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Summary:

There’s a thoughtful essay over at TechDirt by Derek Kerton comparing broadband pipe providers to gas stations. In it, he argues that sharing wireless networks is beneficial for carriers and consumers alike, because it reduces network costs and leaves carriers free to innovate and improve their […]

iStock_000005540809XSmallThere’s a thoughtful essay over at TechDirt by Derek Kerton comparing broadband pipe providers to gas stations. In it, he argues that sharing wireless networks is beneficial for carriers and consumers alike, because it reduces network costs and leaves carriers free to innovate and improve their applications. The analogy is seductive, but it neglects a key difference between gas and broadband: You can’t stockpile broadband the way you can fuel. When a pipeline springs a leak or shuts down, it can take a few hours or days for it to affect consumers, and in that time repairs can begin and fuel can be rerouted. But if a cellular network access point goes down, akin to a gas pipe springing a leak, it has immediate repercussions for everyone using the shared network, instead of just a percentage of people who happen to have chosen Carrier A over Carrier B.

That’s one reason why regulators aren’t keen to see operators share radio networks, because they realize that these things happen, and having an entire community go silent isn’t an ideal situation. Carriers are happy to share some tower infrastructure, but generally are not sharing their radio networks, partly because they believe it acts as a competitive advantage. Check out Verizon’s commercials to see this in action. The metaphor also seems a bit stretched given that pipelines can carry different versions of gasoline, rather than a truly indistinct commodity product such as what shared radio networks transport. So while there are potential advantages to sharing network infrastructure, both carriers and regulators have balked at creating a shared “pipeline” of wireless service for good reasons.

  1. So… the internet is a series of pipes?

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  2. Stacey – I’d recommend you take a trip over to europe, and understand what carriers over here are doing. There is plenty of network sharing going on here – as we’ve already reached coverage saturation (you can get coverage wherever you are from any network, and have been able to for at least 10 years) so competition based on signal coverage ended in the late 90′s in much of europe.

    It turns out that the gasoline (we call it petrol) that telco’s put over their network is an undifferentiated commodity – voice minutes, or internet data, and the “services” that they add at the very last minute (like those gasoline additives) are minor additions.

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  3. Jesse Kopelman Friday, May 15, 2009

    Actually, the availability issue is an argument FOR network sharing, not against it. Fewer facilities means more cost efficiency in Operations and Maintenance and thus more reliable networks. Rather than preventing this type of cost sharing the government should be establishing regulations that require standards for things like battery backup and outage response time.

    Also, keep in mind that backhaul is already often a shared facility. When a fiber line gets cut, as happens every day, multiple cell sites of multiple carriers go offline. Things ould be no better or worse if radios were shared between carriers.

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  4. Brett Glass Friday, May 15, 2009

    I’m a wireless ISP, and from day one I designed my network for wholesale access; anyone could rebrand my service and use my towers to deliver broadband. But guess how many takers I’ve had? Zero. Why? Many of the providers say that it’s because they want full control of the product. Others have been burned by the telcos, and have vowed never to rent wholesale infrastructure again. And some just want to step on you…. We have at least one competitor who seems to want to clog the airwaves, interfering with our transmissions. (This doesn’t actually confer a competitive advantage; after all, the interference is mutual. But they seem to think that since we have more customers than they do, the mutual interference causes us more harm than it does them.)

    In any event, whatever the reason, we’ve had to resign ourselves to the truth: wholesaling doesn’t work. The good news is that by designing a network which was good enough to wholesale, we created an innovative and extremely reliable system. If our competitors won’t join us, at least they won’t be able to beat us.

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  5. Stacey,

    My article at Techdirt was mostly an exploration of the similarities between the industries, and the suggestion that there is a strong economic incentive to share network assets, including the RAN. I’m certainly not saying every carrier should do it, but they should at least give it serious consideration.

    But I think you’re dead wrong when you correct me, and say “regulators aren’t keen to see operators share radio networks”. In fact, Regulators outside the US are FORCING carriers to share networks in order to lower costs, lower environmental impact, and lower NIMBY effects. See this article for a case in point:

    http://www.fiercewireless.com/europe/story/share-networks-or-be-forced-says-french-telecoms-regulator/2009-04-15

    Derek Kerton, The Kerton Group (Techdirt writer)

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    1. Stacey Higginbotham Sunday, May 17, 2009

      Derek, I should have clarified that in the U.S. regulators have been reluctant to encourage sharing.

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  6. as a consumer i believe we would all benefit greatly from shared networks. the reason? it would take coverage and quality and coverage out of the competitive equation. to attract customers carriers would have to compete on price and customer service. these two things are always the most important in consumers minds. i would much rather see comercials about undercuting the competitors price than about how deep or throughly such and such carrier covers a geographic area.

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  7. Subrahmanyam Monday, May 18, 2009

    @Derek,
    The Indian Government is actively considering allowing spectrum sharing. More details here http://bit.ly/MeaRR

    Sharing sure has lot of potential…And increasing adoption of managed services should hasten it too !

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  8. Stacey,

    There are legitimate reasons to not share: for one CDMA versus GSM. Not capable.

    On the other hand, if a VZW cell goes down, it’s not like those customers can hop over to AT&T. The handsets are made for that kind of spectrum / protocol jumping.

    American ILEC’s have roaming contracts for sharing. And that probably works as well as Inter-Carrier Compensation.

    When it comes to redundancy in networks, well, there isn’t much. That’s why when Sprint’s fiber is cut going from Vegas to Phoenix, folks are down. When Silicon Valley has it sfiber chain sawed, people are down.

    The ILEC’s did not really build what we would call redundant networks. One fiber route in and out of Chicago to AT&T’s Canal POP is not how I define redundant.

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    1. Jesse Kopelman Tuesday, May 19, 2009

      Your reason for not sharing the RAN is obsolete. There are Software Defined Radio products on the market that can do both CDMA and GSM. Even if you don’t share the radios, there is no good reason not to share the antennae.

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      1. And SDRs are installed in exactly how many current phones? Zero, is it? How exactly is his reason obsolete, then? I’m not sure you’re clear on what obsolete means.

        If, on the other hand, you’re referring to the Qualcomm product, gsmONE chipset, which includes BOTH CDMA and GSM, then that product is dual mode, not SDR. It heeds to be manually switched, often with a cycling of the radio power. Further, it is installed in a very small minority of the installed base of phones, mostly premium Blackberries targeting world travelers on the VZW network (for now).

        It’s not so much that his opinion is obsolete, but more that yours only applies to the future. We’ll have network convergence on LTE before we have a plurality of dual mode devices.

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