Sharing for Growth

Mobile Network Operators (MNO) have witnessed phenomenal growth since the turn of the millennium. According to the Pakistan Telecommunication Authority (PTA), teledensity had risen to 61.7 percent in December 2010. MNOs appear to be sailing smoothly, having raised revenues in excess of Rs 236 billion during CY10.
However, the hitherto fast expansion of the sector may be in for some hiccups in the coming times as the cellular telecom sector is becoming increasingly saturated. The subscriber base is somewhat stagnant, and the average revenue per user (ARPU) has been declining since 2003.
Foreign Direct Investment in the sector has also become limited to working capital requirements of the existing infrastructure. Adding to these hurdles is the apparent lack of demand for newer technologies like 3G and 4G.
Telecom experts believe that MNOs are in a consolidation phase. While the industry ARPU has declined, MNOs have pushed towards value added services (VAS). To save up on transmission costs, local operators are becoming more open to the idea of sharing wireless infrastructure facilities. Mobilink and Ufone entered into one such agreement earlier this week
Industry experts are certain that infrastructure sharing would help the industry in saving costs and maintaining quality. If this phenomenon occurs on a large scale, MNOs focus will shift away from coverage to content.
More resources and time could be dedicated to strategic marketing. Operational synergies and efficiencies would then translate into significant cost-saving, which could be used to add further value to user experience. Sharing of infrastructure also helps save capital expenditure on new tower sites.
Infrastructure sharing in Pakistan is passive in nature limited to site-sharing only. PTA estimates that only two tower sites are shared for every hundred towers in the country. This ratio needs to improve to fifty shared sites for every hundred sites in order to have a sizable impact, asserts the PTA.
Experts opine that local MNOs need to move to active infrastructure sharing, which involves full spectrum-sharing and radio access networking. They cite Bharti Airtel (Indias biggest mobile operator) as a success story. The company greatly benefited from active infrastructure in India and outsourced everything, except for marketing and strategy.
This is the way to go for the future. Sharing transmission resources drives the coverage or
each factor out of the competition equation. The battle for market leadership or utter survival then moves to strategy, creative marketing and VAS.
For quite some time, there have been talks of forming a company in Pakistan for the sole purpose of wireless infrastructure sharing - Tower Holding co.. This third-party would provide infrastructure solutions and manage the tower site capacities of various operators. Industry participants say that the proposal is on hold for now, but agree that this is the eventual road to success in the telecom sector.
Wireless infrastructure sharing would bring for mobile subscribers what One-link technology platform brought for banking customers: ease of access, choice and availability. MNOs would gain more if they all work out an industry-wide sharing arrangement.
Both passive and active infrastructure sharing offer Pakistani consumers more choice and affordable cellular services. Underserved regions (low on tele-density) would benefit the most. New entrants would focus more on creating a niche instead of fretting over huge start-up costs on establishing and maintaining towers.
MNOs around the world have successful infrastructure sharing arrangements. It is high time this phenomenon picks up pace in Pakistan too. This culture of sharing augurs well for the MNOs bottom line, quality of service and environmental sustainability.