Page 77 - Trends in Telecommunication Reform 2016

Figure 2.1: A cost-savings comparison of different types of sharing

Cost savings from ... 2-way sharing 3-way sharing Chapter 2
Brownfields Greenfields Greenfields
Sharing of towers and physical sites
Passive <10% 10% 15%
network
Sharing of antennas, power and air sharing
conditioning >15% <20% >20%

National roaming Single
network >30% >30% >40%

Active
Full RAN sharing (single entity network
NetCo/ServCo) sharing >40% >50%

Source: GSM Association and Vodafone Group

Box 2.3: Fixed Network Co-Investment Examples

Netherlands: In an example of a commercially driven co-investment arrangement, the Dutch
incumbent operator KPN co-invested with Reggefiber to deploy FTTH connectivity to 2 million
homes. The initial arrangement was for KPN to pay 41 per cent, with Reggefiber funding 59 per
cent of the deployment cost . But in November 2014, KPN acquired 100 per cent of Reggefiber,
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effectively ending the co-investment arrangement .
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Singapore: Singapore’s OpenNet is an example of how a government incentive was used to
effectively require a co-investment strategy. Singapore’s policy objective was to introduce a
structurally separate entity at the passive layer, so it forbade the fixed incumbent from having a
controlling stake in that entity . As a post-script, the co-investment arrangements were unwound
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in 2014, when all of the OpenNet shareholders, including the incumbent, sold their interests to
NetLink Trust, which was set up with the incumbent operator as the beneficiary .
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Portugal: Vodafone Portugal and Optimus entered into a long-term cooperation agreement
calling for each operator to build next-generation access networks independently (mainly in the
Lisbon and Porto areas). The agreement spelled out conditions granting each operator access to
the other’s networks .
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France: In France, the regulator has mandated network sharing for in-building wiring. This has
led operators to grant a passive access to other operators at the concentration point . Under
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the French model, one operator signs a contract with the building owner and becomes the main
operator within the building. This operator is in charge of constructing and maintaining the
networks and offering passive access to the other operators, either through a dedicated or shared
fibre line. Access is granted through a long-term (24- or 30-year) cooperation agreement.

2.3.2 Network sharing in the fixed sector The other main example of fixed-service co-
investment has been when non-incumbent
Co-investment in fixed markets occurs relatively competitors have agreed to co-invest in a new
infrequently compared to mobile network network without involving the incumbent. These
sharing. It is especially rare to see co-investment agreements, however, face the risk that the
agreements for fixed infrastructure without some incumbent will cherry-pick prime customers and
pressure or incentive by a government. otherwise compete aggressively wherever the

Trends in Telecommunication Reform 2016 59