Australian operators Telstra and Vodafone Hutchison Australia (VHA) announced last week that they will call a halt to their network sharing agreement in 2012. Telstra’s CTO Hugh Bradlow subsequently criticised such agreements as deterring operators from investing in their own infrastructure. Now, it should be noted that the two operators’ co-operation was in the 2100 MHz band while Telstra’s main effort in 3G now occurs in 850 MHz, meaning the alliance becomes superfluous to their requirements. But the break-up still opens a debate on network-sharing that has lain dormant for too long.

Network-sharing has become an orthodoxy for the mobile industry. But a decade or more ago, standard thinking among operators was very different. Back then owning your own network was considered central to differentiation. Telecoms regulators saw sharing of infrastructure as a step on the road to anti-competitive behaviour. And operators guarded their network independence fiercely.

I remember suggesting to a senior executive at a mobile operator from the Asia Pacific region (not Telstra as it happens) what I considered an innovative suggestion. A number of operators in any given market could share their network infrastructure and compete only at the service level (an early vision of network-sharing in other words), thinking the idea far-sighted, and that the executive would be impressed. Actually, he was upset. Indeed he described my idea as “communistic”. What he meant was that network-sharing removes a whole area of potential competition and moves the industry closer to a utility-type service with less choice for the end-user. I’m not sure what the executive would make of the current market. He is probably holed up somewhere in despair at the state of free-market capitalism.

Network sharing is certainly the norm for 3G. This week it was announced that Orange, SFR and Bouygues Telecom would jointly roll out an HSPA+ network in rural France. Operators have always shared infrastructure investment in rural locations. And so they should. Sharing in such circumstances makes good economic sense. But should it become so for LTE too?  How about a return to competition in urban markets?  There seems to be a real advantage to be gained by an operator which is the first to deploy LTE, in attracting lucrative early adopters. Being first to launch should be much more attractive than being equal first with one or more rivals.

It’s time for a few other operators to follow Telstra’s lead and stage a counter revolution that questions the conventional thinking about network sharing.

Richard Handford

 

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members