7.5 Mobile Network SharingNote: This section is based in large part on a discussion paper entitled Mobile Network Sharing by Camila Borba Lefvre. This discussion paper was prepared for the 8th ITU Global Symposium for Regulators [1] in 2008. This section explores mobile network sharing. Mobile network sharing offers a number of potential benefits to both operators and users. It has particular relevance in developing countries where mobile operators have become or are fast becoming the dominant infrastructure operators. Mobile networks also have a key role to play in rolling out services to remote and hard-to-service regions. Mobile network sharing is also relevant in developed countries. Many initiatives aimed at providing free Internet access in urban areas use mobile technology. Mobile network sharing also plays a key role in the structuring of triple-play and quadruple-play service packages. This section outlines the policy benefits associated with mobile network sharing, the various forms of passive and active sharing, and regulatory and policy issues associated with mobile network sharing.

7.5.1. Policy reasons for supporting mobile network sharingThis section sets out various policy reasons for supporting mobile network sharing. These policy reasons fall into three broad categories: environmental and public health considerations; the facilitation of network deployment; and upgrading technology from 2G (GSM) to 3G (IMT 2000) and beyond. Each of these categories is discussed below. Environmental and public health considerations People generally view wireless communication masts and antennas as negative additions to the landscape. Local communities may object to the construction of new sites because of the visual impact or environmental considerations. Also, residents may fear public exposure to electromagnetic fields around masts and antennas.[1] Site sharing can limit such concerns and potential negative effects, since it limits the number of sites while achieving the required coverage. [2] Another beneficial aspect of site sharing is the amount of energy that can be saved when operators share electrical power, which is often in limited supply in developing countries. [3] While sharing reduces the number of sites marking the landscape, it can also have adverse impacts. Because antennas generally have to be separated from each other by a minimum distance in order to avoid interference, mast sharing usually requires taller (and more visually disruptive) masts. Local planning authorities actually may prefer several small towers to one large one. More discrete (or disguised) structures reduce visual intrusion, but cannot support more than one operators antenna.

Facilitating network deployment Civil engineering costs can mount up when the number of building sites is relatively high in a mobile network roll-out. Moreover, operators often run into practical difficulties in acquiring and developing adequate sites, obtaining the appropriate regulatory licences, and overcoming public opposition to mobile towers. Site sharing allows operators to reduce their capital and operating expenditures, bypass nettlesome planning and regulatory hassles, and avoid potential environmental pitfalls. In short, site sharing can speed up network deployment and make it less expensive. Lower sitedevelopment costs can pay dividends when they result in networks covering larger areas, increasing the likelihood of bringing wireless services to sparsely populated rural areas and at more affordable prices. Upgrading technology from 2G to 3G Infrastructure sharing can ease the transition from second-generation (2G) to thirdgeneration (3G) mobile networks, by allowing operators to collocate new 3G equipment on their existing towers and masts. This can help cut costs, even though 3G networks commonly require significantly more sites. In the European Union, for example, 2G networks were deployed in the 900 megahertz (MHz) spectrum band, while 3G licenses were assigned in the 1900-2100 MHz band. Because spectrum generally has a shorter range at higher frequencies, 3G networks require more base stations (and therefore more sites) a significant transition expense for 2G operators. However, if those 2G operators can collocate 3G equipment on their existing 2G towers, they can enjoy significant savings as a result. End Notes [1] Current scientific evidence indicates that exposure to radiofrequency fields, such as those emitted by mobile phones and antennas, is unlikely to have negative health effects. In response to health concerns raised by certain communities, the World Health Organization (WHO) established a project to assess the scientific evidence of possible health effects of electromagnetic fields. See www.who.int/peh-emf/en/index.html. The International Commission for Non-ionizing Radiation Protection (www.icnirp.de) has established guidelines for the maximum level of radiofrequency levels in areas of public access from antennas and for users of mobile handsets. [2] This principle is established in the European Union Directive [Framework directive], consideration 23: Facility sharing can be of benefit for town planning, public health or environmental reasons, and should be encouraged by national regulatory authorities on the basis of voluntary agreements. In cases where undertakings are deprived of access to viable alternatives, compulsory facility or property sharing may be appropriate. It covers inter alia: physical collocation and duct, building, mast, antenna or antenna system sharing. Compulsory facility or property sharing should be imposed on undertakings only after full public consultation. [3] Todays standard 3G equipment consumes about 4,000 KWh of Grey energy per year per node, which corresponds to 2.5 tons of CO2, or the equivalent need of 120 trees per node to

compensate for the environmental effect. In a developing country with no or little alternative Green energy, network sharing can significantly reduce the environmental impact.

7.5.2. When might mobile network sharing be appropriate?Determining when mobile network sharing is appropriate requires consideration of both the anticipated benefits of such sharing and the regulatory complexities associated with implementing the sharing arrangements. Understanding the anticipated benefits of various forms of sharing helps to identify contexts where these forms of sharing will be appropriate and most desirable. For example, national roaming arrangements are more important in a country that has remote or rural areas that are un-served or under-served than in a smaller country with a largely urban population. There are some benefits that apply to almost all forms of mobile network sharing. Networksharing agreements generally benefit operators and the general public from a cost perspective. They help operators avoid costs for building or upgrading redundant network sites and allow them to gain additional revenue streams from leasing access. Operators also can achieve considerable savings in rent, maintenance and transmission costs; these savings can be passed down to end-users through lower rates. Sharing arrangements may also achieve economies of scale by combining operating and maintenance activities. Network sharing may also help operators to attain more efficient coverage, since operators may choose to use only those sites that provide deeper and better coverage, decommissioning sites with poor coverage possibilities. Operators can then reinvest those savings in upgrading their networks and providing better coverage and services to end users. Network-sharing agreements may also bring substantial environmental benefits, by reducing the number of sites and improving the landscape. These types of benefits may be of particular relevance in contexts where tourism is a major industry in a country. In Caribbean countries, for example, reducing visual disruption caused by mobile towers and antennae is important to maintaining the beautiful landscape and beaches for which these countries are known. The benefits of various forms of sharing must be weighed against the regulatory measures that will be necessary to facilitate these forms of sharing. There are obstacles to overcome when dealing with network-sharing agreements. From an economic and practical point of view, mobile network sharing is a complex process that requires substantial managerial resources. Some countries (often developing economies) lack the regulatory resources and expertise necessary to address the complex issues that accompany some forms of mobile network sharing such as Mobile Virtual Network Operators (MVNOs). Regulators need to analyze the potential benefits to be generated by network sharing on a case-by-case basis, taking into account the specific characteristics of each market involved, the competition-related concerns that may arise, and the relative difficulty associated with developing and implementing appropriate policies. Generally speaking, network sharing is a useful tool for regulators and policy makers who want to encourage network deployment in un-served or under-served areas. Several instruments can

be used to promote network sharing. National roaming arrangements are probably the most simple and effective arrangements. While roaming leads to a certain level of uniformity among operators offerings, this does not necessarily restrict competition significantly. National regulatory authorities that have anti-competitive concerns may allow network sharing for a limited period (for example, one or two years) in order to promote roll-out of initial phases of network deployment. After that, operators could be required to provide coverage using their own networks. Other types of arrangements, such as active infrastructure sharing, an open access model (allowing and promoting the entry of MVNOs) and functional separation, may also work well to promote roll-out of wireless infrastructure and the advancement of competition. But these types of arrangements may be difficult to monitor and regulate. Such measures require a strong regulator and an effective and efficient judicial system, with appropriate enforcement powers. When analyzing examples of network-sharing agreements around the world, regulators and policy makers should look at the way each market has developed. For example, it is relevant to note that some network-sharing agreements in developed countries have presaged later mergers between the companies involved. [1] In other cases, the companies involved in network sharing arrangements have not merged with each other, but have seen consolidation take place in the market around them. [2] In the past few years, there has been a large consolidation wave in the global telecommunication market across the globe. [3] Perhaps some of those operators could have survived had they been allowed more freedom to share their infrastructure and to compete based on the quality of their service marketing and delivery. [1] This was the case with T-Mobile and Orange in the Netherlands and ATT and Cingular in the USA. [2] After its network sharing arrangement with T-Mobile in the UK and in Germany, the company O2 was acquired by Telefonica. [3] Worth mentioning are: the acquisition of Bell South by AT&T; the merger between Verizon en MCI; the acquisition of O2 by Telefonica of Spain, the acquisition of Orange Netherlands by TMobile; the acquisition of a controlling interest in Telecom Italia by Telefonica.

7.5.3. Options for passive mobile network sharingThis section identifies the options available for mobile operators to share passive infrastructure elements of their wireless access networks. The provider of the infrastructure can either be one of the operators or a separate entity set up to build and operate it, such as a tower company. The passive infrastructure in a mobile network is composed mainly of:

Electrical or fibre optic cables; Masts and pylons; Physical space on the ground, towers, roof tops and other premises; and

Shelter and support cabinets, electrical power supply, air conditioning, alarm systems

and other equipment. Passive Mobile Sharing: Options Available in Site Sharing

Source: Telecom Regulatory Authority of India (TRAI), Recommendations on Infrastructure Sharing A collection of passive network equipment in one structure for mobile telecommunications is generally called a site. Therefore, when one or more operators agree to put their equipment on (or in) the same site, it is called site sharing or collocation. In site-sharing arrangements, operators might share space on the ground or on a tower or rooftop. Depending on the location, operators could install antennas directly on the structure (for example, a water tower or roof-top) or share a mast. The next degree of cooperation would involve sharing support systems at the site, such as power supply and air conditioning (often integrated in a site support cabinet, or SSC). Telecommunication plant (antennas and transmission equipment) is considered active infrastructure, which is discussed in section 7.5.5. Operators often welcome site sharing as cost-effective, because new sites can be costly, capital intensive, cumbersome to maintain and environmentally risky.

7.5.4. Site Sharing ArrangementsThere are several variations of site sharing arrangements. In terms of access, there are three basic types of site-sharing arrangements:

Unilateral One operator agrees to provide access to its facilities to another operator; Bilateral Two operators agree to provide mutual access to facilities; or Multilateral Several operators agree on access terms.

Other variations include the number of sites involved in the arrangement: such agreements may pertain to just one site, or they could provide a framework for access at multiple sites in a certain geographic region. Bilateral agreements for regional site sharing may be particularly appealing for operators from an economic point of view. Sharing passive infrastructure in certain regions enables operators to broaden service coverage over a larger geographical area, which is particularly attractive for operators subject to geographical coverage obligations. Regional site

sharing allows operators to save capital and operating expenditures and provides an alternative to roaming arrangements.[1] Regulators should be careful, however, to head off collusion between operators, especially in highly concentrated markets and where incumbent or dominant operators are negotiating bilateral sharing deals.Standard terms and conditions in site sharing agreements Objective of the agreement Obligations of both parties Term of the agreement Applicable tariffs Billing conditions Service description Implementation and coordination Access to facilities and cooperation Operations and maintenance Subletting conditions (such as no subletting without the consent of the facility owner) Term and termination Penalties Liability Confidentiality Representations and warranties Amendments to agreement Force majeure Governing law and jurisdiction Source : Camila Borba Lefvre, Mobile D/treg/Events/Seminars/GSR/GSR08/papers.html. Network Sharing, at: www.itu.int/ITU-

Most site-sharing agreements do not restrict competition between operators because operators generally retain independent control of their respective networks and services. As a result, operators maintain different services and business plans, concentrating on their different market niches. Full competition is assured where operators retain independent control over their radio planning and the freedom to add sites, including non-shared sites. In that way, operators are free to increase their network capacity and coverage. Better coverage and capacity can be a competitive advantage, allowing operators to distinguish themselves based on the quality, capacity and range of their networks. It is therefore important that site-sharing agreements do not contain exclusivity clauses that would prohibit operators from concluding similar deals with other parties. Site sharing arrangements that fulfill these conditions are not likely to restrict competition among operators. [2] In fact, site-sharing agreements may have a positive impact on competition, since the savings achieved may be passed on to consumers, increasing quality of service and decreasing prices. Finally, it is important to ensure that exchanges of information between site-sharing competitors are limited to information strictly necessary for this purpose, such as technical information and location data for particular sites. Additional exchanges of confidential information should be avoided in order to protect customers proprietary rights and privacy.

End Notes [1] National roaming concerns a situation where the cooperating operators do not share any network elements as such but simply use each others networks to provide services to their own customers. National roaming arrangements allow the roaming operator to rely completely on the infrastructure of the operator providing national roaming, instead of building its own infrastructure in the roaming area. According to certain competition authorities, national roaming agreements may restrict competition between the roaming operators. [2] This was the opinion of the European Commission when it judged the site sharing arrangement for 3G mobile communications between T-Mobile Deutschland and 02 Germany: Commission Decision of 16 July 2003, Case COMP/38.36.

7.5.5. Encouraging passive mobile sharingIn order to accelerate deployment of mobile networks to rural areas, policy makers and regulators may consider adopting regulatory measures to promote site sharing. This section reviews measures that may be taken in order to encourage passive sharing in mobile networks. Mandatory sharing In countries where mobile site sharing is mandatory, operators generally are required to allow third parties to share their facilities upon request. The scope of mandatory site sharing may vary, depending on the needs of local markets and the policy objectives of the government. For example, sharing obligations might only be imposed on operators that have significant market power (SMP) while site sharing remains optional for non-dominant operators. The regulator might elect to require sharing of only certain infrastructure elements. The scope of mandatory sharing may also vary based on the degree of independence operators have in negotiating the specific terms of site sharing agreements. For information about what regulators should consider when setting a policy for mandatory sharing, please see the Practice Note entitled Regulating Mandatory Site Sharing Agreements. A link to this Practice Note is set out below. Box 1: Site Sharing in New Zealand Subject to limited exceptions, mobile site sharing is mandatory upon request in New Zealand, although access seekers and access providers are free to set their own pricing arrangements for collocation. In 2007, an investigation conducted by the New Zealand Commerce Commission (the Commission) found that although collocation agreements for mobile site sharing had been in place for many years, collocation had occurred on less than 0.5% of available towers. The investigation further found that pricing for collocation services was not the impediment to mobile collocation. Instead, the Commission considered that collocation had not occurred more frequently because incumbent operators had control over optimal co-location sites and incumbents had no or limited incentives to support co-location (sic) by competing networks.

(Commerce Commission, Schedule 3 Investigation into Amending the Co-Location Service on Cellular Mobile Transmission Sites, 14 December 2007, p. 9, para. 49.) In response to these findings, the Commission undertook a process to determine the Standard Terms for collocation on mobile cellular transmission sites. The Commission released its Determination on these Standard Terms (the STD or Standard Terms Determination) in December, 2008. The Commissions STD was aimed at enabling the efficient provision of mobile collocation services and at providing access seekers and access providers with appropriate incentives to make efficient use of mobile network resources for the long-term benefit of endusers. The Commission identified three aspects of the STD in particular that it considered will contribute to more rapid collocation of mobile network transmission and reception equipment: (1) the standard type site solution process; (2) the ability for access seekers to make multi-site applications; and (3) the Service Level capacity limit for each access provider of ten applications per access seeker per five day working period. The Commission also stated that it would also monitor the implementation of the STD closely, given the limited progress that has been made towards collocation. The Commission stated that it will be carefully examining the Service Level performance reports, with particular attention on the number of co-location (sic) Applications received and final approvals issued by Access Providers, as well as Service Level defaults. (Commerce Commission, Standard Terms Determination for the specified service Co-location on cellular mobile transmission sites, Decision 661, December 11, 2008, p. xii, para. xxvii.) Source: Commerce Commission, Standard Terms Determination for the specified service Colocation on cellular mobile transmission sites, Decision 661, December 11, 2008.

Optional sharing Policy objectives play an important role in deciding whether site sharing should be mandatory or optional. When the policy is geared toward stimulating operators to invest in their own infrastructure, optional sharing may be applied.[1]

In many cases, operators may opt for site sharing voluntarily, in order to reduce costs. Regulators who wish to minimize market interventions may take measures to stimulate site sharing without mandating it. Measures to promote site-sharing arrangements might include: adopting model agreements; facilitating self-regulation; providing guidance on the types of sharing that is permitted; permitting the sharing of government-owned facilities; and providing financial incentives for sharing. A Practice Note containing further information about these options is linked below. This Practice Note is entitled Measures to

Promote Optional Passive Sharing.The role of local authorities The ability to construct sites in certain areas may be limited by local land use or other regulatory restrictions. In most countries, local authorities are involved in granting permission to install masts and towers for wireless communications. These city or township authorities may take part in promoting site sharing, for example by requiring that new masts or towers be designed to accommodate more than one operator. Local authorities may also require operators to place their equipment on existing masts, unless this is not possible for technical reasons. To promote site sharing successfully, local authorities must work closely with operators and their representatives. Disputes between operators and local authorities can hinder network roll-outs and increase communities often-unnecessary fears of negative impacts from tower sites. Associations of operators may be an important factor in establishing a dialogue between local communities and operators, increasing awareness about the presence and the location of masts in their communities and any possible health or environmental effects of those masts. Such associations may also develop, in cooperation with local communities, guidelines for building new sites or installing new equipment at existing sites. The goal is to increase local participation, improve the availability of information and create legal certainty for operators willing to roll out their networks. It is also possible for national authorities to develop site-selection rules or guidelines to be followed by local authorities. These guidelines could address environmental factors or distinguish between the conditions that apply in urban and rural, less-populated areas. Encouraging the participation of infrastructure providers (tower companies) Telecommunications operators that own towers, masts or other infrastructure may have incentives to prevent competitors from sharing their sites. However, the outsourcing of tower operations may be an interesting option from a business perspective. Specialized tower companies have every incentive to sell their services to as many telecommunications service providers as possible. Tower companies own the towers and masts or, in some case, the whole site. They provide a variety of services to customers, such as: radio and transmission planning; site acquisition; site construction and equipment installation; and/or site maintenance. Outsourcing deals may create considerable financial value for operators and free them up to focus on their core wireless businesses. Outsourcing of site infrastructure has been particularly successful in North America, where it is considered one of the key enablers of effective mobile network roll-out.[2]

Although not as well known as in the United States, tower companies also are becoming more common in Europe.[3] For information about how policy makers and regulators may promote the emergence of tower providers, please see the Practice Note entitled Tower Companies and the Promotion of Passive Sharing.Financial incentives

Sharing arrangements can often reduce costs and make wireless deployment more viable in many areas. In this regard, operators have an incentive to pursue sharing arrangements. Governments can also implement various measures to create additional financial incentives. Such measures could include tax and fee exemptions, the reduction of fees imposed by local authorities, and subsidies. The Practice Note entitled Encouraging Passive Sharing Using Financial Incentives discusses these measures in greater detail. A link to this Practice Note is set out below. [1] Cf. Article 8 of the European Framework Directive, according to which one of the principle policy objectives of the European electronic communications policy is to promote efficient investment in infrastructure. [2] In the United States, the majority of mobile sites are owned by tower companies, and not by mobile operators. Among successful tower companies in North America are: American Tower, Crown Castle and Spectra Site. [3] The company Alticom B.V., which is a subsidiary of the French company TDF S.A., has recently entered the Dutch market in order to operate a tower business for wireless transmission. TDF also operates a tower business in other European countries.

7.5.5. Encouraging passive mobile sharingIn order to accelerate deployment of mobile networks to rural areas, policy makers and regulators may consider adopting regulatory measures to promote site sharing. This section reviews measures that may be taken in order to encourage passive sharing in mobile networks. Mandatory sharing In countries where mobile site sharing is mandatory, operators generally are required to allow third parties to share their facilities upon request. The scope of mandatory site sharing may vary, depending on the needs of local markets and the policy objectives of the government. For example, sharing obligations might only be imposed on operators that have significant market power (SMP) while site sharing remains optional for non-dominant operators. The regulator might elect to require sharing of only certain infrastructure elements. The scope of mandatory sharing may also vary based on the degree of independence operators have in negotiating the specific terms of site sharing agreements. For information about what regulators should consider when setting a policy for mandatory sharing, please see the Practice Note entitled Regulating Mandatory Site Sharing Agreements. A link to this Practice Note is set out below. Box 1: Site Sharing in New Zealand Subject to limited exceptions, mobile site sharing is mandatory upon request in New Zealand, although access seekers and access providers are free to set their own pricing arrangements for collocation. In 2007, an investigation conducted by the New Zealand Commerce Commission

(the Commission) found that although collocation agreements for mobile site sharing had been in place for many years, collocation had occurred on less than 0.5% of available towers. The investigation further found that pricing for collocation services was not the impediment to mobile collocation. Instead, the Commission considered that collocation had not occurred more frequently because incumbent operators had control over optimal co-location sites and incumbents had no or limited incentives to support co-location (sic) by competing networks. (Commerce Commission, Schedule 3 Investigation into Amending the Co-Location Service on Cellular Mobile Transmission Sites, 14 December 2007, p. 9, para. 49.) In response to these findings, the Commission undertook a process to determine the Standard Terms for collocation on mobile cellular transmission sites. The Commission released its Determination on these Standard Terms (the STD or Standard Terms Determination) in December, 2008. The Commissions STD was aimed at enabling the efficient provision of mobile collocation services and at providing access seekers and access providers with appropriate incentives to make efficient use of mobile network resources for the long-term benefit of endusers. The Commission identified three aspects of the STD in particular that it considered will contribute to more rapid collocation of mobile network transmission and reception equipment: (1) the standard type site solution process; (2) the ability for access seekers to make multi-site applications; and (3) the Service Level capacity limit for each access provider of ten applications per access seeker per five day working period. The Commission also stated that it would also monitor the implementation of the STD closely, given the limited progress that has been made towards collocation. The Commission stated that it will be carefully examining the Service Level performance reports, with particular attention on the number of co-location (sic) Applications received and final approvals issued by Access Providers, as well as Service Level defaults. (Commerce Commission, Standard Terms Determination for the specified service Co-location on cellular mobile transmission sites, Decision 661, December 11, 2008, p. xii, para. xxvii.) Source: Commerce Commission, Standard Terms Determination for the specified service Colocation on cellular mobile transmission sites, Decision 661, December 11, 2008.

Optional sharing Policy objectives play an important role in deciding whether site sharing should be mandatory or optional. When the policy is geared toward stimulating operators to invest in their own infrastructure, optional sharing may be applied.[1]

In many cases, operators may opt for site sharing voluntarily, in order to reduce costs.

Regulators who wish to minimize market interventions may take measures to stimulate site sharing without mandating it. Measures to promote site-sharing arrangements might include: adopting model agreements; facilitating self-regulation; providing guidance on the types of sharing that is permitted; permitting the sharing of government-owned facilities; and providing financial incentives for sharing. A Practice Note containing further information about these options is linked below. This Practice Note is entitled Measures to Promote Optional Passive Sharing.The role of local authorities The ability to construct sites in certain areas may be limited by local land use or other regulatory restrictions. In most countries, local authorities are involved in granting permission to install masts and towers for wireless communications. These city or township authorities may take part in promoting site sharing, for example by requiring that new masts or towers be designed to accommodate more than one operator. Local authorities may also require operators to place their equipment on existing masts, unless this is not possible for technical reasons. To promote site sharing successfully, local authorities must work closely with operators and their representatives. Disputes between operators and local authorities can hinder network roll-outs and increase communities often-unnecessary fears of negative impacts from tower sites. Associations of operators may be an important factor in establishing a dialogue between local communities and operators, increasing awareness about the presence and the location of masts in their communities and any possible health or environmental effects of those masts. Such associations may also develop, in cooperation with local communities, guidelines for building new sites or installing new equipment at existing sites. The goal is to increase local participation, improve the availability of information and create legal certainty for operators willing to roll out their networks. It is also possible for national authorities to develop site-selection rules or guidelines to be followed by local authorities. These guidelines could address environmental factors or distinguish between the conditions that apply in urban and rural, less-populated areas. Encouraging the participation of infrastructure providers (tower companies) Telecommunications operators that own towers, masts or other infrastructure may have incentives to prevent competitors from sharing their sites. However, the outsourcing of tower operations may be an interesting option from a business perspective. Specialized tower companies have every incentive to sell their services to as many telecommunications service providers as possible. Tower companies own the towers and masts or, in some case, the whole site. They provide a variety of services to customers, such as: radio and transmission planning; site acquisition; site construction and equipment installation; and/or site maintenance. Outsourcing deals may create considerable financial value for operators and free them up to focus on their core wireless businesses. Outsourcing of site infrastructure has been particularly successful in North America, where it is considered one of the key enablers of effective mobile network roll-out.[2]

Although not as well known as in the United States, tower companies also are becoming more common in Europe.[3] For information about how policy makers and regulators may promote the emergence of tower providers, please see the Practice Note entitled Tower Companies and the Promotion of Passive Sharing.Financial incentives Sharing arrangements can often reduce costs and make wireless deployment more viable in many areas. In this regard, operators have an incentive to pursue sharing arrangements. Governments can also implement various measures to create additional financial incentives. Such measures could include tax and fee exemptions, the reduction of fees imposed by local authorities, and subsidies. The Practice Note entitled Encouraging Passive Sharing Using Financial Incentives discusses these measures in greater detail. A link to this Practice Note is set out below. [1] Cf. Article 8 of the European Framework Directive, according to which one of the principle policy objectives of the European electronic communications policy is to promote efficient investment in infrastructure. [2] In the United States, the majority of mobile sites are owned by tower companies, and not by mobile operators. Among successful tower companies in North America are: American Tower, Crown Castle and Spectra Site. [3] The company Alticom B.V., which is a subsidiary of the French company TDF S.A., has recently entered the Dutch market in order to operate a tower business for wireless transmission. TDF also operates a tower business in other European countries.

6.5.7. Active Mobile Network Sharing: Extended Site SharingExtended site sharing is when operators share not only the passive elements of a site, but also active equipment such as antennas, combiners and transmission links. In extended site sharing arrangements, operators may also share the TRX (transmitter and receiver). This requires parties to share the spectrum, as well. Spectrum sharing is technically possible, but it can raise regulatory challenges because of rules dealing with spectrum optimization. Nevertheless, the Brazilian regulatory ANATEL has expressly allowed spectrum sharing in case operators decide to share their networks in order to provide coverage in rural or remote areas (communities with less than 30,000 inhabitants). The extended site-sharing option may increase capital and operating savings when compared with simple site sharing. The amount of additional savings may be limited, however, because the additional costs of antennas and transmission equipment are relatively small. While it is technically possible for operators using different frequencies to share an antenna, this option poses some technical challenges. It may particularly difficult when radio optimization strategies are not aligned among the operators. While an antenna can be shared, it is usually kept in a certain position, based on the operators own radio optimization strategy. The

optimization strategy of the sharing operator may require changing the antenna position something that may be difficult or impossible when the antenna is shared. Nevertheless, certain equipment manufacturers supply antennas that are adequate for antenna sharing.[1] This equipment includes Multi-Operator Radio Access Network (MO-RAN) technology. Where MO-RANs are deployed they allow for two operators to share the same base station and to share the radio network controller which directs the voice and data traffic back to the operator's own core network. [1] Nokia, for example, is an equipment manufacturer and supplier that provides equipment intended for network sharing.

7.5.8 Active Mobile Network Sharing: Sharing the Radio Access NetworkRack sharing: In addition to the extended sitesharing option, operators can choose to install their active equipment in a shared cabinet or rack (i.e., the housing frame encompassing the electronic and other hardware). In this rack-sharing option, other elements such as channel elements, transmitter and receiver (TRXs) and power amplifiers remain physically separated, along with the transmission networks and other elements of radio access, such as the Radio Network Controllers (RNCs). Power supply, air-conditioning, ancillary cabinet and alarm installations can be shared.[1]

Depending on the actual situation, rack sharing may provide up to 5 per cent capital expenditure savings for an operator, per Node-B. If battery backup is shared, this option may provide even further savings. Figure 1 graphically illustrates this option.Figure 1: Rack Sharing (i.e., sharing the physical frame housing electronics and other equipment and ancillary elements such as power supply, air-conditioning, battery back-up, and alarm installation)

Source: Camila Borba Lefvre, Mobile Network Sharing, at: www.itu.int/ITUD/treg/Events/Seminars/GSR/GSR08/papers.html Full Radio Access Network (RAN) Sharing: In addition to extended site-sharing and rack sharing, operators may also share all the elements of the Node-B. In case independent frequency control needs to be in place, the TRX and the power amplifier (PA) should remain independent, allowing for radiation at each operators assigned frequency range. When the spectrum can be shared, operators may also share the TRX and the PA. Figure 2: Full RAN Sharing

Source: Camila Borba Lefvre, Mobile Network Sharing, at: www.itu.int/ITUD/treg/Events/Seminars/GSR/GSR08/papers.html In the case of full RAN sharing, regulatory authorities may require the shared elements to be functionally separated. In this scenario, operators should retain independent control of all the parameters that determine the quality of the network, such as coverage, speed and the handover parameters. The Dutch regulatory authority required functional separation when it assessed the proposed sharing arrangement for 3G mobile services between operators Ben and Dutchtone.[2] Functional separation implies that the communication between the RNC and the Node-B has to be under the independent control of one operator, as far as that operators service is concerned. This communication may take place using the same cables and connections, but it must be logically separated. In addition, operations, maintenance and network control should be separated. Those elements may be under individual control by each operator or under joint control of an independent third party, which would operate the shared network on behalf of the sharing parties. This independent third party could be a joint venture between the sharing parties or an independent company. Figure3 illustrates a functionally separated RNC, which may be necessary due to regulatory requirements. Figure 3: Separating the RNC Functions

7.5.9 Active Mobile Network Sharing: Core Network SharingSharing of the core network is technically possible. However, core network sharing does raise some commercial concerns. The core network performs several functions in areas essential to service performance, such as billing. The core network also contains a large amount of confidential information on the operators business. These matters can complicate sharing the core network. There are, however, other ways to share the core network, such as national roaming, or through a mobile virtual network operator (MVNO) structure. In addition, with the emergence of so-called next-generation core networks, in which switching and the control/service functionalities are physically separated, network sharing may move into the domain of core network switching while enabling service differentiation and confidentiality. National roaming National roaming refers to an arrangement among operators to use each others networks to provide services in geographic areas where they have no coverage. Such arrangements effectively multiply any one carriers ability to cover the entire country, without actually having deploying infrastructure everywhere. There are several options for the geographic division of a country for the purpose of national roaming. One common method is to assign different cities, provinces or regions to different operators. For more information on roaming arrangements, please see the Practice Note, National Roaming. A link to this Practice Note is set out below. Wholesale mobile access: Mobile virtual network operators

Broadly speaking, mobile virtual network operators (MVNOs) are entities that provide mobile services to end-user customers but do not have their own radio spectrum; in some cases, MVNOs also do not have all the infrastructure necessary to provide mobile telephone services. MVNOs offer services to their customers by reselling wholesale minutes that they have purchased from a mobile network operator (MNO). Many MVNOs have backbone and back-office operations (including a billing and identification system) and only require use of the mobile operators access (or last mile) network. These MVNOs thus avoid having to build out end-toend mobile networks. One form of MVNO, known as a mobile service provider, operates without any network facilities at all, simply buying and reselling minutes to their end users. For more information on MVNOs, please see the Practice Note entitled Mobile Virtual Network Operators. A link to this Practice Note is set out below.

7.5.10 Active Mobile Network Sharing: Backhaul SharingIn certain rural or remote areas, backhaul networks can constitute bottleneck facilities. In areas where mobile traffic is low, the full backhaul capacity may lie unused, making it ideal for sharing among different operators. Accordingly, where passive or active infrastructure is shared on a tower or rooftop, operators may also share backhaul facilities. Backhaul sharing can be achieved either through fibre cables or microwave links. Regulatory or licensing conditions may preclude operators from sharing backhaul facilities, however, especially when spectrum is employed (as with microwave links). This is often the case in rural or remote areas. For example, sharing of radio backhaul is not permitted under the licensing conditions of mobile operators in India. When backhaul radio facilities cannot be shared, operators have to install separate antennas on the towers, in addition to the antennas used to communicate with handsets. This increases the weight of the antenna on the tower, requiring higher and heavier towers, increasing the cost of construction and adding to visual intrusion. Therefore, it may be more practical to share fibre and limit the sharing of radio backhaul facilities to low-traffic regions. In addition, regulators and policy makers intending to foster wireless broadband deployment may wish to encourage mobile operators to replace microwave links with fibre links to add greater bandwidth.

7.5.11. Competition and Active Mobile Network SharingActive mobile sharing raises a number of competition-related concerns. The access that operators have to each others networks provides them with access to confidential information about each others costs, operations, technology, and other key data. Sharing may therefore provide opportunities for collusion on pricing, service packages, and network development. Even without collusion, some forms of sharing such as national roaming may restrict competition by neutralizing key competition parameters such as coverage, call quality and transmission rates. This neutralization occurs because roaming operators are restricted by the

coverage, network quality and transmission speeds available on the visited network, which are a function of the commercial choices made by the visited operator. Regulators may be concerned at the resulting uniformity and lack of market differentiation. These types of concerns were raised by the European Commission when it evaluated 3G network sharing arrangements between T-Mobile and O2 in Germany and the UK. Although the European Commission restricted national roaming arrangements due to competition-related concerns, this decision was subsequently overturned by the European Court of First Instance (CFI). For more details about the European Commissions evaluation of national roaming in the aforementioned cases, please see that attached Practice Note entitled The European Commissions Review of National Roaming Agreements. Sharing may also hinder network roll-out since operators may find that it is cheaper to share infrastructure and provide services in the same geographic areas as their competitors than to roll-out their network to under-served areas. Insofar as sharing increases collaboration and reduces competition in the core and access levels of the network, sharing also reduces the incentive to innovate. Dynamic efficiency may suffer as a result. Box 1: Ofcoms concerns regarding the impact of sharing on competition Network sharing could also have undesirable consequences for competition. For example, [mobile network operators] could collaborate on network development and gain information about each others costs and plans, which may have a chilling effect on competition in the retail market. Dynamic efficiency may also be lower with fewer networks able to provide high quality mobile broadband services. End-to-end competition, i.e. at both the network and service level, could lead to greater innovation, which could bring significant benefits for consumers. We note that the competition concerns would be amplified if the 900 MHz operators were themselves to decide to share a single UMTS 900 network in response to the actions of their competitors. While it is difficult to quantify the potential impact of these effects, Ofcoms initial view is that there is a significant risk that both competitive intensity and innovation in mobile broadband services would be weakened, with potentially serious impacts on consumer welfare. Source: Ofcom, Application of spectrum liberalization and trading to the mobile sector(20 September, 2007). This public consultation document is available at:www.ofcom.org.uk/consult/condocs/liberalisation/liberalisation.pdf. While the collaborative aspects of sharing pose concerns, sharing may also be used by operators, particularly those with significant market power (SMP), to undermine their competitors. Refusals to grant access to network infrastructure, delays in responding to requests for site sharing, poor service quality, and price gouging can sabotage initiatives to promote sharing where it would otherwise be appropriate. Vertically integrated operators in particular have incentives to delay access and service requests, reduce service quality, and over-charge operators who compete in the same downstream markets as they do. With these concerns in mind, there are a number of ex ante measures that regulators may to avoid anti-competitive outcomes. These measures include the following:

Impose geographic coverage requirements. Set standards for quality of service indicators and time frames. Require the publication of RIOs Restrict exchange of confidential information. Time limits: allow sharing in certain areas, for a certain amount of time. This allows for

benefit of sharing for reducing costs so that can help with roll-out, but phases it out as markets grow.

Functional separation.

Although sharing arrangements raise competition-related concerns, there may also be some competition-related benefits associated with these arrangements. Network sharing agreements may help operators to offer services to more people in more geographic regions. The operators can then compete based on brand, price and customer service. This applies in particular to rural and remote areas. One way to balance the concerns about mobile network sharing with the benefits associated with sharing arrangements is to distinguish between urban and rural areas when judging network-sharing agreements. Brazilian regulator ANATEL, for example, permitted mobile network sharing in communities with less than 30,000 inhabitants, but not in other, larger communities, when it issued licences for the provision of 3G mobile services in 2008. Another option is to allow sharing for a period of time until operators have acquired a substantial customer base in rural areas. Subsequently, the operators may be required to deploy their own networks and eliminate or reduce their reliance on roaming. Regulators need a thorough awareness of the competitive situation in the market when judging network-sharing agreements. Such agreements should not affect important competition parameters, such as price and service packages. Cooperating operators should not be allowed to exchange commercially sensitive information that may influence their future competitive behaviour. Where regulators impose conditions or limitations (such as requiring part of the infrastructure to be functionally separate), they may wish to impose only those obligations that are strictly necessary to preserve sustainable competition.

7.5.12 Regulatory and legal issuesWhether mobile sharing involves passive or active infrastructure, there are a number of key regulatory issues that must be addressed. These issues are outlined below. Licensing: Regulators and policy makers must assess the current licensing framework to ensure that it accommodates mobile network sharing, whether in terms of active or passive infrastructure. In particular, regulators and policy makers should consider whether the terms and conditions of existing licensees permit sharing and whether current categories of licences accommodate new types of industry participants such as infrastructure providers (e.g., tower companies) and mobile virtual network operators. Other authorization-related issues will also require considerations, such as fees and universal access obligations.

Mandatory or optional sharing: Regulators and policy makers must determine whether to mandate sharing or to permit it at the option of the operator. A related issue is what types of sharing to permit and on what basis. A good example is spectrum sharing: although it is technically possible to share spectrum, only the Brazilian regulator, ANATEL, has taken steps towards permitting it and then only in certain limited contexts. By contrast, tower sharing is widely permissible around the world, and 3G network sharing is becoming more common. At present, several countries including Jordan, Hong Kong China, and India permit MVNOs, though the terms under which MVNOs may operate differ to quite a degree from jurisdiction to jurisdiction. Box 1: Commonly-recognized acceptable grounds for refusing access and sharing requests

Insufficient capacity (all existing capacity is occupied or reserved). Granting of access is technologically impossible. The access or sharing request, if granted, would breach safety and reliability standards.

Standard terms and conditions: Regulators and policy makers may consider adopting standard terms and conditions to govern sharing arrangements. Alternatively, they may opt to require dominant service providers to file Reference Offers for sharing of essential facilities. One other option is to stipulate that operators are free to negotiate their own terms and conditions for sharing on a commercial basis, and to require that operators enter into arbitration or mediation if they cannot reach an agreement within a prescribed period of time. The Bangladeshi Guidelines for Infrastructure Sharing, for example, provide that parties must negotiate commercial agreements for infrastructure sharing in good faith. However, if the parties are unable to come to an agreement, either party may ask the Bangladesh Telecommunication Regulatory Commission (BTRC) for assistance. Any decision issued by the BTRC in such a case is final and binding. The Guidelines for Infrastructure Sharing specifically state that disputes about tariffs or charges are to be resolved by the BTRC and that the BTRC's decision is final and binding. In most cases, it is preferable to allow operators to negotiate their own arrangements on a commercial basis. Regulators may safeguard against anti-competitive behaviour in this context by setting some general principles for agreement and by establishing time deadlines for completing agreements. General principles that regulators may consider adopting include:

Non-discrimination; Provision of access and capacity on a first-come, first-served basis; A requirement to return excess capacity and penalties for operators who order too

much capacity; Prohibitions on exclusivity arrangements; Transparency; and Acceptable grounds for refusing access and sharing requests.

Incentive regulation: Regulators and policy makers may consider implementing various measures designed to create incentives for sharing generally and/or for complying with the

terms and requirements surrounding sharing. One common approach is to require that all operators keep a log of access requests, along with notes about the measures taken to respond to these requests. Operators may be required to file these logs with the regulator on a regular basis or may simply be required to keep these records and to produce the logs upon request. [1] Another measure that may be taken to enhance the efficiency of processing access requests is to allow operators to file more than one access request with an operator at one time. In New Zealand, for example, the Commerce Commission approved a set of standard terms for mobile collocation that allows access seekers to make up to ten requests to an access provider at a time. Pricing: Regulators and policy makers must determine whether to set prices for sharing or to allow operators to negotiate prices, subject to the general requirement that prices be fair and commercially reasonable. This decision typically turns on the infrastructure in question and on the parties involved. Pricing controls are necessary where prices are unlikely to be fair or where pricing may be used to impose a barrier to market entry. Thus, while it may be necessary to regulate the prices charged for access to essential facilities owned and operated dominant service providers, it may not be necessary to set prices in other contexts where competition is healthier, such as tower sharing. Where prices are controlled, the adoption of some form of costbased methodology is generally considered the best practice. Dominance or Significant Market Power (SMP): Policies to promote ICT sector development and competition require a comprehensive framework for preventing and managing anticompetitive conduct. Regulators must prevent any abuse of dominance in cases where the infrastructure owner also competes downstream with other service providers in the same market. Such policies should be premised on the understanding that regulatory intervention is primarily needed only when an operator possesses Significant Market Power (SMP) and begins abusing that power. The standard best practices for intervention apply in infrastructure sharing regulation as they would in pricing, interconnection and other areas of competition policy. Enforcement and dispute resolution: Whether governments choose a policy of mandatory or optional sharing, efficient enforcement mechanisms and dispute resolution processes should be in place. It is not possible to prescribe the exact enforcement measures that regulators should take; each country has its own institutions and laws. The common thread, however, is a solid and effective mechanism for handling complaints and disputes, with sufficient sanctions to discourage violations. See the Practice Note entitled Dispute Resolution for Mobile Sharing for more information about dispute resolution. [1] See Booz Allen Hamilton Inc, "Telecom Infrastructure Sharing Regulatory Enablers and Economic Benefits", November 2007, p. 8 available online at:www.boozallen.com/media/file/Telecom_Infrastructure_Sharing.pdf.

7.5.13 Regulatory Best PracticesThis section provides a set of best practices related to passive and active mobile infrastructure sharing.

Establish clear, objective and transparent policy goals involving network sharing. Provide guidance on the types of sharing that will be allowed. Establish clear guidelines for the conclusion of voluntary sharing agreements, including

maximum time periods to conclude agreements and to provide actual access. Create efficient dispute settlement and judicial review mechanisms, including

specialized dispute settlement bodies. Allow and stimulate self-regulation. Promote dialogue between authorities, community members and operators about the

installation of infrastructure. Allow network sharing, in particular site sharing and national roaming, in rural and

remote areas. Make a thorough and objective assessment of the competitive situation, including

research on consumer preference and consumer choice. Only impose restrictions that are strictly necessary to promote competition and

proportionate to the established policy goals. Consider whether an open access model (such as the entry of MVNOs) or even

functional separation would be viable, depending on the market situation. Consider providing subsidies for network sharing in remote or rural areas that are

calculated to cover real costs and can be distributed in a competitive fashion. Monitor compliance with sharing requirements by requiring operators to provide regular

reports and by creating an open dialogue with operators. Consider establishing websites publicizing the location of towers and other sites that

may be suitable for infrastructure sharing.