This move can save tens of billions of yuan in 5G construction!

Recently, two major European operators, Vodafone and O2 under Telefonica, announced that they will extend their network sharing agreement to 5G networks, which will enable them to accelerate the deployment of 5G mobile services at a lower cost, thereby increasing the challenge to their competitor British Telecom (BT). In the history of mobile communications development, there have been many cases of co-construction and sharing of cellular networks among mainstream operators around the world. Faced with the extremely high investment and uncertain scale benefits of 5G, public opinion is calling for co-construction and sharing, and co-construction and sharing of 5G networks seems to be the general trend. However, this cooperation method does not seem to be so smooth sailing. At least in China, the road to large-scale co-construction and sharing of 5G is still very long.

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Wireless network co-construction and sharing is not a new thing

The practice of wireless network sharing among operators has a history of more than ten years. At that time, 3G networks had just begun to be deployed. Faced with high investments, some operators chose to cooperate in building and sharing network infrastructure in some areas. The main sharing cases include:

• In 2011, Telenor and Hutchison 3 provided a jointly built and shared 3G network in Sweden. At that time, the two operators chose to establish a joint venture company 3GIS to operate this shared network, covering 70% of Sweden.
• In 2004, Vodafone and OPUTS established a joint venture in Australia to share 3G access network base stations and other infrastructure, and jointly build some base stations.
• In 2006, Vodafone and Orange cooperated to build and share 3G networks in remote areas of Spain.
• In 2016, Vodafone and Orange plan to merge their 3G networks in the UK to reduce operating costs, but the two companies will retain control of their respective backbone networks.

The co-construction and sharing of 3G networks has continued to the 4G era and the current 5G era. The 5G network sharing carried out by Vodafone and O2 in the UK mentioned at the beginning of this article also includes the joint upgrade of high-capacity optical fiber transmission networks. In addition to European operators, Asian operators have also put 5G network sharing on the agenda:

• In December 2018, South Korea's three major operators were the first in the world to simultaneously realize 5G commercialization. Co-construction and sharing also provided an important foundation for rapid commercialization. In April 2018, under the coordination of the South Korean government, South Korea's three major telecom operators reached an agreement on 5G co-construction and sharing. The three operators will co-construct and share 5G construction, accelerate 5G deployment, and effectively use resources to reduce duplicate investment. Since then, the three major operators have begun to jointly deploy 5G.
• Japan's three major operators, NTT DOCOMO, KDDI and SoftBank, have also expressed great interest in a co-construction and sharing plan, and it is expected that under co-construction and sharing, Japan's investment in 5G infrastructure will be less than 4G.

However, although there have been nearly 20 years of practical experience in co-construction and sharing, it has been mostly carried out on a small scale, or only involves sharing of facilities such as towers and base stations. Large-scale and in-depth co-construction and sharing has not yet been formed.

All parties in the domestic industrial chain have their own opinions

There are many stakeholders involved in network co-construction and sharing, and multiple factors make it very difficult. Domestic parties have different attitudes towards co-construction and sharing.

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China Tower has spared no effort in network co-construction and sharing. One of the main missions of the tower company is to reduce duplicate construction and realize the co-construction and sharing of communication infrastructure. China Tower once stated that 5G network construction will realize the sharing of social resources, and 85% of the new 5G sites will be solved by using social resources. In the past few years of operation, the tower company has indeed seen the economic benefits of co-construction and sharing. From a set of data, we can see the direct benefits brought by 5G co-construction and sharing:

• It is estimated that 3 million new sites will be added in 5G construction, of which 2.6 million sites will be solved by social resources and the other 400,000 sites will be newly built;
• It can reduce investment by 250 billion yuan, save 80,000 mu of land, 50 million tons of cement, and 15 million tons of steel.

The 250 billion yuan is real savings. Of course, the tower model has formed a mature business model in many countries around the world and in China. The initial sharing of network infrastructure has been achieved by establishing specialized tower companies.

As a regulatory department, the Radio Administration Bureau of the Ministry of Industry and Information Technology also hopes that co-construction and sharing can be promoted. Due to the scarcity of spectrum resources, the Radio Administration Bureau hopes that co-construction and sharing between operators can be expanded to the spectrum field. Relevant leaders have said that "in the 5G era and the post-5G era, spectrum will gradually move towards sharing. Mobile communications used to be a large user of spectrum, and spectrum was exclusive before, but it will move towards frequency sharing in the future."

Wang Jianzhou, former chairman of China Mobile, is also a staunch supporter of co-construction and sharing. Wang Jianzhou has repeatedly called for co-construction and sharing of 5G networks on many occasions. In his view, the scale of mobile communication networks continues to expand, and duplication of construction is serious. 5G has higher requirements for coverage and requires more frequency resources. It must develop in the direction of high frequency bands and millimeter waves. This leads to the need to continue to expand base station construction in the case of serious duplication of base station construction, resulting in a waste of resources. Therefore, in the construction of 5G, it is necessary to share frequencies, base stations, and the entire network system.

While the outside world is very enthusiastic about the co-construction and sharing of 5G networks, the operators as the parties involved seem to remain cautious about co-construction and sharing. In the past two years, China Telecom and China Unicom have cooperated many times at the market level, and the industry has certain expectations for the two operators to jointly build 5G networks. However, although 3GPP has completed the standards for 5G wireless network sharing, operators will still encounter a lot of problems in actual construction. At a public meeting in November 2018, Shen Shaoai, deputy general manager of China Telecom's technology department, once proposed that in the 4G era, China Telecom and China Unicom had co-constructed and shared practices based on site supporting resources. However, co-construction and sharing based on independent carriers is not feasible for the time being, and there will be four difficulties:

• In terms of network planning, AAU power is limited, coverage will shrink, and large-scale antenna beam planning is difficult;
• In terms of network optimization, it is difficult for operators to optimize between their own 4G and shared 5G;
• In terms of operation and maintenance coordination, the communication cost of co-construction, sharing, delivery and collaboration is high, and operation and maintenance is difficult;
• In terms of operations, the networks are not differentiated and it is difficult to meet the SLAs of their respective customers.

From the perspective of cost-benefit, co-construction and sharing are considered to be the general trend. However, just as the process of co-construction and sharing over the past decade has shown, there will be many barriers in the actual implementation process, resulting in a situation where different participants "each stick to their own opinions."

Saving hundreds of billions of funds requires joint efforts from multiple parties

Of course, the attitude towards co-construction and sharing is a matter of consideration for different stakeholders from their own perspectives. The co-construction and sharing of 5G networks may take some time, and in addition to the statements of all parties, it also requires joint promotion by all parties.

Let us review the history of wireless network co-construction and sharing in China.

In 2008, the Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission jointly issued the "Emergency Notice on Promoting the Co-construction and Sharing of Telecommunications Infrastructure", which put forward clear requirements for the co-construction and sharing of telecommunications infrastructure (including mobile towers, poles, transmission lines, etc.) in the future. Shortly thereafter, the three domestic operators jointly signed the "Telecommunications Infrastructure Co-construction and Sharing Cooperation Framework Agreement", and then the three operators started the co-construction and sharing work.

A report on co-construction and sharing in 2010 disclosed some data: At the beginning of 2010, the three major operators reduced the construction of 47,000 new towers and 81,000 kilometers of poles, reduced the number of base station sites and supporting environments (including towers) by 166,000, and transmission lines (including poles) by 99,000 kilometers, and it is expected that the investment savings will exceed 12 billion yuan. This is only the result of the operators' partial sharing in more than a year. With the establishment of the tower company, some of the success of the previous infrastructure sharing is reflected in the tower operation data.

The basis of co-construction and sharing is clear property rights and low communication costs. In past operations, overseas operators often coordinated the interests of different operators by establishing joint ventures, while domestic operators were more likely to achieve this through coordination organizations established by regulatory authorities and various operators. In terms of technology, co-construction and sharing will lead to problems such as differences in network planning of different standards, interference between communication systems, and tower load-bearing capacity. In July 2009, the Ministry of Industry and Information Technology issued the "Interim Provisions on Engineering Technology for Co-construction and Sharing of Telecommunications Infrastructure", which provided a basis for the specific implementation of co-construction and sharing of wireless networks between different operators from a technical perspective. Of course, after nearly 10 years, this "Interim Provisions" may no longer be suitable for the current actual situation of 4G and 5G co-construction and sharing.

In addition, the maintenance and cost sharing of the network by the sharing parties are exposed to a certain extent, which can help accumulate more experience and lessons for the practice of co-construction and sharing. The experience of co-construction and sharing in the past 10 years has also laid a certain foundation for the co-construction and sharing of 5G in the future.

The co-construction and sharing of the network can be investigated and promoted from two dimensions: the area of ​​sharing and the depth of sharing. At present, due to the operation of the tower company, the shallow form of tower sharing has been realized throughout the country. In the future, the co-construction and sharing of wireless access networks and transmission networks still depends on the test of time. In my opinion, the co-construction and sharing of 5G networks should be put on the agenda from the beginning, but the practice should be carried out in a small scope and initial depth first, such as in non-hotspot areas, co-constructing and using some wireless access networks together, and gradually exploring experience. In this process, it is necessary for the government and enterprises to jointly form various consensuses from the aspects of top-level design, resource allocation, technical specifications, etc., and introduce relevant systems, such as new engineering technical specifications, clear property rights definition, investment return standards, and maintenance plans for shared facilities.

In June 2017, Shang Bing, chairman of China Mobile, revealed that China Mobile's cumulative investment in 4G exceeded 450 billion yuan. Currently, most research institutions believe that 5G investment will be more than 1.5 times that of 4G, so it is highly likely that the three operators will have a total investment of more than one trillion yuan in 5G. Faced with the increasingly narrowing revenue growth rate, this scale of investment will put great pressure on any organization. 5G will be a long-term investment process. The implementation of wireless network co-construction and sharing will save hundreds of billions of yuan in expenditure. It is expected that co-construction and sharing can become a normalized behavior in the process of 5G construction.