Tom Bennie: The efficiency potential of network sharing

Hence the growing interest in network sharing. Sharing can take place at the site level, or by going deeper to include radio sharing or even further back into the network.

Many factors driving increased usage

Smartphones like the iPhone have driven the usage of mobile data and have helped with the development of plans for higher speeds of data and higher network capacity. The applications on the iPhone and the improved user interface have driven mobile web usage ten times more than in previous devices.

There has also been phenomenal growth in the number of dongles in the UK – a key driver in demand for mobile data. This may cause the focus for operators to shift from coverage to bandwidth. There is a need to seek new models for meeting demand and at the same time generating revenue.

Lord Carter’s recent report, Digital Britain, highlights a number of new developments in the UK including universal service to all homes in the UK with a minimum 2 Mb/s. The most cost-effective way to deliver this would be through a shared rural network, and Arqiva is exploring the potential to provide a ‘neutral host’ network open to all operators on this basis. Dedicated infrastructure makes no sense in less populated areas.

Shared infrastructure a good way forward

There are a variety of options for sharing – it does depend on the requirements of the operators involved. In some instances, we have seen antenna sharing, in others we have seen complete sharing of networks. In the UK, MBNL are sharing all of these things. They have one of the leading RAN share deals in the industry and they are using a MORAN (multi-operator radioaccess network) solution. Arqiva has struck a long-term deal with MBNL to provide around one-third of their consolidated sites network.

Operators can reduce both OPEX and CAPEX through network sharing. Site sharing OPEX and backhaul transmission can be shared, and network implementation CAPEX can be shared. MBNL has shown that this can be achieved with existing networks for OPEX savings – combining the 2G and 3G network of T-Mobile with the 3G network of 3 UK. Infrastructure firms in effect lower the cost of capital for back-end systems while still allowing front-end differentiation.

One thing that is clear in this time of huge uncertainty in the financial markets is that access to, and the cost of, capital is getting harder and more expensive. Therefore separating out the network back-end into a business that can reduce the total investment through sharing synergies and making the project more ‘investible’ to debt providers must make sense all round.

Opportunities for LTE

The same logic as applied to 3G networks could easily be applied to the rollout for LTE. Sharing costs delivers significant benefits. Ten percent of your sites give 50 percent of your revenues, so there is huge scope for economies at 90 percent of sites. Why wouldn’t you share in small towns and rural areas?

We consider that this will be increasingly attractive for new networks for fourth generation mobile solutions, and we wait with anticipation to see how many networks will be built for LTE and WiMAX and how many service providers they will support.

There is certainly more opportunity for sharing in new networks and this may be the case in some developing countries. There will also be a greater drive for shared networks in rural areas where coverage might otherwise be uneconomic.

It’s worth considering the original drivers for network sharing and how these will differ within each territory.

A powerful tool to improve efficiency

Network sharing enables operators to offer the highest data rate, broadest coverage and most cost-effective solution to their customers. One of the challenges they face is the differentiation of customer offerings, but this can be achieved in the applications and services layer and does not need to rely on separate networks. As I said earlier, infrastructure firms lower the cost of capital for back-end systems while still allowing front-end differentiation.

For site providers like Arqiva, the challenge is whether to fight the increasing trend in site sharing, or whether to embrace it. We have decided that network sharing (in its many forms) is inevitable and have decided to help the MNOs achieve their strategic goals. That means we get a greater share of the site share market, and we are better placed to take advantage of the new network roll-outs – whether that’s 3G in fill, 4G or mobile TV.

We are convinced that greater network sharing will be a feature of future service/technology deployment and a business such as Arqiva, perhaps in partnership with others, can add real value to the consumer offering and MNO profitability. However, we’re also clear that a “one size fits all” approach is not appropriate. Network sharing will make more sense for some operators than others and to a greater degree in some parts or locations of the network deployment. Arqiva’s ability to mix and match the solution to meet individual operators’ needs will be important in helping to optimize the benefits.

About the Author: Tom Bennie, Chief Executive Officer, Arqiva

Arqiva operates at the heart of the broadcast and mobile communications industry and is at the forefront of network solutions and services in an increasingly digital world.

The company provides much of the infrastructure behind television, radio and wireless communications in the UK and has a growing presence in Ireland, mainland Europe and the USA.

As chief executive officer, Tom’s role is to focus on maximizing performance in the three business areas of Terrestrial Broadcast, Satellite & Media and Wireless Access. He has managed the business through its sale from NTL in 2005 and subsequent expansion under Macquarie. This has included the acquisition of Inmedia Communications, the satellite broadcast business of BT and, most recently, National Grid Wireless.

Tom returned to his role in what was NTL Broadcast in October 2004, after two years as MD of NTL’s business division where he was responsible for the delivery of voice, data and internet services, and where he oversaw restructuring of the business in rapidly changing markets.