NEW YORK-Carrier network sharing, which made headlines this month in Europe with regard to third-generation wireless, is nothing new and will not hurt the prospects of equipment providers, executives of L.M. Ericsson and Nokia Corp. said June 13 at CIBC World Markets’ “Communications Food Chain” conference.
A day earlier, British Telecommunications plc and Deutsche Telekom announced they would share construction costs for wireless networks in the United Kingdom and Germany. The carrier agreement followed by one week the authorization issued by Reg TP, Germany’s telecommunications regulatory agency, for the six UMTS license holders in that country to share towers, base stations and antenna mounts on base stations.
On the day BT and DT announced their shared network construction agreement, Nokia sent the stock market reeling when it cut by half its prior forecast that second-quarter sales would grow by 20 percent.
“When I volunteered to do this presentation, I wasn’t aware of the news to come … At first glance, it (3G network sharing) looks a bit awkward for Nokia,” said Geert Bujik, vice president of strategic business planning.
“Network sharing has been business as usual in second-generation wireless. Lower cost deployments drive coverage, and that will benefit Nokia.”
Ericsson provided the first shared second-generation wireless network in Japan in 1995, said Gary Pinkham, vice president of investor relations. It has built systems, based on multi-vendor interoperability, that can allow up to 18 wireless operators to share a single network.
“There have been comments recently that network sharing will be detrimental. To the contrary, it can speed deployment and improve operators’ financial stability,” he said.
Network sharing typically occurs during the first phase of infrastructure deployment when carriers’ primary goal is coverage of their service territory, Pinkham said. This stage costs operators an average of $35-$70 per pop and takes about five to eight years from a greenfield start to coverage of 80 percent of the population and 60 percent of the geographic area.
“Depending on the method used, network sharing would help carriers save 20 (percent) to 40 percent on capital and operating spending, and this could accelerate the capacity phase,” Pinkham said.
The capacity phase, which occurs when user uptake accelerates, costs about $150 to $300 per subscriber. In five-to-eight years, when coverage and capacity are adequate, the final phase involves enhancing the capabilities of a network. This costs an estimated $5 to $10 per year per subscriber, according to Ericsson’s estimates.
Pinkham categorized network sharing into three basic types: common shared, geographical split and shared utran.
In a common shared network, carriers covering the same area have in common the radio access core, but they retain customer relationship management, billing and home location register systems. A geographical split involves carriers building their own radio access cores in distinct territories and sharing that infrastructure with other wireless service providers. These two options can save between 30 percent and 40 percent in the deployment phase.
In the shared utran alternative, which can save about 20 percent during network deployment, carriers share radio network controllers and base stations.
“The trade-off will not have that big an effect on Ericsson. Furthermore, the majority of carriers won’t share networks. Those that do are likely to build their own networks in urban areas and shared networks in rural areas,” Pinkham said.
