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On the Role of Infrastructure sharing for Mobile Network Operators in Emerging Markets

Djamal-Eddine Meddour, Tinku Rasheed, Yvon Gourhant

arXiv:1211.7113v1cs.NI

TL;DR

The paper examines how mobile network infrastructure sharing can address high investment costs and support affordable access, competition, and technology migration in emerging markets. It surveys technical and regulatory approaches, evaluates CAPEX and OPEX savings, and identifies constraints and applicability. Estimated savings vary by approach, including 25%–48% for CAPEX and 16%–18% for OPEX, while sharing becomes more complex as cooperation increases.

  • Problem

    High investment costs, technology migration, regulation, competition, and separated network and service provision challenge traditional single-owner mobile networks in emerging markets.

  • Method

    The paper analyzes technical infrastructure-sharing solutions together with their regulatory, technical, economic, applicability, and constraint dimensions.

  • Results

    CAPEX savings are estimated at 25%–48% and OPEX savings at 16%–18%, with dense-area GWCN plus backhaul sharing producing around 27.12% combined CAPEX/OPEX savings.

  • Takeaways & Limitations

    Network sharing can cut operational and capital costs while allowing operators to focus more on innovation and customer-facing differentiation.

  • Takeaways & Limitations

    Active sharing is not effective once networks become over-used or markets grow quickly, motivating more dynamic or selective long-term sharing arrangements.

Abstract

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The traditional model of single ownership of all the physical network elements and network layers by mobile network operators is beginning to be challenged. This has been attributed to the rapid and complex technology migration compounded with rigorous regulatory requirements and ever increasing capital expenditures. These trends, combined together with the increasing competition, rapid commoditization of telecommunication equipments and rising separation of network and service provisioning are pushing the operators to adopt multiple strategies, with network infrastructure sharing in the core and radio access networks emerging as a more radical mechanism to substantially and sustainably improve network costs. Through infrastructure sharing, developing countries and other emerging economies can harness the technological, market and regulatory developments that have fostered affordable access to mobile and broadband services. Similarly, the network operators entering or consolidating in the emerging markets can aim for substantial savings on capital and operating expenses. The present paper aims to investigate the current technological solutions and regulatory and the technical-economical dimensions in connection with the sharing of mobile telecommunication networks in emerging countries. We analyze the estimated savings on capital and operating expenses, while assessing the technical constraints, applicability and benefits of the network sharing solutions in an emerging market context.

1. Introduction

Mobile services expanded access in developing countries, but high rollout costs limit affordability, competition, innovation, and coverage in rural and marginalized areas. Infrastructure sharing is presented as a means to support sustained growth, technology migration, broadband deployment, and wider ICT access.

  • High sunk investments make mobile services less affordable and can discourage operators from innovating or migrating to new technologies.These costs can also obstruct new entry and make rural deployment uneconomic.
  • Infrastructure sharing can stimulate technology migration, mobile broadband deployment, and competition between operators and service providers.The paper notes that safeguards are needed to address concerns about anticompetitive behaviour.
  • Sharing is presented as an imperative for sustained telecommunications growth in both urban and rural emerging markets.
  • Mobile network sharing may increase ICT access and contribute to economic growth, quality of life, and international development objectives.

2. Technical approaches for Infrastructure sharing

Infrastructure sharing spans passive, active, and roaming-based arrangements, with technical choices linked to business, geographic, technology, and process models. In emerging markets, passive sharing can reduce deployment costs and support migration from 2G to 3G and broadband services.

  • Sharing categories: Infrastructure-sharing options range from towers and facilities to entire mobile networks, organized as passive, active, and roaming-based sharing.
  • Sharing models: Sharing models are shaped by the parties and contracts, physical footprints, technical approach, and services included.
  • Business models: Greenfield sharing involves operators jointly building and funding a new network according to shared capacity and coverage requirements.
  • Business models: Buy-in sharing lets a second operator obtain network capacity through a usage or upfront fee, but later build-out adjustments can be difficult to agree.
  • Sharing levels: Sharing levels need not be uniform across a network, and operators may use different levels or agreements in different regions.
  • Passive infrastructure sharing: Passive site sharing can reduce CAPEX and OPEX, while collocating 3G equipment on existing 2G sites can support cost-effective broadband upgrades.Site acquisition and civil works can account for up to 40% of costs.

2.2. Active Infrastructure Sharing

Active infrastructure sharing extends cooperation from passive sites to managed network equipment and control systems, offering additional savings but increasing technical complexity and regulatory concerns. Implementations can preserve operator-specific logical control while sharing physical infrastructure or core functions.

  • Active sharing: Active sharing covers managed network elements such as base-station equipment, access switches, and fiber-network management systems.It can provide additional CAPEX and OPEX savings through shared RAN infrastructure.
  • Antenna sharing: Antenna sharing can include TRX and spectrum sharing, but antenna positioning may conflict with an incumbent operator’s radio-optimization strategy.
  • RAN sharing: RAN sharing can operate as two logical access networks using shared physical equipment, separate carriers, and separate MNCs.Examples cited in the paper were deployed in the 2.1 GHz band for low-density 3G areas.
  • RAN sharing: Full RAN sharing generally requires functional separation so each operator independently controls parameters determining coverage, speed, handover, and service quality.
  • Core network sharing: Core network sharing includes servers and core functionalities, but confidentiality and service-critical functions complicate sharing between competitors.National roaming and MVNO arrangements are alternative ways to use shared core-network capabilities.

2.3.Roaming

Roaming-based sharing extends an operator’s service beyond its own coverage by relying on another operator’s network over a defined footprint. Geographically divided networks can connect through national roaming, separate cores with RAN connections, or a shared core and gateway arrangement.

  • Roaming-based sharing: National or international roaming lets subscribers use another operator’s network where their own operator lacks coverage.
  • Roaming-based sharing: National roaming can give a new entrant nationwide coverage while it initially deploys in urban and suburban areas rather than rural regions.
  • Roaming-based sharing: Roaming-based sharing may be unilateral or bilateral, regionally divided or network-wide, with reliance on another operator’s coverage maintained over a defined footprint.
  • Shared RAN with gateway core: A shared RAN with gateway core connects the shared RAN to partners’ core networks through MSC, SGSN, and VLR functions implemented in the core.Unlike active RAN sharing, this approach relies on roaming features rather than special RAN equipment features.

2.4.Mobile Virtual Network Operators (MVNOs)

MVNOs provide mobile services without owning frequencies or a mobile access network, instead reselling wholesale minutes from an existing MNO. They commonly maintain a core network while accessing the MNO’s radio network.

  • MVNOs provide public mobile services without owning mobile frequencies or a 2G/3G mobile access network.
  • Most MVNOs retain a core network for billing and identification while using an MNO’s radio access network.
  • MVNO subscribers technically roam on the permanent network of an MNO.
  • MVNO success and business models vary considerably across countries and markets.

2.5. Technical constraints of Infrastructure sharing

Infrastructure sharing requires coordination and cooperation that increase constraints on operators’ deployment and network operations. These constraints can reduce operational flexibility and differentiation.

  • Increasing levels of infrastructure sharing require greater coordination and cooperation among participating network operators.
  • Sharing constrains operators’ deployment and network operations, ultimately limiting their operational flexibility.
  • The constraints may affect operators’ ability to differentiate themselves.

Technical constraints related to passive sharing

Passive and active infrastructure sharing involve technical constraints spanning site selection, equipment interoperability, quality management, operations, and core-network service continuity.

  • Core-network sharing: Core-network sharing requires suitable sites, common equipment design, coordinated management and service quality, and compatible intelligent-network protocols for service continuity.
  • Antenna sharing: Antenna sharing requires common choices affecting radio planning, reception and transmission diversity, antenna architecture, and amplification.
  • Antenna sharing: Antenna coupling introduces a 3 dB planning loss when separating equipment connected to the common antenna.
  • Site sharing: Site sharing requires at least two carriers in each NodeB, while substantial frequency-band differences add technical complexity.
  • Site sharing: Site sharing is constrained by a limited operator count, manufacturer interoperability risks, service-quality conflicts, and shared-asset maintenance.
  • RNC sharing: RNC sharing adds constraints on separating radio-access functions and achieving hardware and software interoperability across manufacturers.
  • Operations and maintenance: Shared-network operations can be outsourced to one provider to achieve economies of scale, higher field-force utilization, and lower coordination costs.

3. Economic Dimensions of Network Sharing

Network sharing can reduce investment burdens and improve coverage, but its economic value depends on market-specific cost structures, sharing choices, and regulatory conditions. Emerging markets show especially large sharing opportunities in sites, power, RAN equipment, and backhaul.

  • Infrastructure sharing reduces operator investment and can support better coverage by retaining deeper-coverage sites and decommissioning poorly positioned ones.
  • 20-30%: average CAPEX reduction from sharing sites and antennas; 25-45%: savings when operators also share the radio network; an additional 10% follows from sharing all assets.
  • 87%: share of emerging-market CAPEX represented by civil and site acquisition/design (41%), power (31%), and BTS/NodeB (15%).
  • 69%: share of emerging-market OPEX represented by hardware and software support (20%), power (20%), land rent (15%), and backhaul (14%).
  • Passive sharing is widely used in emerging markets, while active sharing is more complex because it requires agreement on technical solutions and equipment manufacturers.
  • Rural sharing is strongly recommended for both 2G and 3G, whereas urban 2G sharing is not recommended and 3G sharing may be suitable in some cases.
  • Sharing improves investment timing and reduces initial financial burdens, but does not by itself resolve all projects’ or operators’ financial-viability problems.

4. Practical use case

The study compares CAPEX/OPEX savings across infrastructure-sharing configurations and urban, suburban, and rural areas. GWCN with backhaul sharing performs best overall, while active sharing has market-growth and overuse limits.

  • Study design: The study evaluates cumulative CAPEX/OPEX savings for MOCN, GWCN, backhaul-sharing, and spectrum-sharing configurations across three area types.The analysis uses network-sharing solution and area type as inputs and assumes 50% CAPEX/OPEX savings for each shared equipment or segment.
  • Lessons learned: GWCN + backhaul sharing provides the best savings across dense, suburban, and rural cases because it shares the maximum listed network elements and can use dedicated or shared spectrum.The shared elements include NodeB, RNC, SGSN, and backhaul.
  • Urban dense Area: 27.12% total savings make GWCN + backhaul sharing the best dense-area approach; CAPEX savings range from 25% to 48%, while OPEX savings range from 16% to 18%.Spectrum sharing adds 1% savings in the dense-area case.
  • Sub-Urban Area: 25% total savings make GWCN + backhaul sharing the best suburban-area approach; CAPEX savings range from 25.5% to 47.9%, while OPEX savings range from 14.9% to 16.5%.Spectrum sharing adds 1.07% overall savings and 1.56% additional OPEX savings in the reported suburban analysis.
  • Rural Area: GWCN + backhaul sharing is also best in rural areas, with CAPEX savings ranging from 29.4% to 48.6% and spectrum sharing adding 0.7% savings.It outperforms MOCN + backhaul sharing by 1.5% with dedicated frequencies.
  • Lessons learned: International connectivity accounts for more than 50% of global OPEX, while active access and backhaul sharing is identified as more beneficial as connectivity costs decrease.The paper notes that submarine cables and Pan-African fibre networks are expected to reduce international-connectivity costs.
  • Lessons learned and Recommendation: Active infrastructure sharing is less effective when networks become over-used or markets grow quickly because operators share the market throughout the sharing period.The paper therefore points toward dynamic sharing policies, service priorities, and more flexible backhaul cooperation for longer-term arrangements.

5. Evolution toward the LTE

For LTE, 3GPP specifies MOCN and GWCN as approaches for sharing the eUTRAN. The paper also frames network sharing as a regulatory tool whose benefits and competitive effects require market-specific assessment.

  • LTE sharing approaches: 3GPP defines MOCN and GWCN approaches for LTE eUTRAN sharing.The paper compares the two approaches at a high level.
  • LTE sharing approaches: In MOCN, the shared eUTRAN connects through S1 to several core networks, while each operator retains its own EPC.The MME, SGW, and PGW are therefore not shared and remain in separate core networks.
  • Regulatory aspects: Network sharing requires substantial managerial resources, so regulators should assess its concrete benefits case by case while considering coverage gains and competition restrictions.National roaming is presented as a simple arrangement, potentially limited in duration where authorities seek to promote initial rollout.

7. Conclusions

The paper concludes that infrastructure sharing is a critical lever for telecommunications growth in emerging mobile markets and should be aligned with business and economic strategies. It identifies policy practices to support competitive passive and active sharing, especially in rural and remote areas.

  • Infrastructure sharing is presented as a critical lever for telecommunications-sector growth in emerging mobile communication markets.The paper describes technological approaches considered viable with current technology and links them to business and economic strategies.
  • Policy framework: Regulators should establish clear, objective, and transparent policy goals for network sharing.
  • Policy framework: Sharing agreements should have clear guidelines, including deadlines for agreement completion and actual access provision.
  • Policy framework: Efficient dispute settlement mechanisms and judicial review, including specialized bodies, should support network sharing.
  • Coverage and competition: Regulators should consider site sharing and national roaming in rural and remote areas, alongside competitive subsidies covering real costs.The recommendations also call for competitive assessments, possible open access or functional separation, and consideration of self-regulation.
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