Network sharing - Future of telecom

The day Vodafone and Telefonica made their intentions of sharing 3G infrastructure public, everybody has started talking about passive network sharing and how fast will we see consolidation in this market...Like anyone else, mine will also be a guess but this deals is certainly a step in the right direction...For too long, service providers have worked inefficiently and havent really utilized their infrastrucutre judiciously. This deal might just break the jinx.

One wonders the real reason for this move. Would these companies have taken this route had we still living in the markets of 2007 where money was cheap and flush...So is this because of money markets still not showing any signs of getting relaxed or is it because execs have seen the real opportunity to improve the efficiency....I think its probably because of latter due to former. That is execs facing cruch of cash have started identifying opportunities where operational efficiencies can be squeezed out...

Let me talk a little bit about infrastructure sharing - There are two types of sharing. First one is active infrastructure sharing which involves sharing of radio frequency...This happens in the case of MVNOs. The other type of sharing is passive infrastructure sharing which involves sharing of the physical sites that is towers. This is where we are going to see majority of action initially. Companies can save immensely on leasing and rental costs and operational costs of maintaining the infrastructure. This is where the focus is....

Using the latter sharing, companies can expand coverage more rapidly. Moreover the environment also benefits from less infrastructure and lower power requirements. As we see goverments around the world taking more stringent measures to help the environment, mobile companies will soon be under the radar of regulators to tap any opportunities to help the environment and thats when this kind of sharing will gather momentum...

Obviously there are innumerable advantages of network sharing but companies should do it very carefully...As network coverage was the prime USP (differentiator) for companies, they would have to learn with common coverage and focus on creating differentiation in providing services. Moreover netco will have to create infrastructure whereever serv co would ask net co to. Companies would have to draft very clear guidelines and SLAs around this...

In the end, there are clear signs and opportunities for companies to go for network sharing. But it should be done very carefully and properly.