NETWORK STRATEGIES

ground up, so mobile operators can be more aggressive on it if they want to.” The extent that operators can share

their backhaul costs and re-use existing sites for LTE will also have a significant bearing on the cost-saving calculation. According to Idate figures from 2009, backhaul expenditure can account for as much as half of the capex needed to deploy LTE RAN equipment in urban and metro- politan areas (see table p.8). Any far-reaching agreement between opera- tors to share backhaul costs would therefore slash the LTE capex bill. Idate estimates average LTE invest-

ment per inhabitant to cover 75% of a population would be €55.3. Its model assumes an operator using 2x 20-MHz bandwidth in the 2.6-GHz band over a seven-year period (2012-2018). Idate also assumes in its LTE RAN

investment calculations that out of every ten existing sites that mobile network operators have in urban areas they will be able to place their LTE equipment in nine of them and take advantage of the antennas already installed there. “Our assumption [made in 2009] of 90% re-use seems to be [still] in line with current developments,” says Idate’s Pujol. “We took into account the construction costs for new sites [includ- ing antennas and power], in our LTE RAN investment figures.” But Terry Norman, a principal analyst

at Analysys Mason, believes the 90% re-use figure is overly optimistic: “Around 20%-30% of LTE sites will need to be new, as there can be loading issues with some existing sites, as well as problems with landlords [to install new equipment].” In fact the greater number of new sites

required for LTE rollout makes network- sharing even more attractive because the

Prices paid for 2.6 GHz mobile spectrum 0.330

0.350 0.300 0.250 0.200 0.150 0.100 0.050 0

0.224 0.165 0.040 0.028 0.026

0.003

0.002

Source: Coleago Consulting

Worldwide LTE subscriber forecast (thousands) Subscribers

2012 Asia-Pacifi c

Western Europe Eastern Europe North America Latin America Total

11,324 3,454 114

10,485 143

25,519

potential cost savings are much higher. Analysys Mason calculates that site land rental, in developed markets, can account for as much as 40% of the overall opex for a mobile network, so to share that expense is clearly attractive. Add in the 50% capex saving of dividing site-build costs by two and the savings really start to mount up, particularly if operators choose to go down the active sharing route. Analysys Mason calculates that LTE equipment accounts for around 15% of total site costs. But Norman does not believe network-

sharing is a prerequisite for a successful LTE business case. LTE equipment, while more advanced, is no more expensive than previous generations of mobile technol- ogy, for example, he says. “The merits of network sharing will have to be analysed on a case-by-case basis,” says Norman. “If

Broadband Wireless Equipment Deployed Globally BWIN™

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2015

132,379 79,453 15,298 91,079 9,673

327,883 Source: IDATE (LTE Watch service 2010)

there was enough demand, in densely- populated areas, an operator could be very well justified in going it alone.” How keen operators are on LTE network

sharing might also be influenced by the cost of spectrum. Since Idate made its LTE capex estimates last year there are signs that the cost of 2.6-GHz spectrum in Europe is coming down in some markets. While Idate calculated that an operator

would pay, on average, €400 million for 2x 20-MHz of spectrum to cover 50 million inhabitants in a developed economy— working out at €0.20 per megahertz per head of the population (MHz/PoP)— operators in Germany ended up paying much less for their paired 2.6-GHz frequencies when the country’s spectrum auctions drew to a close in May (see chart above). Deutsche Telekom, which forked out the most for its four lots of paired

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Hong kong October 08

Sweden May 08

Denmark May 10

November 07

Germany May 10

unpaired May 10 November 09

Netherlands April 10

Finland Germany Norway