China Telecom and China Unicom jointly build and share 5G RAN

China Telecom and China Unicom, two of China’s three leading telecom operators, and two of its four 5G licensees, will jointly cover parts of the country with one shared 5G radio access network.

The two companies, both listed on the Hong Kong Stock Exchange, signed the “Framework Agreement on Co-building and Co-sharing 5G Networks” on Monday. According to the Agreement, the two operators, by sharing the radio spectrums to their names, will “build together” and “share together” one 5G radio access network in 15 major cities, including Beijing, Shanghai, Shenzhen, Guangzhou, etc. The 5G core networks will be built separately.

The Agreement also laid out the plan on how to divide the work between the two in the cities they will share the network. Territories each will cover is divided roughly based on the number of 4G base stations. For example, in Beijing, China Telecom will build 40% of the 5G base stations, while in Shanghai it will build 60%. Each company will be responsible for investing in, maintaining, and operating the base stations it builds. The Agreement also commits “non-aggression” between the partners, for example, collaboration with third parties by one partner should not harm the interest of the other partner. Details of revenue settlement in the shared networks will be worked out later.

On top of that, the two companies will build their own separate 5G networks in other parts of the country. China Telecom’s own network will extend to 19 provinces, while China Unicom’s will cover 10.

The two operators, together with China Mobile, the world’s largest mobile operator by subscriber numbers, and China Broadcasting Network Corporation Ltd, were all awarded 5G licences in June, well ahead of what the industry had expected.

Europe not happy about Czech network sharing arrangements

The Czech Republic’s two dominant mobile operators are sharing one network and the European Commission thinks this is taking things too far.

When the EC thinks something might be dodgy, but hasn’t totally decided yet, it likes to kick things off by sending a statement of objections to all concerned. This puts them on notice that it’s looking into the situation and initiates an investigation. Hence the network sharing arrangement between the Czech versions of O2 and T-Mobile is now under the EC microscope.

“Operators sharing networks generally benefits consumers in terms of faster roll out, cost savings and coverage in rural areas,” said Commissioner Margrethe Vestager. “However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive. In the present case, we have concerns that the network sharing agreement between the two major operators in Czechia reduces competition in the more densely populated areas of the country.”

This is an intriguing conundrum; how can something good suddenly become bad when it’s done too much? To be fair, between them T-Mobile and O2 account for almost three quarters of Czech subscribers. If the only other MNO of note – Vodafone – is frozen out of this arrangement that would appear to put it at a massive disadvantage. The EC is also concerned that their collective dominance means they have a disincentive to provide a decent service.

O2 and Vodafone double down on network sharing deal for 5G

Network sharing deals are not new in the UK, but with O2 and Vodafone evolving their existing relationship to active infrastructure, the partnership certainly has a new mission.

Announced today, O2 and Vodafone have agreed to share 5G active equipment, such as radio antennas, on joint network sites across the UK. The approach should accelerate 5G deployments in the areas where infrastructure investments are not as commercially attractive, though the 23 largest cities have been excluded from the deal.

“Today is an important step in demonstrating our commitment to invest for the future, with mobile connectivity one of the UK’s most powerful opportunities to strengthen the economy and improve the lives of British people,” said O2 CEO Mark Evans. “This agreement will enable us to roll-out 5G faster and more efficiently, benefiting customers while delivering value for our business.  It also importantly allows us to utilise the spectrum we acquired in the last auction very effectively.”

“We’re driving our 5G roll-out forward with this agreement, and taking our customers, our business and the whole of the UK with us,” said Vodafone CEO Nick Jeffrey. “Greater autonomy in major cities will allow us to accelerate deployment, and together with active network sharing, ensures that our customers will get super-fast 5G in even more places more quickly, using fewer masts. We can boost capacity where our customers need it most so they can take full advantage of our new unlimited plans.”

Prior to this announcement, the duo were already in partnership through the Cornerstone Telecommunications Infrastructure (CTIL) joint-venture. This company effectively acquires and manages passive infrastructure across the country, enabling the pair to share costs on some of the most expensive aspects of network deployment; site acquisition, local government bureaucracy and civil engineering.

This new agreement takes the relationship one step further. Although many telcos around the world believe active equipment is a means to differentiate experience, the pair are putting aside their squabbles to grow the network across all regions in the UK. For those areas where ROI is more difficult to realise, spectrum assets will be the only differentiating factor.

In the larger, more densely populated environments, the duo will remain competitive. In 23 large cities, covering 16% of combined cell sites, all assets will be separate. In cities such as London, Manchester or Liverpool, profitability has not been difficult to demonstrate through network expansion, such is the number of subscribers in such a small geographical zone.

Although we are slightly surprised by the concept of sharing active equipment, it is a logical path for the two telcos to take. Spectrum assets should be enough to deliver some sort of differentiated experience, and if the telcos want to move up the value chain, they will need to reconsider their thoughts on the delivery of data.

Connectivity revenues will remain the core business, but 5G presents an opportunity to create a new role in the ecosystem and deliver more value-added services. To enable this, a new mindset to network infrastructure has to be acquired to free up revenues for other areas. This is not the only advantage of network sharing deals, but the intelligent reallocation of funds could allow MNOs to transform from ‘Communications Service Providers’ to ‘Digital Service Providers’.

Coopetition is becoming permanent fixture of 5G world

It might be a management consultant phrase, enough to have some clawing their eyes out, but coopetition is quickly becoming the norm as telcos drive towards the elusive goal of ROI.

The latest firms to enter into the new-era relationship are Orange and Proximus. Announced this week, the duo has signed a term-sheet to enter into a mobile access network sharing agreement by the end of the year. The scope of the partnership will be to meet raising demands in terms of mobile network quality and indoor coverage.

“The signing of the term sheet is an important step in reaching a final mobile access network sharing agreement between Proximus and Orange Belgium,” said Dominique Leroy, CEO of Proximus. “It will allow us to embark on a faster and broader 5G roll-out while improving mobile network capacity and coverage to the benefit of our customers and while keeping a strong and differentiated customer experience.”

“Mobile access network sharing is a trend in Europe which benefits consumers, as it enables more efficient investments to cope with the increasing data consumption,” said Michaël Trabbia, CEO of Orange Belgium. “The timing of this mobile access network sharing agreement is important as it will allow us to accelerate 5G roll-out, while bringing significant environmental benefits by reducing the combined energy consumption by 20%.”

This is a very simple partnership ultimately. The two telcos will enter into a shared infrastructure agreement, it seems both passive and active infrastructure is included but will rely on their own spectrum to differentiate on customer experience. This does appear to be an increasingly common strategy across the European continent to drive the commercial appeal of the connectivity business.

Another example of such business is in the UK, where the telcos have paired off to create joint-ventures to own and manage passive infrastructure in certain regions. CTIL and MBNL are the JVs in question and allow the four MNOs to share the expensive job of civil engineering but differentiate their offerings on the active equipment being installed on the masts and spectrum assets.

One of the reasons such partnerships are becoming more common across Europe is scale. With more than 100 different telcos across the continent, the telcos cannot achieve the same subscriber bases as counterparts in the likes of the US and China. This impacts procurement strategies as well as the ability to drive ROI in the mid-term.

Bearing this in mind, densification and network rollout into the rural communities becomes a problem. 5G is eventually going to force the telcos to acquire more mobile sites in the urban areas, to deal with the traffic increases but also to compensate for shorter spectrum ranges on higher-frequency bands. The rural environments are of course less commercially attractive due to the lower population density, but there are both commercial and regulatory demands to prevent a digital divide.

“The deal between Orange and Proximus is just the latest in a series of network partnerships designed to keep a lid on costs and accelerate deployment,” said Kester Mann of CCS Insight. “This is particularly important at the start of the new 5G era as operators continue to scratch their heads over the business case for investment.

“Although the approach could limit opportunities for operators to differentiate based on connectivity, it could free up investment in other areas such as content, vertical markets and new services. This can only be to the benefit of the consumer.

“We should expect further industry collaboration going forward. This could include the possibility of more innovative models such as shared networks between all operators in a single market or ownership of assets such as spectrum and infrastructure by independent third parties or even government.”

Another recent example of this type of coopetition is in Japan. Last week, KDDI and Softbank came to an agreement to share infrastructure in rural environments. This initiative is also geared towards reducing the burden of capital expenditure in delivering 5G to every corner of society. TIM and Vodafone Italia are another duo exploring the coopetition play to tackle the issue of rural 5G connectivity.

Elsewhere in the telco world, coopetition is emerging in the services game.

There are numerous examples of telcos buddying-up, for most cases with telcos outside of their commercial jurisdiction, to jointly develop services for 5G epoch. As it stands, 5G is nothing more than a ‘bigger, badder, faster’ version of 4G, though if the financial promises are to be realised differentiation is needed. For most, this means venturing into the murky world of enterprise services.

Last month, SK Telecom and Deutsche Telekom announced a partnership which would develop various technologies to improve indoor coverage and explore low-latency media services. A long-standing partnership between DT and Orange has led to the emergence of Djingo, a smart-assistant to challenge the dominance of the OTTs in the smart home.

Coopetition might sound like a buzzword fit for boardrooms of coffee drinkers and overpaid management consultants, but it is a trend which is slowly emerging in the telco world. And in some cases, it might just be the perfect solution to drive towards the long-overdue profits.

BT’s rural position is nothing more than defensive strategy

BT has unveiled its own proposals to bridge the rural divide, but this strategy is just as much about protecting its own attractive position as it is connecting the unconnected.

In a letter to the Daily Telegraph earlier this week, BT’s consumer CEO Marc Allera outlined the vision for a digital society where everyone reaps the benefits. BT is proposing infrastructure tit-for-tat in the regions where there is coverage from at least one of the UK MNOs, and a more simplistic infrastructure sharing proposal in the genuine not-spots.

Both ideas are completely reasonable, and both are geared towards protecting a competitive edge for BT, created through years of mobile infrastructure expansion.

Although there are arguments that rural roaming or network sharing propositions would slow down investment and the rollout of mobile infrastructure, following the money is perhaps a better means to understand BT’s underlying strategy. With every change made in the telco landscape, there is financial gain and loss. When BT proposes an idea, you must question what the financial gain or loss is.

The reason Allera is making noise through the mainstream press right now is due to the negative PR the company attracted a couple of weeks back. O2, Vodafone and Three proposed an infrastructure sharing initiative, which was promptly rejected by BT, painting the picture of a spoilt child having a hissy fit because he has been told to share his favourite toy train. However, when you delve into the details, you see BT’s rejection was a sound commercial decision.

In short, the trio of competitors proposed opening-up current mobile infrastructure, forcing any mast owners to allow competitors to place radio equipment on the structure in areas which have been deemed underserved. This sounds fantastic for the consumer and the Government’s ambition of 95% geographical 4G coverage by 2022, but it effectively erodes the position BT/EE has spent years attempting to craft.

BT/EE has the best mobile coverage throughout the UK. This is not only average speed, but geographical spread. Some might dispute this point, but year after year test from the likes of Opensignal and Ookla crown EE the champion. This has allowed it to tell customers they will be able to get fantastic signal almost everywhere in the UK, an advantage over rival MNOs.

The cost when it comes to expanding 4G coverage is not necessarily anything to do with the radio equipment, but everything else. Acquiring the land, negotiating local planning laws, constructing the site, wiring it up with fibre and electricity, the raw materials and the man power, all add up to make an expensive proposition. It’s no wonder telcos want to open competitor’s masts as opposed to building it themselves. It’s much faster and significantly cheaper to simply pay an engineer to fix radio equipment to an existing mast.

Should the trio’s proposal of collaboration be accepted, this would effectively kill this advantage and completely undermine a long-term commercial strategy. No competent business person would agree to such an initiative, especially considering how much it would have cost.

Now take into consideration the BT alternative.

Firstly, in the areas where there is only one telco present, BT would allow one of its rivals to use its infrastructure, but only if the competitor opens one of its own masts to BT. This creates the collaborative framework legislators and regulators are keen to see but protects BT’s competitive edge, and prior investments, and allows it to enhance its own coverage footprint. Yes, it does help a rival, but the pros outweigh (or at least equal) the cons, and it doesn’t allow competitors to bypass the process BT/EE would have painfully gone through in the past.

This would be the idea for areas where there is a telco present, but for the genuine not spots, where none of the MNOs can provide service, a more straightforward infrastructure sharing agreement can be created. All four would contribute to a pot and all would be free to put whatever radio equipment on the mast.

This does not necessarily encourage competition, but these not spots offer very little commercial potential to anyone. Extending coverage to these areas is not about providing a service to customers but meeting the coverage expectations of the Government. Sheep don’t pay phone bills after all, but occasionally a rambler might want to Instagram said sheep.

While this might not sound like the ‘we’re all in this together’ rhetoric which has been banded around, realistically this very few people would think contrary to this position. These are commercial businesses which are in place to compete with rivals and make money. BT might be spinning their argument to suggest such collaborative schemes would slow down infrastructure rollout, but 99% of decisions in big business always come down to money.

Why would BT want to help its competitors compete in a market which is incredibly difficult to find profits in the first place?

A post-Brexit Ofcom worries us – Vodafone

With the anti-China rhetoric dominating the headlines in recent months, Brexit chatter has become unfashionable. But with the deadline fast approaching, what will Ofcom look like in the future?

Speaking at a breakfast briefing in London, Vodafone UK Chief Counsel and External Affairs Director Helen Lamprell let loose on the UK regulator. Cell tower height, rural roaming, potential reintroduction of international roaming charges, dark fibre and auction dilemmas, there seemed to be a lot of venting going on.

“The UK remains a challenging environment [regulatory], one of the most challenging in the world,” said Lamprell. “But we are seeing positive change.”

The issue which Vodafone is keeping an eye-on is Brexit. According to Lamprell, Ofcom is one of the most conservative regulators throughout the bloc, though when it is freed from the tethers of the Body of European Regulators for Electronic Communications (BEREC), there is a risk it could become even more so.

There isn’t necessarily one massive bugbear from the telco, but several little aggravations which all combine to a much larger nuisance. Let’s have a look at mast height to start with.

Everyone wants signal, but no-one wants towers

As it stands, UK cell towers are limited to 25 metres in height. This obviously doesn’t take into account those masts which are placed on the top of buildings, just the actual structure itself. In most cases, this doesn’t have a massive material impact on operations, such is the population density of the UK, but when you look at countryside locations it becomes a much larger discussion.

Part of the up-coming 5G spectrum auctions will place coverage obligations on telcos. This is a reasonable request by the government, as telcos have shown they will not bridge the digital divide on their own, though as it stands 99% of the UK population is currently covered. Geographical coverage is no-where near this figure, though as there is little commercial gain from providing coverage to these remote locations, reaching the 90% objective is difficult.

One way which this could be done is by providing exemptions to the 25-metre limit in certain situations, such as the countryside, as CTO Scott Petty pointed out, for every 10-metres you go up the coverage ring is doubled.

All four of the major UK MNOs (EE, O2, Vodafone and Three) are meeting with the Department of Digital, Culture, Media and Sport (DCMS) this afternoon, and this will be a point on the agenda. Should these exemptions be granted, it opens the door for shared infrastructure also, as the main cost of these structures is civil engineering and construction, not the equipment on the tower. Both of these developments combined would aid the telcos in reaching the geographical coverage objectives.

This brings us onto another interesting point raised by Lamprell, rural roaming.

My restless, roaming spirit would not allow me to remain at home very long

“Rural roaming takes away our incentive to invest,” Lamprell said. “It’s a really, really dumb idea.”

Three are one of the companies pushing for rural roaming, but as the Vodafone team points out, it is the only MNO which hasn’t built out its rural infrastructure. However, should rural roaming be introduced it would cause a stalemate for investment.

As Petty points out, why would any MNO invest in its own infrastructure when it could force its way onto a competitor’s? All the telcos would be sitting on the starting line, waiting for another to twitch first, such is the pressure on the CAPEX spreadsheet column when investing in future-proofed infrastructure.

Moving onto the international roaming question, Vodafone is staying pretty agile right now. As it stands, the status quo will be maintained, though the team will react to the commercial realities of a post-Brexit landscape. Currently, as a member of the European Union, Vodafone is protected from surcharges when it comes to termination charges, though those protections will end with Brexit.

Vodafone has quite a significant European footprint, in most cases there is little to worry about, but for those territories which fall outside the Vodafone stomp, negotiations will have to take place.

There are several countries, Estonia is an example, which has higher termination rates than the UK. If the reality of a post-Brexit world is Vodafone is swallowing up too many charges from international calls/SMS/data, roaming charges might have to re-introduced in certain markets. This is all very theoretical currently however Ofcom will prevent Vodafone from replicating these charges from the European nations. Vodafone is sitting and waiting for the realities of Brexit right now, though it will not be a broad-brush approach.

“Our position today is to maintain the position we are in, but we will have to evaluate the situation at the time,” said Lamprell.

Ignore Luke, the Dark Side is great

Dark fibre. It used to be a popular conversation, but everyone seems to have forgotten about it recently.

Not Lamprell.

The focus of Ofcom over the last 12 months or so has been on opening-up ducts and poles, and while this certainly is progress, it only addresses part of the problem. Dark fibre is an aspect of the regulatory landscape which could add significant benefits to the industry but has seemingly become unfashionable.

Dark fibre, fibre cabling which is not currently being utilised by Openreach, could answer the backhaul demands of the increasingly congested networks quickly and efficiently. Mainly as it is already there. There is no need to dig up roads, apply for planning permission or procure new materials, it could be as simple as flicking a switch.

Openreach resistance and Ofcom’s aggressive focus on ducts and poles is perhaps missing a trick.

Going, going, maybe not yet

The UK is currently in somewhat of an unusual and unprecedented situation. It is one of the nations leading the world into the 5G. This is not to say it is in a podium position, but compared to the 4G era, the UK is sitting pretty.

Part of the reason for this has been early auctions to divvy up spectrum assets, however, moving forward there are some irregularities which is causing some head-scratching.

Later this year, Ofcom will kick-start another auction which will see 120 Mhz of spectrum in the 3.6-3.8 GHz bands, as well as 80 MHz in the 700 MHz band go up for sale. For both Lamprell and Petty, this auction doesn’t make sense. These are two bands which will be used for different purposes (coverage and speed) so why auction them off together.

If Vodafone had known this was going to happen back in April 2018, during the first spectrum auction, it might have altered its strategy.

“We could end up with a very fragmented spectrum situation,” said Petty.

From the team’s perspective, it seems Ofcom has only just woken up to the coverage demands of the UK government, and is using this auction as a blunt tool to meet the objectives. From an engineering perspective it doesn’t seem to make much sense to Vodafone.

“We are not happy with the rules,” said Lamprell. “But it’s rare for us all [MNOs] to be happy.”

Looking good but looking suspect

The UK is currently in a good position ahead of the 5G bonanza from an engineering perspective. With test hubs being set up around the country and telcos who are acting proactively, the UK looks like an attractive environment to invest in for R&D. It is by no-means leading the global 5G race, but it is in a healthy position.

However, political and regulatory uncertainty are a threat to this perception. The activities and culture of both DCMS and Ofcom over the next couple of months will has a significant impact on the 5G fortunes of the UK, as well as the ability to attract new talent, companies and investment.

TIM and Vodafone Italia sign 5G network sharing pact

Competing Italian MNOs TIM and Vodafone Italia have decided it makes sense to pool their resources when it comes to 5G infrastructure.

Having blown their reserves on the recent 5G spectrum auction, the two have presumably spent the intervening time contemplating awkward concepts like return on investment. Rivals tend not to partner unless they’re so desperate for the return on such a move that it outweighs their instinctive aversion to cooperating with each other.

Hence they have signed one of those rather limp memoranda of understanding, that in this case is a public statement that they’re both up for active network sharing over 5G, but they can also bail out as and when they no longer fancy the idea. Active network sharing involves the actual kit, while passive just means sites, towers, etc.

They already have a passive sharing agreement in place for 4G and that has presumably gone smoothly. So TIM and Vodafone now reckon it may be time to take their relationship to the next level and get active with each other. The main focus of all this activity is 5G but they’re seriously considering extending that to 4G too.

“This partnership will allow our customers to enter the 5G revolution faster and deeper, while at the same time making the best use of both companies’ resources,” said TIM CEO Luigi Gubitosi. “We believe that network sharing is key to do more, effectively and better for the benefit of our clients and all stakeholders, in view of the process of change that will be triggered by the launch of 5G in the years to come and that will be paramount for the development and digitalization of our country.”

“This partnership will allow us to generate significant benefits for our customers and other stakeholders, who will be able to enjoy the best 5G experience, made available in a shorter period of time and across a wider geographical area,” said Aldo Bisio, CEO of Vodafone Italia. “5G represents a technological breakthrough that will have a profound impact on society, and that requires investment, efficiency and a rapid rollout. This has led us to broaden the scope of our existing successful partnership.”

They even have aggressive ambitions for the passive side of things and are contemplating combining the 22,000 towers they collectively own into one company. This wouldn’t be entirely straightforward as TIM’s tower division – Inwit – is partly independently listed so there will be extra scrutiny over the pros and cons of the move.

The announcement coincides with TIM’s full-year 2018 numbers and its announcement of a new cunning plan for the next three years. Revenue growth was flat and the plan is the usual corporate stuff about efficiencies, profit, etc. While partnerships like this have a distinctly defensive feel about them that doesn’t mean they’re a bad idea and if they’re shown to boost the bottom line then everyone’s a winner.

Germany’s 5G auction has not got off to a flying start

Telefónica Deutschland has filed an urgent appeal against the country’s 5G auction terms. Deutsche Telekom may follow suit.

Telefónica Deutschland was seeking to halt the country’s 5G auction by filing an appeal for injunction at an administrative court in Cologne on Tuesday 5 February. Germany was scheduled to hold the 5G auction by the end of March and was expecting to raise up to €5 billion. The key items on the terms issued by the Federal Network Agency being contested are concerning the coverage requirements, especially the coverage in rural areas and along motorways, and the mandated network sharing with competitors (the so-called domestic roaming).

Telefónica Deutschland argued that the coverage obligations could not be fulfilled with the spectrum at auction, while the frequency in its possession is already being used by other expansion requirements.

“This legal uncertainty is extremely unhelpful for the necessary massive investments in future network expansion. Billions in 5G cannot be invested on the basis of unclear rules. It must be in the interest of all involved that clarity and planning security are created here before an auction,” said Markus Haas, CEO of Telefónica Deutschland.

Telefónica was also unhappy that politicians should demand network sharing between competitors. “We have already invested €20 billion in infrastructure in Germany. We have always said that we will continue to invest if the conditions are right,” Haas told the German publication Handelsblatt late last year. However, as a condition to approve its merger with E-Plus in 2014, EU regulators already required Telefónica to make 30 percent of its capacity available to MVNOs, in this case 1&1 Drillisch.

Meanwhile Telefónica insisted that even if there would be a delay in the auction, “this would not have any influence on a large-scale launch of 5G in Germany. This is because the spectrum available for auction for this purpose will not be allocated to the successful participants until the end of 2020 anyway,” the company said in a statement.

Deutsche Telekom may also consider its position differently now. It first told Handelsblatt “we have not yet made an urgent request, to avoid delaying the auction schedule.” But in light of the new appeal from Telefónica, “we are therefore examining all legal options,” the spokesperson added.

It is not the first time the telcos have resorted to legal measures. By the end of December, Deutsche Telekom, Vodafone, Telefónica, as well as the challengers United Internet and Freenet had all filed lawsuits against the government’s rules over the upcoming auction, but none was successful in halting the process.

Deutsche Telekom, Vodafone, Telefónica, and United Internet (trading as “1&1 Drillisch”) filed applications before the deadline of 25 January to participate in the upcoming 5G auction.

Collaboration will be key for telcos in an era of shared 5G networks

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Virat Patel, Managing Director of Pioneer Consulting Asia explores network sharing in the 5G era.

A proposal was recently put forward in the US that its 5G networks should be built and maintained by the US government. In part, this recommendation was made with the view of mitigating espionage risk by Chinese network equipment providers. However, another reason for this recommendation was that the sheer cost of rolling out a nationwide 5G network may not be justifiable based on the potential returns any single operator will be able to generate.

For previous generations of network technology, including the most recent 4G networks, each provider has rolled out their own nationwide network. While there are instances of tower sharing and leasing as well as wholesale agreements, for the most part the operators own their network infrastructure.

The challenge is that for 5G to deliver on its promises of low latency (sub 10ms) and high bandwidth, the number of cells required per km represents a 10-fold increase on the current density. This results in much high capex requirements for telcos and is likely to reduce their willingness to deploy the infrastructure to less populated areas which unfairly penalizes residents in these parts with slower connectivity speeds.

If the government takes responsibility for rolling out the 5G network, this would reduce capex wastage by providing a single 5G network across the country instead of multiple operators deploying their own overlapping networks. Some fear that this will lead to an inefficient government market place that stifles competition, exactly the kind of utility telecom the US government broke up in 1984.

However, there are precedents that suggest government sponsorship of infrastructure can in fact lead to more competition. In efforts to provide high quality broadband with nationwide coverage, governments have already taken steps to launch government supported networks known as national broadband networks (NBNs). Singapore has one of the most successful implementations of an NBN in which the government drove the development of passive and active infrastructure through incentives and fostered a highly transparent and competitive retail market. This model has led to some of the lowest broadband prices in the world. Completing the public to private sector initiative, the entity that owned and wholesaled the passive infrastructure was IPO’d in 2017.

Can the 5G business case work without some form of network sharing?

While 5G standards are still being finalized, the business case for 5G is unlikely to stack up without the sharing of networks – both passive and active components. Even if government ultimately does not take on the task of building out 5G networks, there appears to be a strong business case for operators to go beyond tower sharing and consider sharing radio access and backhaul to minimize their individual capex. Should either of these scenarios materialize, Telcos will no longer compete on network availability or core connectivity services (since all will be identical) but rather on digital services and operational cost efficiencies.

In this scenario of shared 5G networks, how can telcos differentiate their services?

Telcos will need to leverage new technologies and tap into emerging consumer trends to offer services that deepen consumer engagement with their services in a cost-efficient manner.

Below we have outlined emerging technologies and trending services that telcos should consider offering to build differentiation in an era of shared infrastructure:

AI – AI will lead to both cost efficiencies by automating internal processes and delivering better customer experiences, both important areas for telcos to improve at. One area already gaining momentum is AI supported customer service channels. Through AI powered solutions’ that can better sort and respond to natural language queries, operators will be able to reduce issue resolution time thereby improving customer sentiment toward their brand while also saving costs

Digital ecosystem apps – Pioneered by Wechat and now appearing around the world, digital ecosystem apps offer customers a single app to manage their daily needs from voice and messaging communications to ordering transport, groceries and meals to making payments. With mobile carriers enabling subscribers’ mobile lives, a well-designed app with strong partners can leverage their subscriber base for easy access and drive deeper engagement

Video Content – The proliferation of OTT video apps is leading to a tyranny of choice for consumers and the inconvenience of needing and using too many apps to watch content. While telcos have so far struggled with their own standalone OTT video apps, they are well positioned to offer an aggregator platform that curates other apps onto one platform and facilitates single billing through direct carrier billing.

Indeed, these technologies/services are not mutually exclusive – Digital ecosystem apps may well include video services which in turn leverage AI.

We believe telcos should partner with digital service providers rather than use a “build it ourselves” approach, which they have tended to adopt in the past.

How will telcos achieve 5G success?

In summary, the key to telcos’ 5G success will lie in successful collaboration – with other telcos on infrastructure and with emerging digital players for innovative digital services.

 

Meet Virat Patel and other experts in the APAC telco space in the region’s only dedicated 5G event, 5G Asia 2018, taking place in Singapore this September.