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Teledata

Tele Data

Mobile Subscribers Yearwise comparision

Combined Benefits: Active infrastructure sharing lowers network deployment costs

March 31, 2017

Telecom, being a capital intensive business, needs huge investments for growth and expansion purposes. The costs of deploying telecom networks are expected to rise even further in the future, with operators’ focus shifting to rural areas. In these areas, telecom operators have to face challenges associated with higher costs of land acquisition, insurance costs and intermittent power supply. At the same time, more towers are required to cater to the same number of people since population is dispersed in rural and semi-urban areas. Moreover, in India, regulatory clearances are required at various stages for the laying of network infrastructure, which often slows down the pace of roll-outs and adds to the costs.

To this end, infrastructure sharing can help reduce the cost of network roll-outs. It also enables faster deployments and reduces the risk of network redundancy. In addition, sharing presents an additional source of revenue for telecom operators as they can monetise their existing assets by leasing them to other operators.

Network infrastructure sharing can be classified into three categories: passive, active and core. Passive sharing refers to the sharing of non-electronic infrastructure like shelters, towers or masts, power supply and air conditioning. This is the most common form of sharing among operators in India. Active infrastructure covers all electronic telecommunication elements like antennas, feeder cables, radio spectrum, radio access networks (RANs), access node switches, base transceiver stations (BTSs) and Node B. Meanwhile, core infrastructure sharing refers to the sharing of parts of the core network, apart from RANs.

Active infrastructure sharing in India

The Indian telecom sector was among the first to adopt passive infrastructure sharing in a big way. The trend started in 2007 and led to the creation of a separate industry of telecom towers. Operators’ attempt to hive off their telecom tower assets into separate units and share this infrastructure with their peers led to significant savings and hence helped in increasing their profit margins. Meanwhile, active infrastructure sharing in India has picked up only recently. This can be attributed to the delay on the policy front that is lack of a suitable framework to enable active sharing. The guidelines for spectrum sharing were released in September 2015 while the sharing of active infrastructure including antennas, feeder cables, Node B, RAN and transmission systems was approved in February 2016.

Reliance Communications and Reliance Jio Infocomm Limited were the first ones to strike a spectrum sharing deal. The operators have spectrum sharing arrangements in 17 circles and trading agreements in 10 circles. Meanwhile, intra-circle roaming has gained traction with several operators signing agreements for rolling out their new 3G and 4G services through the networks of other operators. Roaming arrangements lead to delayed or reduced investments in network infrastructure and help operators achieve greater geographical presence in a shorter time-to-market.

Sharing concerns

Although active infrastructure sharing offers many benefits, the concept raises a number of concerns, which are:

• Competition concerns: Active sharing allows access to operators’ networks, which leads to the sharing of confidential information related to network costs, operations, technology and other crucial data. Sharing may, therefore, provide opportunities for price collusion, service packages and network development.

• Service differentiation: Active sharing can restrain operator independence as some network parameters will be common to both parties. They might have to agree on certain factors, which can be a complicated process.

• Operational challenges: Working out joint agreements is a tedious task that involves complex negotiations on a variety of operational parameters. This could necessitate the sharing of confidential competitor data as well. Operators tend to have multiple vendors across circles, making this a major operational issue.

Therefore, it is imperative to have a clear and transparent regulatory roadmap for successful active infrastructure sharing. To this end, the government and the regulator can consider formulating guidelines that do not affect competition parameters like prices, promotional schemes or service and network quality. The regulations should also restrict the sharing of confidential information, which may lead to tariff parity or negatively influence competition in the market.

 
 

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Discussion Board

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  • Jos Babu, Chief Information Officer and National Head (Digital), UAE Exchange, India
  • Samrat Das, Chief Information Officer, PNB-MetLife Insurance
  • Aruna Rao, Senior Executive Vice-President and Group Chief Technology Officer, Kotak Mahindra Bank Limited
  • Gururaj Rao, Chief Information Officer, Mahindra Finance
  • Mohit Rochlani, Director, IT and Operations, IndiaFirst Life Insurance Company
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