CoE /ARB Workshop On “Infrastructure Sharing and LLU”

1. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Session 1 Introduction and Background Infrastructure Sharing Trends By: Isabelle Gross Khartoum – Sudan, 27 – 29 March 2011

2. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Content outline of this section - when and where did it start? - how would you characterise these early experiences of infrastructure sharing - the dilemma between infrastructure sharing and competition forms of infrastructure sharing Khartoum – Sudan, 27 – 29 March 2011

3. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background When and where did it start? (1/5) Towards 2001 – in European: following the hype of 3G licensing in Europe and the big investments made in licence acquisition, many operators were under pressure to share deployment costs and thus share infrastructure. UK: 5 licences auctioned; Revenue: between US$6.1 and 9.1 billion per licence Spain: 4 licences auctioned: Revenue of US$120 million per licence Germany: 6 licences auctioned: Revenue of US$7.7 billion per licenc Khartoum – Sudan, 27 – 29 March 2011

4. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background When and where did it start? (2/5) Chart of prices of 3G licence per inhabitant Khartoum – Sudan, 27 – 29 March 2011

5. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background When and where did it start? (3/5) - Sweden – March 2001 between Tele2 and Tella: the two operators agreed to set up a joint venture company and deploy a nationwide 3G network. As of 2005, they had one of the largest shared 3G network in the global telecom industry - Sweden – May 2001 between HI3G and Europolitan: the joint venture was tasked to deploy a 3G network covering 70% of population outside major cities. Orange later joined the joint venture. - UK – December 2001 between BT and Hutchison 3G: the main outcome was a roaming deal on 2G between BT Cellnet and Hutchison 3G. Khartoum – Sudan, 27 – 29 March 2011

6. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background When and where did it start? (4/5) Supporting material: - mmO2's BT Cellnet signs 2G national roaming agreement with Hutchison 3G http://www.o2.com/media/press_releases/press_release_61.asp?archive=yes - Nokia chosen as main 3G supplier to 3G Infrastructure Services AB, the joint venture in Sweden, in landmark network-sharing deal http://www.3g.co.uk/ZPR1153.htm - Orange joins 3G Infrastructure Services AB as a third owner together with Europolitan Vodafone and Hi3G http://www.3gnewsroom.com/3g_news/jan_02/news_1735.shtml Khartoum – Sudan, 27 – 29 March 2011

7. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background When and where did it start? (5/5) - how would you characterise these early experiences of infrastructure sharing? - what were the drivers? - voluntary versus compulsory sharing? - what was shared? - cost sharing versus infrastructure sharing? Khartoum – Sudan, 27 – 29 March 2011

8. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background The dilemma between infrastructure sharing and competition (1/4) The hype of 3G licensing in Europe has been followed by several years of delays before the commercial launch of 3G services. From a regulatory view point, the 3G case also marks a move from market liberalisation (competition) to market facilitation (infrastructure sharing). This is well summarise by the EU position in 2002 acknowledging that “From a competition law point of view, network sharing reduces competition," said a lawyer close to the issues. "But there is a recognition by the Commission that something has to be done for the mobile industry.”[1]. [1] Brussels throws lifeline to stricken 3G2, Financial Times, 25 August 2002 Khartoum – Sudan, 27 – 29 March 2011

9. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background The dilemma between infrastructure sharing and competition (2/4) What was the European regulators’ approach on infrastructure sharing? Germany: Licence position: Independent control of network emphasised Regulatory changes / activities: Regulator has indicated it favours network sharing as long as competition requirements met. 6 June 2001. RegTP, the German telecommunications regulator, announced that it would allow 3G licence winners to share the same radio base stations, towers and antennae. Use of logically distinct Node Bs is permissible as is use of logically distinct RNCs. Shared use of core network – MSC is not permitted. Netherlands: Licence position: Site sharing mandatory, in line with any technical constraints. RNC & Node B sharing allowed as long as independent control is maintained. Regulatory changes / activities: “Collaboration must be limited to the joint construction and use of the UMTS radio network (such as masts, aerials and network operations) In doing so, each operator must be able to individually determine the quality of the network at its own discretion, so that in practical terms there is no difference with a network constructed entirely by a single operator.” Must comply with competition regulations. Khartoum – Sudan, 27 – 29 March 2011

10. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background The dilemma between infrastructure sharing and competition (3/4) What was European regulators’ approach on infrastructure sharing? France: Licence position: Independent control of network emphasised Regulatory changes / activities: Level 1: sharing of sites and passive elements, e.g. masts, electrical supply , etc is encouraged. Level 2: sharing of Antenna and connections is permitted Level 3: sharing of base stations is permitted, once the operator maintains full control over RNC functions. Level 4: Sharing of backbone elements. – switches and routers – not permitted if pooling of frequencies, i.e. when backbone and radio are shared. Geographic sharing: permitted, but national roaming cannot be used to meet coverage requirements. Khartoum – Sudan, 27 – 29 March 2011

11. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background The dilemma between infrastructure sharing and competition (4/4) What was European regulators’ approach on infrastructure sharing? UK: Licence position: Site and mast sharing encouraged. Inter-operator agreements subject to competition law. Regulatory changes / activities: Regulator published position May 2001 (see supporting documentation of Oftel (Ofcom today) position) What are the participants’ point of views/experiences regarding the issue of balancing infrastructure sharing with competition? Khartoum – Sudan, 27 – 29 March 2011

12. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (1/9) - relevant for both the fixed line and mobile segment (but more case in the mobile segment) - in the mobile segment: different forms according to components (active or passive) - balance between passive and active components sharing Khartoum – Sudan, 27 – 29 March 2011

13. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (2/9) Site sharing/collocation: - this is the basic form of sharing where operators agree to share available infrastructure, including site space, buildings and easements, towers and masts, power supply, and transmission equipment. -Site sharing is suitable for densely populated areas with limited availability; expensive sites such underground subway tunnels; and rural areas with high transmission and power costs. Khartoum – Sudan, 27 – 29 March 2011

14. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (3/9) Network sharing: - sharing BTS equipment and sharing common networks, both circuit-switched and packet-oriented. - operators typically share the RBS, RNC, mobile services switching centre/visiting location register (MSC/VLR), and serving GRPS support node (SGNSN) - each operator keeps its own individual home network that has subscriber databases, services, subscriber billing and connections to external networks Khartoum – Sudan, 27 – 29 March 2011

15. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (4/9) Spectrum sharing - spectrum sharing also known as spectrum trading. It entails operators to lease their spectrum to other operators on commercial basis - spectrum = scare resource ; it is often underused by one operator in a given area and sharing is viable option for two or more operators - Kenya’s project on LTE spectrum Khartoum – Sudan, 27 – 29 March 2011

16. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (5/9) MVNOs: - an entity with no network and no rights to spectrum - rely entirely on the infrastructure of another mobile network to offer services - can leverage its own user base to generate subscribers (very common in developed countries less common in developing countries; UK: Tesco, Carephone Warehouse ; South Africa: Virgin and Red Bull) Khartoum – Sudan, 27 – 29 March 2011

17. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (6/9) Interconnection: - often thought of in terms of the exchange of network traffic to allow users of different networks to communicate with each other - can also be viewed as a form of sharing because interconnection facilitates “last mile” sharing. Khartoum – Sudan, 27 – 29 March 2011

18. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (7/9) National roaming: - mandatory or voluntary national roaming allows new operators while their networks are being built to provide national coverage by means of sharing others mobile operators’ networks in specific areas. - often only a temporary measure until the operator has built its own network - shorter time frame for new entrants to launch their service with a commercially viable coverage Khartoum – Sudan, 27 – 29 March 2011

19. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (8/9) Towers companies: - set up of independent (or subsidiary of existing mobile operators) company that manage BTS - new roll out (example of 3G in Europe); purchase of existing towers of mobile operators fair treatment of new entrant; cash injection for operators selling their sites Khartoum – Sudan, 27 – 29 March 2011

20. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Forms of infrastructure sharing (9/9) Unbundling: - mandatory offering by network operators of specific elements of their network to other operators, on terms approved the regulator - network component (switches) ; local loop unbundling (full unbundling, line sharing, bit stream access) also see supporting documentation Khartoum – Sudan, 27 – 29 March 2011

21. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Introduction and background Conclusion - more common in mobile segment than in fixed line segment because less complex to implement (implementation at the rollout stage versus structural separation between infrastructure and service provisioning for existing fixed operators) - balance between cost savings and competition (operators versus regulator) balance between infrastructure investment and sharing infrastructure Khartoum – Sudan, 27 – 29 March 2011

22. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Infrastructure sharing trends - emergence and multiplication of infrastructure providers such as tower companies and resale-based service providers such as Mobile Virtual Network Operators (MVNOs) - rollout of high speed broadband services calls for more infrastructure sharing in developed and developing countries - new regulatory challenges in a more complex infrastructure environment (NGN, NGA, fibre versus copper, LTE) Khartoum – Sudan, 27 – 29 March 2011

23. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Infrastructure sharing trends The tower company, a new type of infrastructure providers - trend among telecoms operator to part themselves from passive network components - need of cash, operations more geared towards services, etc - examples in developing countries: Helios Towers, Eaton Towers, American Towers - examples in supporting documentation Khartoum – Sudan, 27 – 29 March 2011

24. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Infrastructure sharing trends MVNOs - trend towards more diversified service offerings at the retail level - more MVNOs in developed countries than in developing countries (regulatory and competition issues?) - examples in supporting documentation Khartoum – Sudan, 27 – 29 March 2011

25. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Infrastructure sharing trends The rollout of high speed broadband services calls for more infrastructure sharing in developed and developing countries - in developed countries: see in the USA, FCC Broadband Acceleration Plan; EU Digital Agenda (2010-2020) - in developing countries: national and cross-borders fibre backbones (CAB and SA) - examples in supporting documentation Khartoum – Sudan, 27 – 29 March 2011

26. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Infrastructure sharing trends New regulatory challenges in a more complex infrastructure environment (NGN, NGA, fibre versus copper, LTE) - access regulation - LLU on FTH Khartoum – Sudan, 27 – 29 March 2011

27. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Mobile Networks Sharing Introduction notes and material for the session This role play session on mobile networks sharing is intended to provide the opportunity to the workshop’s participants to - reflect on infrastructure sharing issues in real time - analyse and resolve blocks and bottlenecks regarding infrastructure sharing - apprehend infrastructure sharing issues from another stakeholder’s perspective - share their experience regarding infrastructure sharing improve negotiations skills Outcomes of role play session: - to draft an infrastructure sharing plan (at least make sensible recommendations) Khartoum – Sudan, 27 – 29 March 2011

28. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Mobile Networks Sharing Introduction notes and material for the session Information on the country and the public ICT bodies The country and the various stakeholders (Ministry of ICT, regulator, mobile operators) are fictitious in order to disconnect participants as much as possible from their daytime job and responsibilities. Country Name: Tonga Ministry of ICT: Mr Omar Leli Regulator: TRA (Tonga Regulatory Authority) Head of TRA: Mr Ahmed Bashir Khartoum – Sudan, 27 – 29 March 2011

29. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Mobile Networks Sharing Introduction notes and material for the session Market overview: - mobile penetration rate: just under 50% (leaves room for growth) - 3G services already launched by one of the mobile operator (Blue Telecom Ltd); the remaining two operators have received a 3G licence/spectrum but they haven’t launched commercial services yet. Name of the mobile operators: - Tonga Mobile Ltd (mobile arm of the incumbent) - Blue telecom Ltd - All telecom Ltd Khartoum – Sudan, 27 – 29 March 2011

30. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Mobile Networks Sharing Introduction notes and material for the session Date of entry in the market, market share, number of towers for each mobile operator Market entry date, Market share, Number of BTS Tonga Mobile Ltd: 1998 - 18% - 700 Blue telecom Ltd: 1998 - 76% - 2,300 All telecom Ltd: 2005 - 6% - 300 Khartoum – Sudan, 27 – 29 March 2011

31. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Mobile Networks Sharing Introduction notes and material for the session Group formation: participants are divided in 4 groups of roughly equal number Group 1: Blue Telecom Group 2: All Telecom Group 3: Tonga Mobile Group 4: TRA representatives Khartoum – Sudan, 27 – 29 March 2011

32. CoE/ARB WorkshopOn“Infrastructure Sharing and LLU” Mobile Networks Sharing Introduction notes and material for the session - Memo from Mr Omar Leli, Ministry of ICT tasking TRA to investigate the possibilities of introducing mobile networks sharing in the country in order to increase access to ICT services in the country. (see document 1) - Meeting invitation letter from Mr Ahmed Bashir, head of TRA to the mobile operators. (see document 2) Khartoum – Sudan, 27 – 29 March 2011