Page 82 - Trends in Telecommunication Reform 2016

for sharing operators and potential service- An IRU may be seen as a form of co-investment or
based competitors. If this remains a concern network sharing. Seen as an up-front guarantee
for regulators, they could require (and provide of access, the IRU effectively gives an operator a
upfront regulatory certainty about) provisioning of share of the infrastructure, which it shares with
sufficient capacity for services-based competitors. the grantor of the IRU and any other IRU holders.
IRUs have been a particular feature of the French
FTTH projects. They can also arise in mobile
2.6.4 Service-Level Agreement (SLA) network sharing arrangements.
performance

In the absence of infrastructure competition to 2.7 Alternatives to Network Sharing
drive efficiencies, there will be a requirement
for SLA-driven performance to incentivize the What are the alternatives to network sharing/co-
shared network to perform. Depending on the investment? This section explores other ways for
effectiveness of the SLA regime, this can be governments to promote efficiency in deploying
effective in ensuring efficient operation of the broadband infrastructure.
network.

Commercial models for sharing 2.7.1 Geographic splitting

The main commercial models for network sharing Geographic splitting allows one operator to simply
and co-investment are joint ventures and long- provide wholesale network services to another
term co-operation agreements, often known as operator – including national roaming or MVNO
IRU access. services – in return for the same services being
provided to it in another geographic region.
Joint ventures – Joint ventures are a common Operator A would build, own and operate the
structure adopted for network sharing (usually network in Region A, allowing Operator B to use
incorporated, sometimes unincorporated). its network there. In return, Operator A would
Normally, the joint venture owns, operates get the same rights to use Operator B’s network
and maintains the joint network. In these in Region B. This sort of arrangement can be
circumstances, sharing operators contribute applied in relation to fixed networks, as well as
financial and human resources to the joint mobile ones. In Geneva, Switzerland, for example,
venture, although some aspects may be the utility SIG operates an access network in the
outsourced to third-party vendors. Sometimes it is Geneva metro area, while Swisscom operates
only an asset-owning joint venture, or the JV may an access network in the centre city. Both
acquire assets from one or both sharing partners SIG and Swisscom grant each other dark fibre
to form the basis of the new network. access, allocating the roll-out cost 60 per cent to
Swisscom and 40 per cent to SIG .
17
Indefeasible rights of use (IRUs) – IRUs have been
a feature of the telecommunication industry for In the fixed network context, there are instances
many years, particularly for long-haul transmission of one partner building the access or "last-mile"
and undersea cables. Legally, IRUs give a party the segment of a network, with another partner
right to use network infrastructure (such as dark building the backhaul segment. In Switzerland,
fibre), a certain amount of capacity (including the utility usually builds the terminating segment
transmission), or a network facility (such as ducts) (OTO-CP) and Swisscom builds the feeder and
for most of the life of the asset. IRU arrangements backhaul network (CP-ODF), providing collocation.
are often valid for about 25-30 years and are The partners exchange IRUs to access each other’s
normally non-renewable. As well as access to infrastructure .
18
the main infrastructure, an IRU will usually also
allow access to ancillary infrastructure, such
as manholes and cabinets where duct access 2.7.2 Third-party outsourcing
is provided, as well as colocation and access to
splicing/junction nodes. Another alternative to network sharing is third-
party outsourcing, in which the sharing operators

64 Trends in Telecommunication Reform 2016