Sharing of operators’ assets is sensible, but challenging
There are many examples in business and economics of the tension between maximizing efficiency and ensuring fairness. The consequences of sharing of network infrastructure and other assets, which is becoming increasingly common between mobile operators, provide another example. Regulators as well as operators themselves face challenges in achieving an effectively balanced outcome or compromise between these two worthy goals.
There are substantial economic benefits (capital and operational) to be gained by operators through sharing the costs of deploying new and upgraded mobile networks, including passive infrastructure (land, buildings, towers, power supplies) and even at the next level active elements such as antennas and base stations. Mobile operators are being stimulated to embrace asset sharing with direct competitors (not in an MVNO relationship) as they exhaust the possibilities of other forms of cost cutting while revenues per minute for voice and per Mbyte for data are decreasing faster than their costs.
Network sharing benefits not only operators but also users by improving radio coverage, as well as by supporting lower retail prices than would be possible without sharing, assuming that these prices reflect costs. But there are significant business and competitive as well as technical issues to be addressed if the potential economic and associated operational benefits from sharing are to be delivered to customers as well as enjoyed by the participating operators.
The greatest challenges for potential partners arise in establishing the sharing details which depends upon reaching agreement about or resolving differences in competitive objectives, such as the timing of the deployment of a new technology, which may otherwise derail the partnership. A framework that ensures fairness between the parties has to be created. For their part regulators and policy makers may wish to encourage and facilitate sharing to improve the coverage and affordability of mobile services as one means to help bridge the digital divide as well as enhance the quality of the services available within their territories. However, they must be alert to the possibility that asset sharing may be used by partners to discriminate against another competitor to reduce competitive intensity in a market, which would be an undesirable outcome.
Sharing network and other assets brings sufficiently large economic and other benefits to operators and thus ideally to their customers that it would be foolish to prohibit it. But in this regard as in many others regulators should pay attention to a famous saying which can be paraphrased as “The price of competition is eternal vigilance.”
Sharing operator assets – discussion
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