1. CoE/ARB Workshop On Infrastructure Sharing and LLU Session 4 Infrastructure Sharing Drivers and Blocks By: Isabelle Gross Khartoum – Sudan, 27 – 29 March 2011

2. CoE/ARB Workshop On Infrastructure Sharing and LLU Introduction and definition: What do we mean by drivers? - an aspect of a business that effects a change on another aspect of the business. A driver is most commonly a factor that contributes to the growth of a particular business. Do you agree with this definition? Want to elaborate on it? Khartoum – Sudan, 27 – 29 March 2011

3. CoE/ARB Workshop On Infrastructure Sharing and LLU Stakeholders and infrastructure sharing - telecoms regulator - telecoms operators (fixed, mobile, infrastructure provider, etc) - other stakeholders (International public organisation, national Government, local authorities, Competition Commission, etc) = various stakeholders with each having its own perspective and therefore likeliness that they have their own drivers Khartoum – Sudan, 27 – 29 March 2011

4. CoE/ARB Workshop On Infrastructure Sharing and LLU Group work - two groups representing the regulator and the telecoms operator - each group tasked with defining drivers from its perspective (15 minutes) - groups findings presentations & discussion (20 minutes) Khartoum – Sudan, 27 – 29 March 2011

5. CoE/ARB Workshop On Infrastructure Sharing and LLU Group findings: the drivers for the regulator - list here all the drivers found by the regulators group 1- 1- 2- 2- 3- 3- 4- 4- 5- 5- Khartoum – Sudan, 27 – 29 March 2011

6. CoE/ARB Workshop On Infrastructure Sharing and LLU Group findings: the drivers for the telecoms operator - list here all the drivers found by the telecoms operator group 1- 1- 2- 2- 3- 3- 4- 4- 5- 5- Khartoum – Sudan, 27 – 29 March 2011

7. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing drivers for the regulator? (1/2) - to ensure that telecommunication services are available to the whole population (access) at affordable prices - to speed up growth and rollout of telecoms services - to encourage competition (the set up of an infrastructure sharing friendly legal environment will potentially attract new entrants because it decreases financial and practical barriers to market entry for them and then in turn the increased number of actors will encourage competition) Khartoum – Sudan, 27 – 29 March 2011

8. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing drivers for the regulator? (2/2) - to help implement universal service access programs: incentive tool for the regulator to encourage telecoms operators to roll out networks in underserved areas. - optimize the use of national scare resources: - simple form: rights of way - complex form: more efficient use of spectrum (Kenyas project for LTE spectrum allocation) - to reduce negative environmental impacts (the multiplication of masts in cities) Khartoum – Sudan, 27 – 29 March 2011

9. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing drivers for the telecoms operator? (1/3) - reducing the investment risk factor by spreading it among several players Telecoms spending = considerable investment in technology and network deployment. These investment are fixed, sunk and irreversible = high risk factor + additional risk with regular adoption of new technology and infrastructure upgrade + additional risk with regular adoption of new technology and infrastructure upgrade - fixed network: copper to NGN - mobile network: 2G, 3G, LTE Khartoum – Sudan, 27 – 29 March 2011

10. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing drivers for the telecoms operator? (2/3) - cost savings (CAPEX and OPEX) CAPEX savings: India: a study done 3 years ago showed that operators required an average of 240,000 towers up to 2010. An analysis indicated that CAPEX savings could reach US$4 billion if operators achieved a double tenancy on the deployed sites. OPEX savings: maintenance services and energy costs - offer a new source of revenue Incumbent operators (fixed) and existing mobile operators can generate significant revenue from infrastructure sharing (up to 15% of the operators total revenue) Khartoum – Sudan, 27 – 29 March 2011

11. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing drivers for the telecoms operator? (3/3) - release capital for other strategic investments Selling off the network to an independent company allows the release of cash for new strategic investments: e.g. base station sold to 3rd party company - allows operators to shift focus from network deployment and maintenance to service improvements and innovations - potential to increase geographic or population coverage - helps to achieve universal access targets by lowering the cost (shared between operators) of rolling out networks in low density area (rural area) or/and low income area (urban and rural areas) Khartoum – Sudan, 27 – 29 March 2011

12. CoE/ARB Workshop On Infrastructure Sharing and LLU Group work - two groups representing the regulator and the telecoms operator - each group tasked with defining which drivers are shared among the regulator and the telecoms operators and which are not shared (10 minutes) - groups findings presentations & discussion (10 minutes) Khartoum – Sudan, 27 – 29 March 2011

13. CoE/ARB Workshop On Infrastructure Sharing and LLU Group findings: - list here all the shared and unshared drivers Khartoum – Sudan, 27 – 29 March 2011 Shared drivers between the regulator and the telcos Telecoms operators drivers only Regulator drivers only

14. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing blocks? The regulators perspective: - Competition issue The point of view of the UK regulator on O2/T-Mobile 3G infrastructure sharing agreement (see supporting material) The point of the Commission of the European Union on on O2/T-Mobile 3G infrastructure sharing agreement (see supporting material) Bilateral agreements can exclude other players - Infrastructure redundancy issue (customer left without service options if shared telephone mast is destroyed) - Reduce ability to innovate (because of a less competitive environment) Khartoum – Sudan, 27 – 29 March 2011

15. CoE/ARB Workshop On Infrastructure Sharing and LLU What are the infrastructure sharing blocks? The telecoms operators perspective: - Mistrust among telecoms operators, spying, sabotage (see supporting documentation with the case of French telcos with regards to fibre ducts access and Telecel in Zimbabwe) - Quality of service: as part of the network is controlled by third party company or competitor (unless SLA) - Long commercial negotiations to reach a sharing agreement; risk of exclusion if bilateral agreements are allowed Khartoum – Sudan, 27 – 29 March 2011

16. CoE/ARB Workshop On Infrastructure Sharing and LLU Conclusions - drivers and blocks in infrastructure sharing are different for each stakeholder - understanding the drivers and blocks of each party involved prior to setting up a infrastructure sharing program will increase the success of the program - the driver of cost savings on passive components for mobile operators is on the increase across developed and developing countries - issue surrounding the enforcement of infrastructure sharing obligations on telecoms operators Khartoum – Sudan, 27 – 29 March 2011

17. CoE/ARB Workshop On Infrastructure Sharing and LLU Mobile Networks Sharing Additional material for the session - Tonga to get 4th mobile operator by the Daily News (latest news) (see supporting document 3) Khartoum – Sudan, 27 – 29 March 2011