Technology & Innovation

A network shared

September 10, 2010

Global

September 10, 2010

Global
Our Editors

The Economist Intelligence Unit

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A Freshfields Bruckhaus Deringer article, written in co-operation with the Economist Intelligence Unit

The rewards of network sharing are too big for mobile operators and regulators to ignore, both in developing and in mature markets.

Mobile operators in developed markets are finding it harder to tell a convincing growth story. Almost everyone has a mobile phone and, on average, they are lowering their monthly bills. Worryingly for operators, the decline in spending is not just down to a passing phase of tougher economic conditions. Regulatory and competitive pressures have squeezed prices for voice and data services, particularly in Europe, and these twin forces are unlikely to ease any time soon.

In emerging markets, the number of high-growth opportunities is also diminishing fast as mobile penetration levels rise. Adding to the competitive pressure, some emerging-market governments have been over-zealous in awarding mobile licences. In Ghana, for example, there are six licensed mobile network operators.

To protect margins in such difficult times, mobile operators desperately need to reduce their costs. For many in mature markets – and a growing number in developing markets – this has led to some form of network sharing, which offers a clear way to reduce expenditure. Mobile operators that share their sites and tower masts for base station and antenna equipment, for example, should have fewer operating expenses than if they were not sharing.

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