NETWORK STRATEGIES


5-MHz spectrum in the 2.6-GHz band, paid just €0.02/MHz/PoP. Yet TeliaSonera’s Ljunggren is not


convinced that spectrum prices will be a major factor in deciding whether or not to enter into a network-sharing deal. “What really determines the urgency for network-sharing is how much new infra- structure you really need to build,” he says. “With 3G licences we had coverage requirements of 99% of [the] population, which was challenging, and that really pushed us into network sharing.” Nevertheless, pooling of spectrum


could be attractive in some markets in order to ensure extensive coverage. In March, private equity company Harbinger announced it will build a nationwide wholesale LTE network in the US, at the same time buying satellite network oper- ator SkyTerra. Harbinger has said it is willing to pool its spectrum with other licensees to expand network capacity, and analysts expect it to consolidate satellite spectrum owned by Terrestar Networks, in which it holds a stake. The company may also look to partner with a tier-two


operator, and reportedly has already been in talks with T-Mobile USA. Regulators that don’t attach onerous


coverage conditions to LTE frequency bands can take some of the financial pres- sure from operators, as can allowing them to re-farm existing 900-MHz assets for LTE. But because such measures make the LTE business case more attractive, network sharing could persuade opera- tors that would otherwise have been more cautious to bring LTE to market sooner. Tele2 and Telenor declared they would


pool their respective spectrum resources in 1800 MHz and 2.6 GHz (as well as 900 MHz) to roll out LTE via the net4mobility joint venture shortly after the Swedish regulator announced it would extend existing 900-MHz mobile operator licences for ten years until 2015, as well as open the door to LTE in that band. For the time being, though, net4mobility is keeping tight-lipped about the scale of the capex and opex savings it expects to achieve on behalf of its parent companies. Yet if the German auctions are anything to go by, digital dividend spectrum will


‘The cost of digital dividend spectrum might force some operators to reconsider sharing’


LTE capex for base case scenario LTE RAN


Backhaul investment


Radio licence investment E80m Total investment


E415m Average investment per inhabitant covered: E55.3 Source: IDATE


LTE growth projections in selected regions 20%


16% 12% 8% 4% 0%


Saudi Arabia, Bahrain and UAE 8 Middle East


n LTE % of mobile subscriptions in 2014 n Data revenue CAGR 2009-2014


Population of 10 million inhabitants E223m E112m


Population of 50 million inhabitants E1,16m E558m E400m


E2,074m


be a lot more expensive than 2.6-GHz spectrum, providing as it does a cheaper way to provide nationwide LTE coverage to rural areas. That is because fewer sites are required for signal-boosting equip- ment compared with higher frequencies. Deutsche Telekom, Telefonica O2 and


Vodafone each paid in excess of €0.70/ MHz/PoP for their respective two lots of 5-MHz paired spectrum in the 800-MHz frequency band. Telefonica, which paid the most for its 20-MHz slice of the digital dividend in Germany, ended up having to splash out a hefty €1.21 billion for its 800-MHz allocation (which accounted for nearly 90% of its entire spectrum spend- ing in the German auction). At these prices, even operators that are


cautious about network-sharing might be forced to rethink their position to offset the higher costs of digital dividend spec- trum. Ljunggren says TeliaSonera is already looking into the possibility of network-sharing agreements in Sweden at both 1800 MHz and 800 MHz, with spectrum scheduled to be auctioned off in these frequency bands in Q4 2010 and Q1 2011 respectively. Equally, while passive network sharing


has become accepted globally for 3G roll- outs, operators have been far more reluctant to enter active sharing deals. The difficulty of aligning network rollout strategies has been a major reason for that, yet the cost-saving benefits might be too big for operators to ignore as they move into LTE. Active network sharing isn’t the only


way operators can cut costs, says Téral at Infonetics. “LTE RAN sharing is just one cost-cutting option available to mobile operators,” he says. “In fact, [better] 2G and 3G asset utilization and re-use, along with re-farming, are greater priorities than LTE RAN sharing.” Yet to compete effectively in the mobile


Western Europe Source: Pyramid Research


broadband market there will be growing pressures to offset the cost of spectrum and equipment, as well as to reduce the cost of installing fatter backhaul pipes to support the higher volumes of traffic that LTE-based applications should bring. And that seems certain to drive LTE network sharing up the agenda. n


www.totaltele.com July/August 2010


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