5G Infrastructure – Share More, Plan Less

As 5G networks roll out globally, operators and administrators are seeking ways to accelerate the benefits of the new technology, while keeping costs, and other potential road blocks, under control.

China Telecom and China Unicom are actively considering sharing infrastructure. China Mobile may also join them; especially for networks in rural areas where the return on investment calculations are harder to justify than in urban settings. The three Chinese operators co-own a tower company, China Tower Corp, so some of the groundwork has already been laid. China Tower Corp has said it has received requests to install 65,000 5G base stations so far – a number it expects to exceed 100,000 by the year end.

China Unicom has said that sharing infrastructure can result in capex savings of between $28 billion and $38 billion — though at least part of those savings represent lost revenue for infrastructure vendors that have been holding out for the 5G spending bonanza. This indicates that the total spend may be considerably less than would otherwise be the case if all operators built their own networks.

In the UK, all four operators have established some form of infrastructure sharing. 3 UK (owned by CK Hutchison) formed a joint venture with T-Mobile (now EE) called Mobile Broadband Network Limited (MBNL). Separately, Vodafone and O2 have a jointly owned company called Cornerstone. Vodafone and O2 are are adding 5G to their existing shared infrastructure. This is a logical move as it minimizes the roll-out costs of the new technology and accelerates time to market – especially in less dense suburban and rural areas that are costly to cover. At the same time, they are providing for greater autonomy in urban areas, where the usage is most intense and therefore offers the greatest return for differentiated offerings. They may open Cornerstone to additional investors that will allow Vodafone and O2 to, partially, monetize their existing investments.

Mobile operators have tended to compete on the basis of network coverage and quality – exemplified by Verizon Wireless’ ‘Can you hear me now?’ advertising campaign of a few years ago. 5G will be no different; we are already seeing competitive shots being fired, with 3 UK claiming it is the only true 5G service provider in the UK, thanks to its 100MHz of contiguous spectrum. The moves toward more infrastructure sharing may not be smooth – but they do make sense in some circumstances. 5G services however, promise to be more complex and diverse than anything we’ve seen before – enabled by the capacity and speed of the technology – and by the increasing use of distributed computing capabilities through things like mobile edge computing (MEC), that will be key to delivering the ultra-low latency services expected in 5G.

In a separate move, the UK government has opened a consultation on whether to allow higher cell towers to be built without additional planning consent being required. The current legislation limits towers to 25 meters. Higher towers can be used to extend coverage in rural areas – and can carry more kit, though the size of antenna systems is tending to shrink with the latest developments.

Other industries often share infrastructure and compete on customer-facing service provision. Mobile network operators are no stranger to this; MVNOs effectively share the infrastructure of the host operators and compete in the provision of service. The most extreme step on this path would be the formation of a single national ‘Net Co’ that would be responsible for building a single wholesale network (SWN) to be used by all operators. It has been tried in a few markets – especially to provide service in areas that would otherwise not be covered, but they’ve not been successful. We expect the SWN model will not be used in 5G, but various forms of infrastructure sharing will increasingly be the norm.

If you would like to talk about 5G with us, Counterpoint’s Neil Shah will be attending the 5G Leadership Summit in Mumbai on August 30th. Follow the link to schedule a meeting with Neil.

Peter has 27 years experience in the mobile industry with extensive experience in market analysis and corporate development. Most recently Peter was Global Head of Market and Competitive Intelligence at Nokia. Here he headed a team responsible for analyzing and quantifying the industry. Prior to Nokia, Peter was an equity analyst at SoundView Technology Group. And before that he was VP and Chief Analyst of mobile and wireless research at Gartner. Peter’s early years in the industry were spent with NEC and Panasonic.

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