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Tue 8 Aug 2006 04:00 AM

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Come Together

Site sharing could be an efficient way for the region's mobile operators to expand their coverage while reducing investment needs, but it will probably be some time before we see such cooperation.

|~||~||~|With most regional mobile markets housing two operators or more, landscapes are slowly becoming littered with the masts and towers of expanding GSM and 3G networks. There are solutions available to mitigate this unsightly and potentially hazardous trend, and site sharing models are available that could also help reduce CAPEX for operators. However, such a practice in the Middle East is yet to be seen and it could be some time before it is. One wonders whether operators would stand to benefit substantially if infrastructure sharing in the region arrived sooner rather than later.

Liberalisation having slowly spreading its wings across the Middle East and more operators having entered the market, such sharing models could an efficient method for operators to increase coverage and reduce costs. But it is unlikely to happen in the near future. With most regional markets currently in duopoly stage, enough revenue is being generated to justify rolling out individual infrastructure. Even when a third provider joins the fray, markets with low penetration levels still offer significant revenue gains. And if the opportunities for a new entrant’s growth were not so high, the push for sharing would have to come from the regulator, with incumbents highly unlikely to allow their infrastructure to be used by another.

Looking at more advanced market, some five years ago, as third-generation mobile networks were moving from concept to reality, operators were facing the prospect of extremely expensive infrastructure rollouts. Having already spent significant sums of money acquiring the 3G licences, the thought of another hefty investment for the actual radio equipment was a difficult and often financially unviable proposal to stomach. Despite intense rivalry over the years, many of the major operators in the telecoms world decided to come together, sharing networks and radio infrastructure to reduce dramatically reduce individual costs.

Network sharing is not simply an option solely reserved for 3G networks. While the ability to re-use GSM equipment when building WCDMA networks was what first triggered the development of more advanced network-sharing functionalities, simpler approaches are available to those still focusing on their basic 2G rollout. Away from national roaming agreements whereby capacity is leased to new entrants, one method of utilising each other’s infrastructure is an equipment-sharing model, where a new entrant uses the masts and sites of an incumbent to install its own antennas and radio equipment. In some cases, operators have actually come together before the initial rollout, jointly erecting base stations in areas where they previously had no coverage.

But suppliers to the Middle East operators, obviously wanting to generate as much business as possible, are offering financed deals that favour operators taking an individual route. With build-operate-transfer (BOT) deals, such as the one drawn up between Nokia and the UAE’s second operator du, operators typically are not faced with huge upfront costs. Having access to strong financing, the cost of infrastructure rollouts is unlikely to be a major concern for many regional operators.

With regulators seemingly as yet unconcerned about site sharing models, one push could come from government planning departments. Aside from the cost savings and competitive benefits to new entrants, there is an issue of aesthetics that could play a significant role, especially in areas already with a high density of telecoms equipment. In more developed markets, the positioning of base stations have become a serious concern among local communities regarding the appearance of the towers and the relatively unknown health risk associated with them. Planning departments have been known to reject applications for telecoms structures, forcing operators to consider the sharing path. There are alternative routes, some suppliers offering a range of less unattractive structures, such as AlanDick’s ‘cellular trees’ – masts that look like trees.

But it is still likely to be several years before regulation and planning authorities drive any kind of infrastructure cooperation between operators. For the time being, with finance seemingly not an issue and problems of space as yet unfounded, operators are likely to continue developing along a solitary path, though it would be prudent of them to consider future trends and developments. ||**||

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