generally allowed in Europe, the situation for Radio Access Network (RAN) sharing is generally less clear.

“Would regulators tolerate it? Do competition laws allow it? Is it a violation of licence conditions?” asks Emeka Obiodu, senior analyst at Ovum. “Previously, EU regulators could mandate mobile network sharing under the market for call access and regulation (Market 15). However, since ex-ante regulation was removed from Market 15 in November 2007, there is almost no clear-cut EU-wide mechanism on how network sharing ought to be pursued.”

Obiodu points out that most of the network sharing deals in Europe have been treated on a case-by-case basis, and operators are largely left to push through with the process on their own.

High profile European network sharing deals at various levels of network access have been struck by T-Mobile and 3 in the UK, Tele2 and TeliaSonera in Sweden, and Vodafone and TIM in Italy, with Obiodu arguing that the results show that the model works.

“What is needed is a coherent EU-wide directive on network sharing by regulators. It should be clear to MNOs that the same conditions will prevail across the region whenever and wherever they want to share their networks. Most licences were issued with coverage stipulations, and now that the mobile network is already ubiquitous those coverage demands for every MNO ought to be relaxed, especially in the 2G domain,” the analyst said.

Ovum believes that in the face of the global credit crunch, network sharing should form part of every mobile carrier’s cost saving measures. And with the constant pressure to be environmentally friendly, network sharing covers both bases.

Last week, there were reports that Orange and Vodafone UK are considering expanding their UK RAN network sharing agreement to include the costs of costs of engineering, maintenance, and technology, which could help each operator cut costs by up to £1m.