بسم الله الرحمن الرحيم. Sharing in Telecommunications Market. and. National Roaming. Mohammed El Hassan Abdel Karim – March 09/March 11. Infrastructure Sharing:.
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Sharing in Telecommunications Market
Mohammed El Hassan Abdel Karim – March 09/March 11
“a.k.afacility sharing” is a process involving at least two Telcos to share infrastructure & essential facilities in their operations. That is mainly to:
Though it is normally done by common consent. National Regulator Authority (NRA) may impose certain conditions at his discretion to meet certain pubic interests.
That may include ex ante regulation for mandatory unbundling by incumbents of productive assets that are associated with high sunk entry costs.
Market players with different status resemble a state of uneven competitive advantages with wide disparities which may lead to Market Failure (inefficient prices, poor QoS, non-optimal Coverage & reduced affordability).
The new Regulatory Trend supported by the ITU, WB and many entities calls for transition toward infra-structure Sharing and Service & Facility-based competition. That was declared in GSR 08 (Thailand 2008) – six-degrees of sharing.
The present world economic downturn enhanced the infrastructure sharing optionto contribute to mitigate financial outlay.
A BoozAllenHamilton report shows the following :
India – 240 000 towers are needed over the next three years. Analysis show that CAPEX savings could reach US$ 4 bn if operators exercise double tenancy on deployed sites over the 3 years.
Two competing operators in the ME require 3500 tower each for optimal coverage. If they share 50% of their towers, CAPEX saving can reach US$ 250 million over 3 years time.
In a fixed network sharing case, multiple cost components would be optimized if 2 or more operators share the network. Set-up costs could be reduced up to 40%, utilization cost by 20%.
Telecom Infra Structure Sharing- Regulatory Enablers and Economic Benefits. Booz Allen Hamilton, 2007
Network Passive Elements Sharing
Network Active Elements Sharing
Logistic & Administrative Facilities – ITU vision *
* “Trends in Telecommunication Reform 2008: Six Degrees of Separation” – ITU, Nov 2008
Unbundled local loops
Wholesale line rental
Functional Separation – Market oriented:
selling services and support to end-users.
Core network services.
Call origination, termination, transit etc.
Service Platform Separation
Value chain Separation
Business Separation – Economics-oriented:
Divesture (Bell USA).
Though sharing between operators is based primarily on mutual consent and understanding, the NRA, however, should establish a binding frame.
It is also important to know that SHARING and SEPARATION are complementary terms. The use of any depends on which ground you are on. What is shared by a service provider is separated from another operator.
Separation of a valid part of the operator’s facilities to be shared and used by another service provider demands the NRA to heed important issues, the SMP (facility supplier) shall:
Not deny the right to share his facility to any legally appropriate service provider.
Disclose the certified total available working capacity of his network (showing used and redundant capacity and capacities planned for immediate future use.)
Guarantee same quality used for his business to be applied to the sharing party.
Keep separate accounts for each of his operations, value chains , whole-sale and retail markets. He should also charge the sharing party the same charge incurred by his own service provision and defined in his accounts as operational costs.
Competition is normally based on services offered by the providers (service-based competition).
In competitive environment, sharing can develop new competitive strategy for market non-SMP players . The Cave’s Ladder Theory.
Present policy catchword in most developing countries – no need to duplicate infra-structure!
Full Competitive Advantage
Time in market
Isan important application of the infrastructure sharing process.
A Regulatory-controlled process -though normally, in principle, initiated by Telcos themselves- that enables a certain service provider to benefit from the network and any specific facility that belongs to another Telco to distribute his traffic and provide his own service(s) over a defined domain out of his normal reach, typically national coverage boundaries.
A-type – Incumbentor any other significant market power (SMP)telco who have infrastructure facilities and large coverage. Normally with market lead and high competitive advantage.
Service Provider – B Domain
SUB - B
Area Covered B
Service Provider – A Domain
SUB - A
REMOTE SUB - C
Area Covered A
Limit of Geographical Coverage - A
Virtual Service Provider – C
No Network (no coverage).
What is National Roaming ?
Generalized Shared Roaming Model
REMOTE SUB - B
Service Provider - A
REMOTE SUB - A
Generalized Interconnection Model
Provider - B
REMOTE SUB - B
REMOTE SUB - B
Provider - A
REMOTE SUB - A
REMOTE SUB - A
Interconnection – National Roaming main difference
Provider - A
Improve economic efficiency, optimal utilization of resources.
Enhance recovery of invested costs and encourage more investment.
Reduce cross-industry disputes and enhance transparency.
Improve investment efficiency , optimized CAPEX & OPEX.
Enhance Universal Service & rural development through (transnational ) small businesses.
Enrich competitiveness. May be also necessary for Regulator to apply generous access rules for new entrants.
Technology neutral regulation means same charges for same services provided by different types of networks. This does not always correspond to the principle of cost-based prices for Interconnection cost estimates. National Roaming mitigates this paradox by pushing IXP to remote access end.
WDR proposition* of Stimulating Investment in Network Development: Roles for Regulators:NRA’s can reduce barriers & risk to investment and identify an increasing diversification in potential sources of network investment.
*World Dialogue for Regulation - WDR, theme 2004/2005.
Compatible and versatile Telecom Law (and enforcement powers).
Consider evolution toward facility-based competition within multi-sector regulationframe.
To support future trend of sharing and relative market development, NRA should develop clear-cut rules to regulate “Separation” in the market:
Consider liberalization of Infrastructure & Facility market (JV. Independent firm, Regulator-centric approach).
Define essential rules for modes and conditions of separation through public consultation:
6 - Ownership separation(in whole or part)
5 - Legal separation (separate legal entities under same ownership)
4 - Business separation
3 - Virtual separation
2 - Creation of a wholesale division
1 - Accounting separation
“The effectiveness by which this fundamental separation of basic functions is achieved will have a significant impact upon the growth of the sector. The more effective the separation, the better will be the climate to attract financing and undertake investment. If each function can be performed well, each will provide clarity and stability in an institutional framework conducive to rapid growth and effective achievement of economic and social objectives”.
William H. Melody, “ref 3”
Voicecalls + Video calls
Voicecalls + Video calls + Internet
Voicecalls + Video calls + Internet + GPS
Voicecalls + Video calls + Internet + GPS + IPTV(mTV)
Voicecalls + Video calls + Internet + GPS + IPTV (mTV) + mApplications
Generic ICT Services
Meta-Services & Applications
Local & Inter-Regional Networking
Classification of ICT Services