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WCIS Insight: Network sharing: a capital-light business model

Product Type: Market Research Report
Published by: Informa Media and Telecom
Published: December 2007
Product Code: R443-283
Description
This report comprises four in-depth case studies on network sharing in Australia, Sweden, the UK and India. Each explores operators' motivations for network sharing and how these may have changed over time, the scope of the particular deals and the regulator's position on network sharing.

Key Coverage Four in-depth case studies:
  • Australia
  • India
  • Sweden
  • UK
Market Data
In developed markets it is largely the roll out of 3G networks into rural and sparsely-populated areas that has brought the issue of network sharing onto the agenda, while in emerging markets operators are looking to keep down the cost of expanding networks into very low-ARPU areas.

This report examines the key issues and considerations for operators and the market overall.

Key Issues Addressed
  • What are operators' main motives for entering network-sharing deals with rivals?
  • How fast have they been able to move forward after signing deals?
  • Where operators have set up an independent joint-venture company to own their shared network what advantages has this brought?
  • How have competitors reacted?
  • How has the availability of WCDMA equipment for lower frequency bands (850MHz and 900MHz) affected the business case for network sharing in Australia and other markets with a large geographical area?
  • What has been the response from telecoms regulators and competition authorities to network-sharing deals in their respective countries?
Countries / Sectors / Companies Covered
  • Australia
  • India
  • Sweden
  • UK
Who should read this report
  • Operators
  • Vendors
  • Handset and infrastructure vendors
  • Analysts
  • Financial Institutions
  • Government
  • Regulators
Table of Contents
CHAPTER 1

INTRODUCTION

Figure 1.1: The two levels of active infrastructure sharing

CHAPTER 2

AUSTRALIA

First-mover Hutchison sells half its 3G network to Telstra

Telstra’s focus shifts to WCDMA850

Figure 2.1: Australia total mobile capital expenditure by operator, 1H02-1H07

Hutchison maintains status quo under the network share

Optus and Vodafone opt for a less integrated sharing arrangement

Optus and Vodafone break away from the shared network

Few regulatory hurdles in Australia

CHAPTER 3

SWEDEN

Svenska UMTS-Nat born out of a ‘catastrophe for the nation’

Figure 3.1: Sweden: original applications of UMTS licence bidders

Figure 3.2: Sweden: Svenska UMTS-Nat population coverage, 2002-2006

Figure 3.3: Sweden: ownership structure of Svenska UMTS-Nat AB and Svenska UMTS-Licens AB

Cost-saving potential and focus on service offerings drive joint-venture agreement

Scope of network sharing extends deep into network

Figure 3.4: A schematic view of the shared network

Tele2 and TeliaSonera develop, market and sell services independently

Figure 3.5: Sweden: mobile TV offerings of Tele2 and TeliaSonera over Svenska-UMTS Nat

Regulator takes positive stance

Operators purchase capacity on demand

Figure 3.6: Sweden: value of capacity purchased by TeliaSonera from Svenska UMTS-Nat, 2004-2007

Termination rates applied per operator not per network

Independence of joint venture company is key success factor

CHAPTER 4

UK

Drivers of network sharing: freeing up capex and reducing opex

Figure 4.1: Vodafone UK’s planned upgrades to network speeds

Chronology of negotiations highlights complexity of the deal

Competitive response: T-Mobile and 3 UK to integrate 3G networks

Regulatory and competition authorities not likely to block deals

CHAPTER 5

INDIA

Infrastructure sharing yields cost savings

Reasons for infrastructure sharing

Improving rural coverage and maintaining quality of service

Figure 5.1: India, distribution of rural population by village size

Sharing of towers expected to increase

Figure 5.2: India, non-operator tower companies (situation on 30 June 2007)

CHAPTER 6

CONCLUSION

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