Understanding the TCO of a Mobile Network

TCO or 'Total Cost of Ownership' is an important topic for the mobile networks. The service providers use it to ascertain how much the network will cost and based on that they decide what they should charge and how much money could make. 

In this basic tutorial, we looks at the basic costs in the mobile network, eventually looking at the CapEx and OpEx of RAN and look at how some operators try to reduce the these costs. Slides and video embedded below.

Beginners: TCO of a Mobile Network from 3G4G

Would love to hear your thoughts and anecdotes.

Related Posts:

• The 3G4G Blog: What is meant by Infrastructure in a Telecoms Network?
• The 3G4G Blog: Mobile Network Cell Tower Site Construction
• The 3G4G Blog: Quick tutorial on Mobile Network Sharing Options
• The 3G4G Blog: Network Sharing is becoming more relevant with 5G
• The 3G4G Blog: Mobile Network Infrastructure Sharing in Japan over Electric Power Infrastructure
• Connectivity Technology Blog: Different Types Of Service Providers

The Journey from Communications Service Provider (CSP) to Digital Service Provider (DSP)

Reliance Jio has recently been called as India's first digital service provider (DSP), but what exactly is a DSP and how does an existing mobile network transform from the traditional communications service provider (CSP) to a DSP?

Service Providers are also known as Telecommunications Service Provider (TSP) or Communications Service Provider (CSP). Basically, they refer to someone who provides services.

Mobile Network Operators (MNOs) are also referred to as Mobile Service Providers (MSPs) or Wireless Service Providers (WSPs). Even though CSP is a generic term, it generally always refers to MSP.

The term “Digital Service Provider" applies to any company that distributes media online. In the case of telcos, it's an organization that has moved on from offering core, traditional telecom services, to providing mobile broadband access, services, content and apps, all sold directly from the device.

Analysys Mason provides this simple equation to explain how a CSP can transform into DSP

Another way of representing this is to compare CSP & DSP as shown in the table below

We made a tutorial on this topic, the slides and video is embedded below. If you want to jump directly to the DSP part, move to 2:35 in the video.

Beginners: Different Types of Service Providers (SPs) from 3G4G

Finally, another term that gets thrown around often confuses people is Telco & Netco

Telco stands for Telecommunications Company, which basically means Mobile Network Operator.

NetCo or Network cooperation is the practice of a Mobile Network Operator (MNO) sharing part of its Radio Access Network (RAN) with another MNO.

There are other terms like Towerco & Infraco that probably deserve their own post.


Related Posts:

• 3G4G: MNO, MVNO, MVNA, MVNE: Different types of mobile operators
• The 3G4G Blog: Quick tutorial on Mobile Network Sharing Options
• The 3G4G Blog: How MOCN RAN-Sharing Works
• Connectivity Technology Blog: Different Types Of Service Providers
• Operator Watch Blog: Jio is the Largest Mobile Network in India by Subscriber Numbers

Mobile Network Infrastructure Sharing in Japan over Electric Power Infrastructure

On the 3G4G Small Cells Blog, I have written about the Autralian operator Telstra trialing small cells on Tasmania’s power poles to fix mobile black spots. This looks like a similar initiative in Japan but at a much larger scale.

KDDI have an announcement in Japanese here but Rakuten has one in English:

TEPCO (Tokyo Electric Power COmpany) Power Grid, Incorporated, KDDI CORPORATION, SoftBank Corp. and Rakuten Mobile Network, Inc. announced that the four companies have reached an agreement to collaborate on trials of base station site and equipment sharing utilizing TEPCO PG’s utility poles and other electric power infrastructure, ahead of the introduction of 5th generation mobile communications systems (5G) in Japan. The trials are due to be begin in the first half of FY2019.

5G utilizes high frequency bands in order to enable higher speeds and greater capacity. As a result, the number of base stations required for 5G is expected to be larger than for 4G. The growing number of base stations not only creates difficulties in securing installation locations, but also calls for consideration on the impact too many antennas and other equipment might have on the landscape.

TEPCO PG has been working together with KDDI to explore the shared utilization of utility poles and other electric power infrastructure and base station equipment between mobile network operators, and as preparations are now complete, the companies are set to begin the trials using actual equipment.

The trials, which SoftBank and Rakuten Mobile Network are also set to join, aim to verify the feasibility of location and equipment sharing between mobile network operators. Specifically, the trials will evaluate the equipment, layout, workability, serviceability and the level of radio interference resulting from sharing the antenna for base station installations on utility poles. There are also plans to expand the number of companies participating in the trials to include other organizations planning to utilize 5G in the future.

Sharing utility poles among a number of mobile network operators makes it possible to flexibly build out base stations in urban areas and rapidly launch services in rural areas. It is also expected to address the issue of securing locations for base stations and lowers the impact of base station equipment on the landscape.

Through the trials, TEPCO PG, KDDI, SoftBank and Rakuten Mobile Network aim to reduce the infrastructure construction costs and contribute to the smooth nationwide introduction of 5G.

The picture on the top is from KDDI press release, translated using Google Translate.


Related Posts:

• The 3G4G Blog: Quick tutorial on Mobile Network Sharing Options
• The 3G4G Blog: A practical use of MOCN in ESN

A practical use of MOCN in ESN

Just came across this slide from recent DAS & Small Cells Congress where EE talked about their ESN network development. Found this particular example interesting as they talk about how the commercial user and ESN user would use the same RAN but a different core.

This ties nicely with a recent tutorial that I did on Mobile Network Sharing options. If you would like to learn more, see here.

Related Post (added 23 March 2019)

• Update on UK's Emergency Services Network (ESN) from BAPCO 2019

Quick tutorial on Mobile Network Sharing Options

Here is a quick tutorial on mobile network sharing approaches, looking at site/mast sharing, MORAN, MOCN and GWCN. Slides and video embedded below. If for some reason you prefer direct link to video, its here.

Mobile Network Sharing from 3G4G

See also:

• Telecoms Infrastructure Blog: Passive and Active Infrastructure Sharing
• Telecoms Infrastructure Blog: Small Cells Network Sharing
• The 3G4G Blog: Network Sharing is becoming more relevant with 5G
• The 3G4G Blog: A practical use of MOCN in ESN

Network Sharing is becoming more relevant with 5G

5G is becoming a case of 'damned if you do damned if you don't'. Behind the headlines of new achievements and faster speeds lies the reality that many operators are struggling to keep afloat. Indian and Nigerian operators are struggling with heavy debt and it wont be a surprise if some of the operators fold in due course.

With increasing costs and decreasing revenues, its no surprise that operators are looking at ways of keeping costs down. Some operators are postponing their 5G plans in favour of Gigabit LTE. Other die hard operators are pushing ahead with 5G but looking at ways to keep the costs down. In Japan for example, NTT DOCOMO has suggested sharing 5G base stations with its two rivals to trim costs, particularly focusing efforts in urban areas.

In this post, I am looking to summarise an old but brilliant post by Dr. Kim Larsen here. While it is a very well written and in-depth post, I have a feeling that many readers may not have the patience to go through all of it. All pictures in this post are from the original post by Dr. Kim Larsen.

Before embarking on any Network sharing mission, its worthwhile asking the 5W's (Who, Why, What, Where, When) and 2H's (How, How much).

• Why do you want to share?
• Who to share with? (your equal, your better or your worse).
• What to share? (sites, passives, active, frequencies, new sites, old sites, towers, rooftops, organization, ,…).
• Where to share? (rural, sub-urban, urban, regional, all, etc..).
• When is a good time to start sharing? During rollout phase, steady phase or modernisation phase. See picture below. For 5G, it would make much more sense that network sharing is done from the beginning, i.e., Rollout Phase

• How to do sharing?. This may sound like a simple question but it should take account of regulatory complexity in a country. The picture below explains this well:

• How much will it cost and how much savings can be attained in the long term? This is in-fact a very important question because the end result after a lot of hard work and laying off many people may result in an insignificant amount of cost savings. Dr. Kim provides detailed insight on this topic that I find it difficult to summarise. Best option is to read it on his blog.

An alternative approach to network sharing is national roaming. Many European operators are dead against national roaming as this means the network loses its differentiation compared to rival operators. Having said that, its always worthwhile working out the savings and seeing if this can actually help.

National Roaming can be attractive for relative low traffic scenarios or in case were product of traffic units and national roaming unit cost remains manageable and lower than the Shared Network Cost.

The termination cost or restructuring cost, including write-off of existing telecom assets (i.e., radio nodes, passive site solutions, transmission, aggregation nodes, etc….) is likely to be a substantially financial burden to National Roaming Business Case in an area with existing telecom infrastructure. Certainly above and beyond that of a Network Sharing scenario where assets are being re-used and restructuring cost might be partially shared between the sharing partners.

Obviously, if National Roaming is established in an area that has no network coverage, restructuring and termination cost is not an issue and Network TCO will clearly be avoided, Albeit the above economical logic and P&L trade-offs on cost still applies.

If this has been useful to understand some of the basics of network sharing, I encourage you to read the original blog post as that contains many more details.

Futher Reading:

• Fundamentals of Mobile Network Sharing
• The ABC of Network Sharing – The Fundamentals (Part I).

Case Study: RAN Sharing in Poland

The last post on Network sharing by NEC was surprisingly popular so I thought its worth doing a case study by Orange in Poland on how they successfully managed to share their network with T-Mobile. Full presentation embedded as follows:

Deployment of RAN Sharing in Poland from Zahid Ghadialy

NEC on 'Radio Access Network' (RAN) Sharing

Its been a while we looked at anything to do with Network Sharing. The last post with an embed from Dr. Kim Larsen presentation, has already crossed 11K+ views on slideshare. Over the last few years there has been a raft of announcements about various operators sharing their networks locally with the rivals to reduce their CAPEX as well as their OPEX. Even though I understand the reasons behind the network sharing I believe that the end consumers end up losing as they may not have a means of differentiating between the different operators on a macro cell.

Certain operators on the other hand offer differentiators like residential femtocells that can enhance indoor coverage or a tie up with WiFi hotspot providers which may provide them wi-fi access on the move. The following whitepaper from NEC is an interesting read to understanding how RAN sharing in the LTE would work.

“NEC’s Approach towards Active Radio Access Network Sharing” from Zahid Ghadialy

Fundamentals of Mobile Network Sharing

Some days back I blogged about the twitter discussion on 'Mobile Network Sharing'. Dr. Kim Larsen from Deutsche Telekom (DT) has now made a presentation and in his own words:


Given the renewed discussion of Network Sharing pros and cons I thought it made sense to wrap up several of my older presentations and update some of the information with latest knowledge. 


The myth of network sharing is clear -> huge savings and benefits often blinding the decision makers for the other side of the coin. 


I hope this presentation provided a fair picture of both sides of the Network Sharing Coin!

Fundamentals of Mobile Network Sharing

View more presentations from Kim Kyllesbech Larsen

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

Analysing the Network Sharing Opportunity

Interesting presentation by Thierry DUPONT, TDF in the LTE World Summit 2012.

LTE World Summit 2012 - Day 1 T1 Thierry Dupont TDF from ceobroadband

Network sharing and other means to leapfrog operator efficiencies

Ultra-efficient network factory: Network sharing and other means to leapfrog operator efficiencies.

View more presentations from Kim Kyllesbech Larsen

UTRAN Network Sharing

This is a new feature that the network operators are getting more interested in. The problem is that the Network side is more prepared than the handset side which still has some way to go.

The possibility of sharing part or all of the network by two or more separated commercial entities was not considered in the initial specification work of 3GPP. However, as e.g. a result of partnerships, the need for two or more operators to share common network infrastructure has become an economically desirable goal. Meanwhile, changes to public network operating licence conditions make such sharing possible from a regulatory point of view.

Some work has already been carried out in this area with the definition of the equivalent PLMN concept and partly with the introduction of Iu-Flex, but there is still the need to consolidate these activities under a coherent work plan.

Network sharing is in a way similar to what is done by MVNO's who use the host network to offer services. In network sharing case the other operator would not generally be a MVNO and probably the equipment would belong to both of the operators along with the cost and revenue earned. This is easily possible if the network is not overloaded (as in case of 3 UK) but if its a long time existing operator (like Vodafone) than they may not have enough spare capacity to allow someone else to share their infrastructure.

3GPP Specs for further reference:

3GPP TS 23.251 - Network Sharing; Architecture and functional description

3GPP TR 22.951 - Service aspects and requirements for network sharing