European Mobile Operators Cooperate On Coverage

from the if-you-can't-beat-'em dept

American mobile operators’ advertising is still dominated by claims about their network coverage, from the “Can You Hear Me Now?” guy to consistent sniping about whose network is bigger. But in Europe, competing on coverage largely went out years ago, thanks to smaller geographic areas to cover and denser populations, while converging on a single technology didn’t hurt, either. Some operators there have gone so far as to embrace network sharing, where they collaborate on their infrastructure with their rivals to cut costs. Vodafone and Telefonica have announced the biggest network-sharing deal so far, saying they’ll jointly build new cell sites and consolidate existing ones in several countries across the continent. Network sharing is seeing renewed interest as operators look to trim their capital expenditures, but it can benefit consumers as well. In one sense, a lot of spending is duplicated by rival operators as they build out network footprints that are roughly equivalent; significantly reducing that cost would have a big impact on their businesses, and allow them to redirect some of those resources elsewhere. As a Telefonica exec says, “by reducing our costs in areas of the business that customers don’t see, we can ensure that we invest in areas they truly value.” Thus far, many operators’ response to the commoditization of their product has been to try and differentiate on coverage; eliminating that factor could spur them to differentiate in other ways, such as with new and better services.

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Companies: telefonica, vodafone

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Comments on “European Mobile Operators Cooperate On Coverage”

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Anonymous Coward says:

Need more information

Is this merely a build out sharing partnership?

If from a network and technology perspective, the carriers are able to engage in inter-carrier handoff, it would be quite a feat. I believe inter-technology was included with the IMS specification (Somewhere around 3GPP release 7, and in 1996, if memory serves me correct.) I understand release 8 recently came out but I haven’t performed the research to understand if intercarrier handoff is included in the featureset.

If the business was successful in accomplishing Intercarrier Handoff, it would be amazing, but somehow I doubt that’s what’s actually occurred.

Maybe Derek Kerton can better weigh in on this. I’ve been out of wireless for a few years now.

Derek Kerton (profile) says:

Re: Need more information

Inter-carrier handoff has been happening for a long time, unbeknownst to the subscribers.

MetroPCS, for example, roams off of their own network onto Verizon’s when their customers go out of urban areas (with handoff).

After their launch, 3 UK roamed onto O2 when their customers went out of range of a 3G 3 tower. Although it’s a bad example because dropped calls were a major problem, the plan was for seamless handoff.

TELUS and Bell Mobility have shared networks for a long time, with TELUS stronger in Western Canada, and Bell stronger in the East, it made sense for them to do a roaming swap over spend huge bucks to build. A TELUS customer in Ontario might seamlessly be passed over to a Bell tower.

What is proposed above in Carlo’s post is not just that Telefonica and Vodafone will cooperate on future (4G) network build-out, but that they will consolidate their existing tower locations and infrastructure, too. This could create considerable savings, but will hurt the equipment vendors.

Sharing network elements can occur at any variety of levels. Ex:
– share spectrum (rare. spectrum is the scarcest commodity)
– share RAN (Radio Access Network. This is not commonly done.)
– share tower locations (done frequently, usually through third party site owners like American Tower)
– share base station hardware (done less freqently, but possible)
– share backhaul (done freqently, often managed by third parties like Crown Castle or a DAS provider like NextG)

Carriers can consider combinations of the above depending on their level of partnership, their desire for autonomy vs. cost savings, and their distrust/hatred of their competitors! Normally, calls and data are still handled, switched, and billed by the carrier, but the last few miles may travel over shared infrastructure.

Subscribers need never know.

Derek Kerton (profile) says:

Re: Re: Need more information

Forgot to mention, news yesterday came out that the two biggest wireless telecom operators in the world are….

Do you think you can guess it?

Did you guess Vodafone and/or a Chinese operator? Wrong. Ericsson and Nokia Siemens Networks. More and more carriers are outsourcing their network management to the professional service divisions of the vendors.

Basically, the upshot of my prior comment and this one is that the cellular business is looking a lot like the auto business in some ways. No, we’re not dying. But when you buy a Pontiac Vibe, you shouldn’t assume that the car was made by Pontiac, designed by Pontiac, and built in Detroit. Many different vendors work together to make components, logistics, assemble, and then badge the final product. Similarly, when you place a call on AT&T, and you’re phone screen says you’re on AT&T – don’t be too sure that many companies aren’t involved in making that call.

Dave says:

Re: They're not sharing the network.

“In practice, the agreement means the companies will jointly build sites or consolidate existing antenna towers and infrastructure for second- and third-generation networks, reducing the total number of cellphone towers in operation and cutting the amount they pay to rent equipment.”

Where do you get this power supply thing?

Derek Kerton (profile) says:

Re: Easy to contemplate with national licenses

RE #4 You’re right that having multiple MSAs, each with it’s own spectrum rights holder affects this, but don’t be too sure that it won’t work in North America. In fact, the rural, fragmented nature of our market actually supports a thriving network sharing economy:

Telus and Bell mobility do this like Telefonica and Voda.

AT&T and Sprint share assets with their affiliate networks. AT&T customers OFTEN roam onto partner networks when they move into rural areas. For example, Unicel is a Vermont wireless carrier that sells service to local residents, but also handles ALL AT&T calls in the state. This is invisible to AT&T users.

Ever wonder why AT&T doesn’t sell the iPhone in most rural areas of Alaska, Arizona, Colorado, Idaho, Kansas, Maine, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, South Dakota, Utah and Wyoming? It’s because they don’t own the networks there, and would have to pay too much in roaming wholesale fees to the rural carriers there.

Granted, this isn’t the same scale as the Telefonica/Voda deal, but it shows a high level of network sharing by companies like Unicel.

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