Shared networks have been around for

a decade now. Has the key to success

been missed? What are the challenges
and what needs to be done differently?
105782915

Signalling the Future

The execution of a shared network involves a step
change in intensity when compared to single
network rollout.

This intensity requires a different way of working, a

new culture that supports execution and a clear
understanding of where the project fits in with the
parent companies’ strategy.

Getting this right unlocks significant new savings

and a better service for subscribers.

Introduction
The concept of network sharing has been around for over a decade now. The first projects started
in the early 2000’s with the goal of delivering difficult 3G coverage targets set by regulators in
various countries. In its purest form the shared-network concept delivers reduced operational
costs, higher capacity, reduced capital requirements, improved network coverage and more
headroom for growth. The sharing concept is an attractive economic model and now that it has
been widely implemented. How does it stack up against expectations?

Making strategy work is often more difficult than the task of strategy making. The key to success is
the quality of execution. Following a decade of these projects what are the main lessons that have
been learned? And, what are the main obstacles in the way of a successful network sharing
project? How do these change with the various sharing models, for example independent joint
venture companies, shared service organisation, geographic sharing, MORAN and MOCN etc.?
Over the past number of years, Vilicom has worked on network sharing projects and strategy in
Ireland, the UK, Middle East, Asia and Australasia. This paper examines the main lessons learned
when a Mobile Network Operator (MNO) embarks on a network sharing project and the model
changes to a Network Joint Venture providing coverage and connectivity on behalf of parent
Communication Services Providers (CSPs).

© Vilicom 1 www.vilicom.com
The Role of People and Culture
From our work on shared networks to date, the biggest challenge that has been met relates to
people and the interaction between the two cultures of the parent organisations. Creating a
culture that supports execution of the sharing strategy is an important process that cannot be
overlooked and involves significant change management. Contrast a network consolidation project
with the initial network rollout. The initial rollout involves a significant challenge over a number of
years. In contrast, the creation of the new shared network is a much larger project carried out over
a significantly shorter timescale, with greater complexity and sometimes restrictions on the way
information can flow due to competition law.
Network Launch

Independent Rollout
Effort

N/W Consolidation
Intensity Step Change

Time
Figure 1 – Project intensity in the launch and network consolidation phases

Greater effort in a shorter time implies an increased intensity in the project. This requires a
different approach to the one learned during the original network rollout. In the early stages of a
network sharing project, the step change required in effort can be a significant shock to the system.
3GIS has described its network sharing project as “one of Sweden’s largest industrial projects in
modern times.”

The structure of the organisation, staffing, measurements, rewards and development practices all
need to be used to create a different culture that supports execution at a new level of intensity.
Changing the mindset, values and behaviours of the organisation can take some time, although a
shared wireless engineering background helps. In any change process, the rate of adoption is not
linear as may be implicitly assumed beforehand, but rather it takes time for momentum to build

© Vilicom 2 www.vilicom.com
before the rate of change begins to accelerate. This feels like inertia to the project teams and the
parent companies, but it is important not to lose faith in the project during these early stages, to
push for a quick win at the beginning followed by periodic wins thereafter to build momentum. The
experience is that if this is done correctly, ground lost during the establishment phase can be
regained.

Organisational Models for Network Sharing

Organisational models vary widely by ownership, staffing, span of responsibilities and method of
infrastructure implementation. Five models are shown in the two figures below.
Shared Services Shared Services & Outsource Asset Joint Venture Asset JV & Outsource

Contract Contract Shareholder Agreement Shareholder Agreement

CSP-A CSP-B CSP-A CSP-B CSP-A CSP-B CSP-A CSP-B

Steering Steering Equity Equity

Service Provider

Insfrastructure
Joint Joint Independent Independent
Workgroup Workgroup Joint Venture Joint Venture

Contract Contract

Outsourcing Outsourcing
Provider Provider

Figure 2 – Organisation models for network sharing

In the Shared Services model, asset ownership stays with Geographic Share

the Communication Service Providers (CSPs) and for each Contract

site a host and guest approach is adopted to reduce the
site count. Infrastructure delivery moves to a new shared
CSP-A CSP-B
services organisation and efficiencies are realised through
joint procurement, reduction in site count and pooled
Service Provider
human resources. In the Shared Services and Outsource
Insfrastructure
Model, the joint workgroup is essentially an expert
procurement group that manages an outsourcing contract Coordination

with an equipment vendor or other large outsourcing

provider. The joint workgroup is lightly staffed with the
CSP-A CSP-B
majority of resources either transferring to the Territory 1 Territory 2
outsourcing provider or headcount permanently reduced.
Figure 3 – Organisation model for
geographic sharing

© Vilicom 3 www.vilicom.com
In the Asset Joint Venture model, an independent joint venture is formed that takes ownership of
the underlying assets. The equity is held by the parent Communication Service Providers and a
shareholders’ agreement is formed. The board of the JV represents the parent companies interests
and a steering committee deals with more operational matters as the JV’s customers. Similar to the
Shared Services and Outsource Model, the Asset Joint Venture and Outsource model involves
managing a complex outsourcing agreement. The Asset Joint Venture model raises some
interesting possibilities. The joint venture could be sold as a going concern releasing capital for the
Communication Service Providers to invest in growth or pay dividends. It could seek to expand its
number of customers to find further efficiencies. It could also possibly be sold to an existing Asset
Joint Venture abroad seeking to expand. This would bring in existing expertise in execution of a
shared network strategy and exploit efficiencies at a multinational scale.

The final model is the Geographic Share. This involves splitting the territory of interest in two with
the network in each half owned and managed directly by one of the Communication Service
Providers broadcasting both providers’ carrier. Each operator then decommissions and rolls back
its network outside its geographic area of responsibility. This model should be relatively simpler
and quicker to implement than others.

The success or failure of any of these models rests on the commitment of the parent companies,
the ability of the people involved to execute and the scale of the investment. For multinational
operators it is important that both the parent and local market unit are equally committed to the
deal. Two operators that are in radically different phases of the investment cycle may find the
execution of the sharing project difficult. Parent companies typically seek to balance investment
across their entire portfolio of business units, with some receiving investment and others being
used to generate cash for investment elsewhere. A sharing agreement between a CSP in the heavy
investment phase and one in the cash generation phase will need this difference of strategy to be
recognised and incorporated in the sharing model.

Generally, it is good practice for a company to assign its best people to its most strategically
valuable projects. If network sharing is an important part of a CSP’s strategy, then its best people
need to get involved and drive its execution. Otherwise, what other projects are they being held
back for? It is often tempting to keep great people in the parent company when the sharing
organisation is being formed. Of course, if the existing performance culture is unsatisfactory the
formation of a network sharing model offers the chance of a clean start.

The setting of Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) are important
with early and regular measurement of progress. An output-based contract that defines the service
received by consumers is often desirable, but this type of SLA can often difficult to define or
measure. Independent assessment of SLAs can be beneficial to give an unbiased view and help
keep the relationship between the parent companies productive.

© Vilicom 4 www.vilicom.com
Technical Considerations
Six network models for network sharing are shown below ranging from light passive sharing to full
Radio Access Network (RAN) and Core Network sharing with only billing and value added services
being kept separate. When implementing the technical solution for network sharing the impact on
customers, regulation, management of site providers, technology evolution, rollout/expansion
plans, and base-station design are all factors that need to be considered.
Site Share Logical BTS Share MORAN Geographic Share MOCN Shared Network

Shared:
Shared: Shared: Tower
Shared: Tower Tower Antenna
Shared: Shared: Tower Antenna Antenna BTS
Tower Tower Antenna BTS BTS BSC/RNC/S-GW
Cabin Antenna BTS BSC/RNC BSC/RNC/S-GW Spectrum
Power BTS BSC/RNC/S-GW Territory Spectrum Core
BTS Equipment
BTS Equipment BTS Equipment BTS Equipment CSP=B BTS Equipment BTS Equipment
CSP-A
Carrier
Eqt.

BSC/RNC BSC/RNC
BSC/RNC BSC/RNC BSC/RNC BSC/RNC
MSC/SGSN/EPC MSC/SGSN/EPC
MSC/SGSN/EPC MSC/SGSN/EPC MSC/SGSN/EPC MSC/SGSN/EPC
HLR/IMS/VAS/IN HLR/IMS/VAS/IN
HLR/IMS/VAS/IN HLR/IMS/VAS/IN HLR/IMS/VAS/IN HLR/IMS/VAS/IN

Figure 4 – Technical models for network sharing

The impact of network sharing on customers can be significant. The implementation of the shared
network will require network outages while upgrades take place. Recent practice has been to carry
out these upgrades in daylight hours to reduce costs, but this has a greater affect than night-time
work. Consolidation of sites will frequently involve changes in base-station location where sites are
not already co-located on the same structure. When the coverage footprint of the network
changes there will always be winners and losers, especially when it comes to indoor coverage.
Large corporate and VIP customers are of particular interest here and contingency plans need to be
put in place where they are likely to be affected. Certain sharing schemes also involve the
installation of new combiners. These combiners introduce new system losses, which will also
change the coverage footprint. Combiner systems need to be flexible enough to cater for the
network upgrade path, for example LTE or spectrum re-farming. It can be interesting to contrast
mobile and fixed networks in this regard. A fixed network operator would not dream of
disconnecting a customer and re-using the copper or fibre elsewhere, but this is normal practice on
mobile networks!

In a well-executed network sharing project, the reduction in site count has been typically in the
order of 40%. If both Communication Service Providers (CSPs) began the project with the same site
count this means that each now has 20% more sites providing cellular coverage. This represents

© Vilicom 5 www.vilicom.com
significant coverage uplift and a boost in the quality of customer service and has been
demonstrated in real-world projects.

It is often more advantageous for a smaller Communication Service Provider (CSP) to share with a
larger CSP for two reasons. If the smaller CSP is smaller in terms of coverage footprint, then the
advantage of gaining access to a large site portfolio to expand coverage is great for speed and cost
of rollout. If the CSP is smaller in terms of operational costs then its proportional savings in
operational expenditure are typically larger.

The Impact on Competitive Strategy

Strategy is about competing and winning in the market. Winning in the market means providing
better value for customers than competitors for a greater percentage of those customers. Value is
subjective from person to person, but value can be improved by reducing the cost or increasing the
benefits. In practical terms for wireless networks value can be improved by speeding up data
throughput, improving voice reliability, making subscription easier and more pleasant in retail
shops, improving support, electronic billing, reducing the price of bundled services and the
introduction of new services such as home automation, machine-to-machine, finance management
and mobile payment, etc. This list goes on.

What does this mean for network sharing and what impact can it have on the Communication
Service Provider’s strategy? If the Communication Service Provider is pursuing cost advantage in
the market, then significant savings can be realised, but this will not give a competitive advantage
over the other sharing partner and the freedom to differentiate on traditional communication
services through a superior radio network is significantly reduced. If the Communication Service
Provider is pursuing differentiation advantage, then network sharing can free up significant capital
and operational expenditure to spend on developing new value propositions. Even further capital
could be released if the Communication Service Provider divests the sharing joint venture to free
even further capital. Outsourcing the sharing project or moving to a shared services model means
that flexibility or changes in focus incurs additional cost and a contract change process.

Conclusions
Network sharing projects involve a significant change in project intensity when compared to
traditional rollouts. This requires a new approach, different organisational models, new processes
and a culture that supports execution at a new pace. The proof of this is in the number of network
sharing projects that have been announced only to be cancelled at later date. There are many

© Vilicom 6 www.vilicom.com
organisational models, but their success depends on the level of commitment from the parent
companies, the scale of investment to be made and the ability of the people involved.

If executing a network sharing project is an important part of your strategy, then your best people
need to be deployed on it. Otherwise, what projects are you saving them for? This ensures that
ownership and accountability is maintained as the strategy moves formulation to execution stage.
While you may be able to source strong new leadership for the sharing project, it is a riskier
approach.

The consolidation project will affect customers during its execution, but the overall result will be a
stronger, more robust network. However, when there are any changes in the coverage footprint of
the network there will always be customers who lose out. Contingency needs to be planned for the
important ones who will be costly to lose.

Finally, network sharing is a means to an end and it needs to be clear where it fits in with the
overall competitive strategy, whether it is pursuing cost advantage over competitors or seeking
new ways to increase benefits for customers.

© Vilicom 7 www.vilicom.com
 Appendix – Sample of Network Sharing Projects
Country CSPs Announced Status Model
AUS Optus, Vodafone 3Q2004 Underway Passive, Cities
AUS Three, Telstra 4Q2004 Completed MOCN 3GIS, closed after 8 yrs
CZE T-Mobile, Vodafone 2Q2007 Abandoned ---
CZE T-Mobile, Telefónica 1Q2011 Underway Passive
DEU T-Mobile, O2 1Q2002 Abandoned ---
DEU O2, Vodafone 1Q2009 Abandoned ---
DNK Telia, Telenor 2Q2011 Underway MORAN TT-Netvaerket
ESP Orange, Vodafone 4Q2006 Abandoned MORAN
ESP O2, Vodafone 1Q2009 Abandoned ---
ESP Orange, Vodafone 3Q2013 Underway Passive, Rural
FRA SFR, Bouygues 1Q2014 Announced MORAN, Rural
GBR T-Mobile, O2 1Q2002 Abandoned ---
GBR Three, EE 4Q2007 Completed MORAN MBNL
GBR Orange, Vodafone 1Q2008 Abandoned --- Abandoned
GBR O2, Vodafone 1Q2009 Underway Passive, Geo Cornerstone
MYS Cellcom, DiGi 2Q2011 Underway MORAN
NED KPN, Telfort 4Q2001 Abandoned --- Abandoned 1Q2003
NED T-Mobile, Orange 2Q2002 Abandoned Passive RANN, closed 4Q2004
NED KPN, Vodafone 3Q2012 Abandoned Passive Abandoned 4Q2014
NED T-Mobile, Tele2 3Q2013 Underway Passive
POL T-Mobile, Orange 4Q2010 Underway MORAn
IRL O2, Vodafone 1Q2009 Abandoned ---
IRL O2, Eircom 1Q2011 Underway Logical BTS Mosaic
IRL Three, Vodafone 3Q2012 Underway Passive Netshare IRL
ISR Cellcom, Pelephone 4Q2013 Underway Passive
SWE Telenor, Three 1Q2001 Underway MOCN 3GIS
SWE TeliaSonera, Tele2 3Q2003 Completed MOCN SUNAB

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