Determining when mobile network sharing is appropriate requires consideration of both the anticipated benefits of such sharing and the regulatory complexities associated with implementing the sharing arrangements.
Understanding the anticipated benefits of various forms of sharing helps to identify contexts where these forms of sharing will be appropriate and most desirable. For example, national roaming arrangements are more important in a country that has remote or rural areas that are un-served or under-served than in a smaller country with a largely urban population.
There are some benefits that apply to almost all forms of mobile network sharing. Network-sharing agreements generally benefit operators and the general public from a cost perspective. They help operators avoid costs for building or upgrading redundant network sites and allow them to gain additional revenue streams from leasing access. Operators also can achieve considerable savings in rent, maintenance and transmission costs; these savings can be passed down to end-users through lower rates. Sharing arrangements may also achieve economies of scale by combining operating and maintenance activities. Network sharing may also help operators to attain more efficient coverage, since operators may choose to use only those sites that provide deeper and better coverage, decommissioning sites with poor coverage possibilities. Operators can then reinvest those savings in upgrading their networks and providing better coverage and services to end users.
Network-sharing agreements may also bring substantial environmental benefits, by reducing the number of sites and improving the landscape. These types of benefits may be of particular relevance in contexts where tourism is a major industry in a country. In Caribbean countries, for example, reducing visual disruption caused by mobile towers and antennae is important to maintaining the beautiful landscape and beaches for which these countries are known.
The benefits of various forms of sharing must be weighed against the regulatory measures that will be necessary to facilitate these forms of sharing. There are obstacles to overcome when dealing with network-sharing agreements. From an economic and practical point of view, mobile network sharing is a complex process that requires substantial managerial resources. Some countries (often developing economies) lack the regulatory resources and expertise necessary to address the complex issues that accompany some forms of mobile network sharing such as Mobile Virtual Network Operators (MVNOs). Regulators need to analyze the potential benefits to be generated by network sharing on a case-by-case basis, taking into account the specific characteristics of each market involved, the competition-related concerns that may arise, and the relative difficulty associated with developing and implementing appropriate policies.
Generally speaking, network sharing is a useful tool for regulators and policy makers who want to encourage network deployment in un-served or under-served areas. Several instruments can be used to promote network sharing. National roaming arrangements are probably the most simple and effective arrangements. While roaming leads to a certain level of uniformity among operators’ offerings, this does not necessarily restrict competition significantly. National regulatory authorities that have anti-competitive concerns may allow network sharing for a limited period (for example, one or two years) in order to promote roll-out of initial phases of network deployment. After that, operators could be required to provide coverage using their own networks.
Other types of arrangements, such as active infrastructure sharing, an open access model (allowing and promoting the entry of MVNOs) and functional separation, may also work well to promote roll-out of wireless infrastructure and the advancement of competition. But these types of arrangements may be difficult to monitor and regulate. Such measures require a strong regulator and an effective and efficient judicial system, with appropriate enforcement powers.
When analyzing examples of network-sharing agreements around the world, regulators and policy makers should look at the way each market has developed. For example, it is relevant to note that some network-sharing agreements in developed countries have presaged later mergers between the companies involved. [1] In other cases, the companies involved in network sharing arrangements have not merged with each other, but have seen consolidation take place in the market around them. [2] In the past few years, there has been a large consolidation wave in the global telecommunication market across the globe. [3] Perhaps some of those operators could have survived had they been allowed more freedom to share their infrastructure and to compete based on the quality of their service marketing and delivery.
[1] This was the case with T-Mobile and Orange in the Netherlands and ATT and Cingular in the USA.
[2] After its network sharing arrangement with T-Mobile in the UK and in Germany, the company O2 was acquired by Telefonica.
[3] Worth mentioning are: the acquisition of Bell South by AT&T; the merger between Verizon en MCI; the acquisition of O2 by Telefonica of Spain, the acquisition of Orange Netherlands by T-Mobile; the acquisition of a controlling interest in Telecom Italia by Telefonica.