Mobile operators still have a curious antipathy to sharing their RANs, despite the increasingly strong case that this will be the only way to make 5G roll-out affordable – at least with the density and indoor penetration many 5G use cases will require.
Some operators are starting to get that message though. Vodafone is pursuing higher levels of active RAN sharing in key markets like the UK and Italy than it has before; some MNOs are coming round to the idea that they should encourage neutral hosts in small cell and industrial environments, rather than take on the whole cost burden themselves.
A few countries have sought to take sharing a step further and mandate a single network for all MNOs to use. The only place where this may end up succeeding is Mexico, which is rolling out a wholesale 4G network in 90 MHz of 700 MHz spectrum. The company building this network, Altan Redes, appears to be on track to reach half the population by next year – it announced last month that it had reached 43%, or 48m people, and would increase this to 60m by the end of October. It has also announced a list of MVNOs and enterprise providers which plan to use the network.
However, the old issue of MNOs wanting full control may rear its head. Local press reports suggest two of Mexico’s MNOs, Telefónica Movistar and AT&T Mexico, do not want to use the shared system and will instead refarm 1.9 GHz airwaves for 4G (though if market leader America Movil shows full support, the sharing scheme may succeed anyway).
Other schemes – in Russia, Kenya and elsewhere – have usually foundered on operators’ wish to control their own spectrum and network build-out.
Two countries, on different continents, are reviving the single network idea in different ways for 5G. In Malaysia, incumbent Telekom Malaysia (TM) is proposing that it should be the exclusive deployer of 5G; while in Poland, plans for a shared network are being discussed.
TM has petitioned the Malaysian Communications and Multimedia Commission (MCMC) for nationwide spectrum to enable it to build a single wholesale 5G network. This comes as the regulator is holding a consultation on the best way to allocate the spectrum designated for 5G, in 700 MHz, 2.3 GHz and 2.6 GHz.
The incumbent said in a filing that “a drastic approach” was required to make Malaysia’s 5G roll-out cost-effective and to accelerate progress, in order to support its ambitious national digital and industrial objectives.
“The basic supply-side economics of individual mobile roll-outs and multiple overlapping networks can no longer work,” it wrote, and the expense of such an approach would limit the ability to launch critical services like health and public safety, or to extend mobile broadband to underserved rural areas.
“Splitting the spectrum bands to many operators is neither efficient nor economical for the country,” TM added. “A single national InfraCo will avoid duplication of infrastructure and networks, thus reducing the total cost of ownership for the industry.” It is best-placed to be that deployer because it has the most extensive fiber coverage, it argued, with more than 540,000 kilometers in deployed fiber and core capacity.
Of course, the telco said it would guarantee fair access to the network through regulated open access wholesale arrangements, but if the proposal is taken seriously, it could give it a route back into the mobile market, while helping the government achieve the ambitious timeline set out by communications minister Gobind Singh Deo, who wants to see 5G service launches in the first half of next year.
By contrast, MCMC is looking to auction the spectrum in two tranches in the third and fourth quarters of 2020, which would allow for service launches around the middle of 2021. But TM’s proposal would no longer require an auction and that could speed up the process by 6-9 months, said the telco. Unsurprisingly, the four MNOs – Celcom, Digi, Maxis and U Mobile – are all calling for an auction process, despite the cost savings that a wholesale approach could bring them.
In Poland, the MNOs seem more open to the idea of working with a state-owned shared network operator. A shared 5G network has been proposed in the 700 MHz band only, which would have several potential benefits for the operators. It could avoid them having to pay the high prices that typically accrue to sub-GHz bands in auctions; and keeping this scarce spectrum in a single chunk could be a far more efficient use of limited resources, for all stakeholders.
Like many operators, they are focusing mainly on a capacity play with 5G, which makes midband spectrum like 3.5 GHz more important for competitive edge and service differentiation, while the propagation qualities of 700 MHz could conceivably support a shared network for rural access and some indoor applications – areas where MNOs typically find it impossible to identify a profit model.
And it will be impossible for all four MNOs to secure an individual licence in 700 MHz because the spectrum is too scarce, so they are scared of an unbalanced market, and of being the operator which loses out.
State-owned fiber network operator Exatel has expressed its interest in building a wholesale 700 MHz 5G network, and last week, press reports indicated that the four MNOs are preparing to sign a letter of intent on working with Exatel on the project. This assumes “the financial and substantive participation of commercial operators in the construction of the 700 MHz network in exchange for the possibility of using the capacity of the new network” via network slicing, Polish news service Telko.in reported.
This would be a turnaround since the spring, when only Polkomtel-owned Plus seemed interested in the sharing idea. At that time, T-Mobile indicated it was reluctant to support initiatives that might help its rivals, new and old, to reduce its 5G headstart (it has already starting rolling out services); while Orange said it would prefer to deploy alone.
Exatel’s CEO Nikodem Bończa-Tomaszewski told Business Insider Polska earlier this year that a consortium of public and private companies, co-investing in the new network (financially or by supplying resources like fiber backhaul), would be the “safest and cheapest way” to implement 5G. He said the emergence of “softawareization” in 5G networks would make it easier for operators to secure their own virtualized share while still being able to differentiate their services and QoS.
Other benefits, said Bończa-Tomaszewski, would include an improved ability for the government to oversee network security as cybersecurity concerns, stemming from US-China tensions, start to overshadow 5G plans in Europe and elsewhere.
The network will not be usable until 2022 or 2023 since it is currently in use by TV providers. And there are interference issues, since a significant portion of the 700 MHz band is unusable for cellular in many regions because Poland has not agreed a deal with Russia over its TV signals.
The misalignment between government ambitions and MNO economics will sometimes be a spur to sharing, as is possible in Malaysia. Many operators are struggling to find a strong business case for deploying 5G. They have plenty of capacity left in 4G and the services which would really require the capabilities of 5G seem, to many, futuristic or uncertain in the potential for monetization.
Yet governments, and some industrial sectors, are impatient for 5G – a situation which seems to lend itself to a co-investment approach, to accelerate roll-out of the new networks while keeping costs affordable for MNOs. The requirement becomes even more urgent when densification is considered, with a large number of operators expecting to deploy 5G initially to serve targeted zones of coverage and capacity around city centers, business parks or industrial facilities.
There are various approaches to sharing the cost of deploying and maintaining a network. Passive infrastructure sharing is increasingly common as operators offload their towers and look towards dark fiber to support their next generation backhaul and fronthaul requirements. In the small cell environment, sharing of sites and backhaul will be almost inevitable in highly dense scenarios, and there are already specialist neutral host providers, as well as tower and fiber owners, which are looking to extend their model into small cell-as-a-service (SCaaS).
The logical extension of this will be to share active equipment too – in calculations Rethink has carried out related to different small cell roll-out models, a neutral host approach, in which a third party acquires the sites but also implements and manages multi-operator access points, can reduce TCO per operator at least three-fold. Neutral host specialists like Dense Air (which is even acquiring licensed spectrum to support its build-outs) as well as towercos like Crown Castle in the USA, are showing the way forward and such initiatives are set to accelerate once densification becomes a mainstream strategy.
But in active RAN sharing, operators fear losing control of their ability to differentiate based on network quality or optimization, while regulators are wary of reduced choice and competition.
The wholesale national network is the most contentious of all the options because it often comes at the behest of government, and therefore accompanied by concerns that operators will have their freedom of action – in technical and commercial decisions – restricted.
If the politics of creating a platform which the MNOs share equally prove too daunting, some markets may eventually go the same way as electricity, railways and even wireline broadband has in many regions – towards a utility model, in which a single operator builds the infrastructure and supports all the others.
As for a third party running that network, there have been a few attempts to create a national neutral host platform, but these have often faltered on regulatory concerns (LightSquared, now Ligado, in the US is still struggling to get its wholesale-only network off the ground); or because, if the MNOs will not sign up, there is insufficient revenue to tap. The latter barrier should be lowered in the 5G era as more and more companies look to offer optimized services that require greater control over the network than pure over-the-top or MVNO arrangements. Content providers like Netflix, web giants like AWS and industrial or private cellular operators are all increasingly wanting to make deep connections with the network itself to enhance the QoS of their offerings.
In 5G, the intensified need to reduce TCO may prompt operators and governments to look again at sharing models. Last year, consultancy McKinsey published a report arguing that network sharing would be essential to “reduce cost and make 5G deployments feasible”.