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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: quartersawyer who wrote (32531)	2/17/2003 4:04:41 PM
From: quartersawyer	Read Replies (2) \| Respond to of 196546

GSM Operators: United They Fight Continued from Page 4 Infrastructure sharing>>>>>>>>>>> Network sharing is very prevalent in Europe, where operators have paid huge licences fees. As a result, several high-profile sharing deals have been made. In Germany, multiple operators have built common network right from the scratch. The biggest infrastructure sharing deal has been between BT and Deutsche Telecom—which share common networks in UK and Germany. Vendors like Nokia have also developed multi-operator radio access equipment to facilitate network sharing. Real estate for base stations and backbone towers can be shared without much fuss to begin with In a highly competitive mobile industry like India, where price wars are the order of the day—reduction of capex and opex assumes critical importance. Like Europe, the cellular industry in India operates in an expensive licence regime where thousands of crores of rupees have been paid to obtain licences. Also, the country’s large geography makes it a tough challenge to cover the various cities, towns and villages with cellular networks. In this context, infrastructure sharing among cellular operators is the way to go about to not only expand rapidly but also be at a competitive advantage. However, while the benefits of sharing can be high, the risk of not being able to distinguish one’s service from the other is also real. Perhaps this is the reason why in India, despite having multiple cellular service providers in each operating areas—a total of 68 networks are operational in the country—the opportunity to share the network has not been explored widely. There are exceptions starting to happen, though. The entry of the third and fourth operators has somewhat made some operators look at this option. COAI has proposed that cellular operators share their core wireless network infrastructure as well. Real estate for base stations and backbone towers can be shared without much fuss to begin with. And going ahead such resources as switches and access radios which form the crux of a cellular network can also be shared. Two alternatives for sharing costs are envisaged. For a greenfield project like the fourth operator networks, the capital expenditure can be equally shared by the operators. In case of the operational expenditure of maintaining the sites, one of the operator can do the maintenance while the cost can be shared in a ratio negotiated by the operators. In case of infrastructure sharing with an existing site, the new operators can be charged for sharing the network by arriving at an operational cost taking into consideration the initial capex of the existing network, depreciation, and maintenance costs. This will allow faster rollout of new players and create additional revenues for incumbents. COAI’s proposal already seems to be paying dividends. By striking a strategic alliance, AirTel has taken the help of Escotel’s infrastructure in Kerala to quickly start its services in the state. The two have agreed to share each other’s networks in states where both have operations. Currently, Escotel can also make use of AirTel’s operational network in Himachal Pradesh. The sharing involves co-location of antennas with both operators taking the burden of the operational costs together. Under the sharing system, multiple antennas can be located on a tower with a distance of one meter to get proper signal for all operators. Other operators are also known to be exploring this option. It is being seen as a win-win situation for both incumbent mobile operators as well as the new entrants. Another significant case of infrastructure sharing among the cellular operators in India has been that of using the same long distance carrier to route their national long distance mobile calls. Almost every cellular service provider in India today uses Bharti Tele-ventures’s long distance network, thus allowing them to lower the tariffs of long distance calls. A tariff cut in this respect has already been announced and further cell-to-cell call benefits could come for customers due to this sharing arrangement. Sharing in the Future The sharing of cellular infrastructure in India is still a wide open area. Apart from sharing of towers, not much resources are being shared by operators. Areas like sharing of transport equipment, switches and even radio frequencies assumes great importance if the cellular industry has to achieve the tall targets of 120 million by 2008 that it has set for itself. Today, cellular networks are more concentrated around cities and major towns. Tomorrow, they will have to further expand into the interiors of the country, touching even the villages. All this means expensive rollout requirements which run into billions of dollars in capex. Already, there are networks that are waiting to be filled up. Instead of waiting for subscribers to come and make use of it and pay for it as a result, it makes sense to present ones’s network as an outsourcing opportunity for other cellular companies which are setting up networks. This would save a huge amount of money for the new network providers while bring in new revenues for the existing network owners. Spectrum availability has also been in news frequently, with cellular operators complaining of clogging of their spectrum in several pockets. But, it is also a fact that the spectrum that they have been allocated for regions where the traffic is not so much are not being fully utilized. This idle spectrum can be put to use in future, if it is shared with another operator who does not have adequate frequencies or is awaiting for sanction of frequencies. Technologies that enable such sharing are already available. Nareshchandra Laishram