Summary
By sharing network infrastructure elements, so called Infrastructure Sharing, mobile network operators are able to realise cost savings. The extent to which cost savings can be achieved depends on different factors such as the type and amount of network elements shared, the point in time the cooperation is agreed on (ex ante versus ex post), the level of demand or to which degree free capacities in existing networks are available.
With the upcoming 5G mobile technology and the new high spectrum frequencies of more short range (cell radius) a discussion in the public political debate has started regarding the high investment needs associated with the new mobile base stations required and the question “How could those be raised?”. One option would be reducing costs for individual providers through Infrastructure Sharing – at least in areas in which the roll-out is exceptionally expensive or demand is notably low.
Infrastructure Sharing has been common practice in all European member states for many years now. However, this is only true for the sharing of passive network elements such as masts. Active Infrastructure Sharing, which also includes the shared use of electronic elements such as antennas, is less common. However, there are large differences in that respect among the various countries. In Germany we observe almost exclusively passive Infrastructure Sharing agreements, whereas for example in Sweden active Infrastructure Sharing on large scale has been common practice for years now.
Cost saving advantages and associated effects that can be achieved through Infrastructure Sharing, such as a faster roll-out, are accompanied by drawbacks. The risk of a reduction in competition based on a lack of services differentiation between mobile network operators, due to large-scale sharing, is high. This is one of the concerns that leads to Infrastructure Sharing being handled cautiously. Moreover, the risk of less redundant infrastructures in the long-term is brought into the discussion about the “right” level of Infrastructure Sharing frequently.
Regulatory specifications for Infrastructure Sharing must balance benefits and drawbacks. Furthermore, the legal framework is required to provide an environment which protects market players outside the cooperation and thus preserves competition when it comes to large scale or intensive Infrastructure Sharing agreements. This, in turn, benefits consumers. Apart from regulatory requirements, the motivation of market players and market-structure are relevant to determine, which and how many Infrastructure Sharing cooperations are established in a country.
Aim of the present work is to support the decision making process in the field of competition policy and regulation with respect to Infrastructure Sharing in the context of the beginning 5G roll-out, by taking into account case studies from different countries as well as shining light on the various aspects of the topic. The main part of this study consists of calculations for different scenarios concerning cost saving potentials associated with Infrastructure Sharing in the context of 5G introduction. In this way we provide a quantification for one factor, namely the cost saving advantage for network operators involved, and thus support the decision-making process.
In a greenfield scenario, calculations show cost savings between 16 - 22 percent for RAN-Sharing, depending on the technology (4G/5G) and number of partners involved. In regards to full network sharing (national roaming) the potential for savings is about 3 percent higher and lies between 19 – 33 percent. Consequently savings are mainly derived in the RAN. From a trans-technological perspective 5G is more efficient compared to 4G and is therefore more cost-effective and better suited to sharing savings.
Discussion Paper is available for download.
