Future Sharing Opportunities for Mobile Network Operators
Opinion by Steven Hartley, senior analyst at Ovum
The notion of one network is not entirely far-fetched. After the savings of passive sharing have been realised, where can future savngs come from? In our forthcoming report 2020 vision for mobilewe predict that operators will seek increasingly active forms of sharing. Sharing ever more of your infrastructure might sound ridiculous today, but all forms of sharing sounded ridiculous ten years ago.
This will be driven by a combination of data demands driving up capacity needs, competition eroding prices and the propagation characteristics of Long-Term Evolution (LTE) requiring more sites. LTE will be a mature technology too by then and its efficiency gains will have already been largely realised.
The result will be a dwindling number of physical mobile networks, until some markets at the forefront of this trend are left with just one mobile network, including the RAN, backhaul and even transport elements of the core. However, some elements may remain independent, particularly at integrated operators in which proprietary legacy systems are either unable, or unwilling, to be incorporated. 2020 won't see the conclusion of this trend, but its advent will certainly be apparent, most noticeably in Europe and particularly the UK.
The notion is not entirely far-fetched and not without precedent. Functional separation is becoming increasingly common in fixed telecoms, again with the UK leading the way. For mobile it is merely market forces leading to a single network, rather than a dominant player being forced to open up its network.
Vendors could end up operating the single network
An interesting facet of recent announcements has been Ericsson's role. It could end up managing the networks for four of the UK's five operators, if it adds O2 - highly likely given its past experience with the combined T-Mobile and 3. Therefore, in the long-term future, why not let it operate the single network? Today's mobile network operators could then be service retailers.
We're not suggesting that Ericsson has hidden notions of becoming a mobile wholesaler. That would be unfair. However, following the chain of thought to its logical conclusion, this is a reasonable outcome. And of course Ericsson's rivals will be joining the managed services fray too to add the spice of competition.
There's also the option to nationalise the network. The banking industry is currently undergoing this process, so why not?
Mobile regulation would have to evolve
Regulation of mobile services has focused on infrastructure-based competition since the industry's inception. Only over the last couple of years has there been a shift in ideology towards more services-based competition, starting in the fixed network but increasingly now in mobile. While many regulators impose limits on network sharing, the pressure to change will become unstoppable, with the change simply occurring at different rates in different markets.
If there is a single infrastructure, then mobile regulation must evolve. Those with significant market power in the future will be today's vendors. Today's MNOs will effectively be MVNOs. Furthermore, how do regulators deal with the process of transferring ownership of spectrum and infrastructure to an infrastructure vendor?
In markets where vendors control networks, surely their own equipment will be
favoured? From an infrastructure industry perspective this means a smaller
global equipment market and managed services deals becoming crucial to survival.
The only other survival strategy will be to innovate - and thereby become
indispensable to the mega-vendors / network operators.
Survival of the fittest
Ultimately, following current trends to their ultimate conclusions offers interesting insights into the future of our industry. It also highlights how change will impact operators, infrastructure vendors and regulators equally.
So, who will be the winners and losers from all this? Quite simply, commercial Darwinism will reign: those that can most ably adapt to the changed environment will prosper. Those that can not, or will not, adapt must perish.