Network Sharing, An Avenue for the Future of 5G Deployment

With the advent of 5G, there has been a constant buzz around the cost of the deployment increasing and that operators have been restrained in their enthusiasm to fund this next generation wireless technology. This to some extent is true, as mobile network operators have been struggling to find new revenue generation sources in the past aside from their mobile subscriptions and unable to lift their average revenue per user (ARPU). Without additional revenue, it would be challenging for mobile network operators to find the money to build or upgrade their networks. Regardless of it being a private or publicly listed mobile network operator, they need to seek alternatives to upgrade their networks and ensure their competitiveness in the market.

Network Sharing is one avenue which mobile network operators can tap onto to reduce the cost of rollout by sharing the equipment and assets located at the cell sites. The list of equipment and assets varies with respective to the type of network sharing which the mobile operators signed, either Passive or Active. Passive network sharing is where mobile operators share the physical infrastructure (e.g., mast), common equipment (e.g., power supply), and services (e.g., security). Active network sharing involves the mobile network operators also sharing their Radio Access Network (RAN) equipment (e.g., antennas, radios, cables, etc.). Network sharing is also a standard within 3GPP which has been evolving since Release 6 till the latest version, technical specification TS23.251, under Release 16. 

In the industry, there are increasingly more active RAN sharing agreements to improve coverage, reducing cost, and speeding up deployment by relying on their partner mobile network operator. For example, United Kingdom Vodafone and O2 Telefonica practice active sharing for 5G while operating their own equipment at about 2,700 sites in the larger cities of UK. In Germany, Deutsche Telekom has agreed with Telefonica O2 Germany to close up “grey spots”, where only one operator is currently present in their 4G networks in 2021.

Given the importance of mobile broadband in both developed and developing markets, it is crucial that quality broadband can be delivered to society and businesses. Network sharing agreement is a great way to move forward the industry and help mobile network operators with deployment. It also ties in with the development of mobile wireless broadband as one of the important proveniences for the modern society, much like that of water and electricity. As such, there are four key pointers with respect to network sharing:

1. The first is that mobile operators can and should adopt active network sharing where the market would not be able to deliver or deliver in sub-optimal level in terms of connectivity (e.g., in rural areas). Rural areas are places where mobile network operators and markets often argued that due to the population scarcity, it does not make business sense for deployments to be extensive. Increasingly, mobile network operators are acting out to ensure rural coverage, even in 5G, through some form of network sharing. For example, in Japan, Softbank and KDDI set out a joint venture to promote the deployment of 5G in the rural areas. This is achieved through mutual use of base station assets held by both companies.
2. Mobile operators can adopt active network sharing to reduce the environmental impact of building out an excessive number of cell sites due to competition. Through network sharing agreements, mobile operators not only can reduce the cost of deployments but reduce unnecessary material wastage by deploying more cell sites. Scope Three carbon emissions make up the largest chunk, about two-third of total carbon emissions, for the telecommunication industry. Scope Three emissions are indirect emissions that comes from the operators’ upstream value chain or from manufacturing of the product (e.g., radios or antennas) which operators use in network.
3. In addition, mobile operators now need to also invest in additional infrastructure in the edge and bring computing capabilities closer to the end user. With this change in infrastructure architecture, moving from centralized to the edge, there are additional costs, such as the need of fiber to be deployed from the edge to the regional offices. With network sharing, it would be possible to reduce the cost of deployments.
4. While network sharing has its advantages, there is a danger it can be taken too far. Mobile operators should be careful with anti-competitive behavior through network sharing agreements. An example occurred in Czech Republic where O2 Czech Republic and T-Mobile Czech Republic have been notified by the European Commission that they may be to breach of EU antitrust rules. This also stems from the two mobile operators being the two largest operators with about 67% combined market share and that the network sharing agreements reduce the incentive for either operator to modernize and upgrade their networks. That said, policy makers should examine if there is a need to cut out safeguards for mobile network operators when active network sharing agreements are signed. This is especially so with telecommunications becoming a fundamental requirement for society. As technologies evolve and the market conditions transform, policy needs to pivot and match the market developments in order to bring out innovations. 

Mobile operators, the telecommunication industry, and policy makers should look into how the industry can move forward to ensure quality mobile broadband provision. Network sharing is one way to help mobile operators move ahead and start focusing resources and time onto building ecosystems and applications for 5G. Only with applications and use cases for 5G available will there be truly differentiated larger market demand for the new generation wireless technology.