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Friday, 13 July 2012

A twitter discussion on 'Integration problems with Mobile Network Sharing'






@dmavrakis: Are cost savings >> cultural and integration problems for mobile network sharing? - http://www.telecoms.com/46594/cultural-and-integration-problems-hamper-network-sharing-deals/

Dimitris Mavrakis, principal analyst at Informa Telecoms & Media, believes that a major challenge many operators should anticipate when embarking upon network sharing deals is the extent to which cultural and integration problems can slow down their progress and success. 
Mavrakis said that one such deal that he is aware of saw two operators spending several months holding meetings on a frequent basis in order to tackle cultural issues. And with some key figures in the industry, such as Orange Spain’s CTO Eduard Duato, calling for multiple vendors to share networks for cost-effective LTE rollout, cultural and integration problems will be vast. 
“If two operators cannot agree, what happens when there are three or four? The cultural problems and integration problems increase dramatically with the number of operators involved,” he said. 
He explained that there are multiple types of integration issues affecting operators in this scenario. 
“One vendor’s equipment may be compatible with the core network but with another one, it may require considerable effort to integrate. But there is a danger that after the equipment has been integrated the core network, it may still need considerable reconfiguration to work efficiently. This is just the tip of the iceberg; it could be that the billing system is not interoperable, or that the personnel are not trained to handle certain problems – there could be a million different problems.” 
Mavrakis noted the words of Graham Payne, managing director for the MBNL project, as evidence of the tribulations involved in setting up a shared network. Payne said that, unless the companies embarking on a sharing project were fully committed from board level on down, the results could be disastrous. 
“[Payne] said that the integration of the three networks was the biggest achievement of his career, and he’s a seasoned veteran – he’s not a newbie. So that speaks volumes about how difficult it can be,” said Mavrakis. 
He added that even by taking the path that Vodafone and O2 have in the UK, and splitting the market by geographic area, is not a sure-fire way to prevent such integration and cultural problems. 
“There’s no silver bullet; it really depends on each operator. In the case of Vodafone and O2 it may be a better solution, but if we’re talking about a shared network for LTE, from a cost perspective, the more operators involved, the better. The problem is working with the culture and the competitive nature of each operator.” 
However, Mavrakis did admit that because cost savings are the biggest driver for network sharing, the benefits that operators will see from such deals should be sufficient incentive to overcome any integration and cultural problems.

@KimKLarsen: (1) I have come to believe that for #NetworkSharing to be successful/sustainable it needs to provide more than "just" cost saving

@KimKLarsen: (2) Often Operators gets blinded of saving Potential and forget UPFRONT Cash requirements and Restructuring Cost needed!

@dmavrakis: Very interesting! Seems all discussion on network sharing is on benefits, but not on challenges or threats.

@KimKLarsen: (3) TMUK-H3G 3G sharing was about doing a lot more than they could standalone (for same or better TCO), EE Ltd formula similar,

@KimKLarsen: (4) PTC-Or PL Deploy incredible strong SHARED 2&3&4G network across! Poland (would not have been financially feasible standalone)

@dmavrakis: Agreed. Strong drive for single deployed nationwide network+sharing for LTE or any new RAN tech.

@KimKLarsen: (5) Negatives of ?#Networksharing? (a) upfront cash required, (b) helping competition (e.g., H3G-UK), (c) strategic lock-in,

@KimKLarsen: (6) (d) Complex governance (e) Complex & COSTLY disentanglement (f) loss of operational independence (g) asymmetric benefits etc

@dmavrakis: I would hate to think what disentanglement means in an active RAN sharing deal...

@KimKLarsen: (7) Doing more network for same/less TCO compared to standalone is a MUCH Easier case for ?#Networksharing? than just cost saving!
@KimKLarsen: ;-) There are no easy/clean Divorces! but Disentanglement of Active RAN Share w. Spectrum Sharing would be Mother of Messiness!
@dmavrakis: Is it even possible? I feel sorry for the person in charge of such a divorce :-)
@KimKLarsen: Though the lawyers would have a field day with Disentangling an Active RAN Share JV ;-) ....

@dmavrakis: Indeed! Patent litigation and network sharing divorces. Lawyers' dream cases!
@KimKLarsen: (8) Overlooked in ?#Networksharing?: (i) instant cell split=more capacity, (ii) improved coverage, (iii) Spectral efficiency boost
@dmavrakis: Very interesting! Seems all discussion on network sharing is on benefits, but not on challenges or threats.

@Gabeuk: Biggest issue I've heard for #Networksharing is the competitive dynamic -- you need to be more or less equal size

@KimKLarsen: Well then TMUK & Three UK must have been a mistake! ;-) ... Smaller party has much more to gain from sharing that's true!

@KimKLarsen: An important consideration as is the possible asymmetry! but I would not say it's the Biggest Issue nor a Blocking Stone!

@KimKLarsen: As the saying goes: "Money Makes Strange Bed Fellows" ;-) & cost savings do (often) take precedent over market dynamics.

@twehmeier: Interesting to see if agreement unwinds with transition to LTE, a la Sweden. Or are there commitments?

@Gabeuk: TMoUK and 3UK were the two smallest outfits at the time... so it worked for both of them

@Gabeuk: TeliaSonera wanted out of the deal, hence push to LTE. Telenor wont share in Norway, but will in Sweden

@Gabeuk: O2 and Vodafone are RAN sharing in the UK because they are roughly equal size; other combinations couldn't be agreed

@KimKLarsen: It is a highly asymmetric venture in terms of respective market shares and network size -> Size does Not matter too much!

@KimKLarsen: There are no other options in UK for meaningful network sharing! O2/VF needs higher net density to remain competitive!

@KimKLarsen: I just don't believe that Size Matters ;-) is a very important consideration for #Networksharing ...

@dmavrakis: Indeed, VF/O2 can't compete against MBNL's site density on a standalone basis!

@KimKLarsen: The only way O2 & VF could create a network in equal size to EEs in a meaningful economical way is to share their grids!

@Gabeuk: TMo, 3UK, and Orange all needed scale -- hence those combinations, and why VF and O2 sat aside

@Gabeuk: yes, the emergence of EE has changed the telco landscape in the UK

@KimKLarsen: (1) Changes in spectrum strength/position (low vs high freq) between partners might trigger an unwind.

@KimKLarsen: (2) though more likely than unwind would be downgrade from active to passive/site sharing!

@disruptivedean: Issue I see is around flexibility, eg if one MNO's customer profile has v different usage patterns

@dmavrakis: That may be in favor or active sharing. E.g. if busy hours or traffic patterns are different

@disruptivedean: Yes, but might be mix of signalling vs. "tonnage" intense, indoor/outdoor mix, specific geo's etc

@disruptivedean: ie network-sharing puts constraints on business models, customer targets, mktg propositions etc

@dmavrakis: Not sure if network sharing has effect beyond the network dept of MNO.

xoxoxoxoxoxo Added 13/07/2012 xoxoxoxoxoxo


@sadinmobile: Interesting - from experience "network" sharing should be strictly limited to a very short term or site/antenna sharing only..

@KimKLarsen: how do you get to that conclusion/experience? Particular the very short term statement? At odds with the economics!

@sadinmobile: After traffic levels pick up, networks will split anyway, until then it's nothing but tech issues and politics, s/t <5y

@KimKLarsen: 2+ yrs to get a shared network, spending abundant on integration & restructuring, w. <3 yrs to recover! Hmmm ;-)

@KimKLarsen: Though this said (1) I do agree that most of the Opex savings are in site related Opex incl. Ops/field services!

@KimKLarsen: (2) substantial Capex savings/avoidance can be achieved as well … doing so much more for the same amount of cash!

@KimKLarsen: and (3) network sharing is so much more than technology … it’s about marketing too … though politics! YEAHHH that too!

@sadinmobile: site/antenna sharing should def be done for many reasons. Also fibre backhaul sharing is a must for larger landscapes.

@KimKLarsen: particular last point is a really important one for LTE and HSPA+ where legacy backhaul falls short of air-interface!

@KimKLarsen: Few operators have the financial strength & infrastructure to standalone finance FTTS: backhaul sharing is important!

@KimKLarsen: And as backhaul FTTS is shared, so does site sharing jump out as a natural corollary.


Participants:
@dmavrakis = Dimitris Mavrakis
@KimKLarsen = Dr. Kim Larsen
@Gabeuk = Gabriel Brown
@twehmeier = Thomas Wehmeier
@disruptivedean = Dean Bubley
@sadinmobile = Sadin N

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