A recent report by Frost & Sullivan finds that mobile network backhaul infrastructure plays a key role in the delivery of services to end users and is likely to be an important spending area for network upgrades during the medium and long terms. “Operators will be upgrading backhaul to match the capacity of core and access networks that have been receiving constant attention. Infrastructure sharing will increasingly be used by operators to reduce capital expenditure (Capex) and operating expenditure (Opex) on backhauls. These trends will create growth opportunities in the Sub-Saharan African mobile network backhaul infrastructure market”. It added that the backhaul infrastructure markets in Angola, Gabon, Ghana and Kenya spent $355 million in 2009 and estimates this to reach $1.45 billion in 2015. “Escalating demand for data services is driving the need for upgrading mobile network backhaul infrastructure. Operators need to share costs and invest in network technologies that support transmission of large quantities of data such as optical fibre,” notes Frost & Sullivan ICT Senior Research Analyst Vitalis G. Ozianyi. Landing of undersea cables on various African countries’ coasts and deployment of enhanced 3G (3G+) and 4G technologies will amplify the increasing demand for data services. Microwave-based backhaul is likely to remain dominant for rural coverage; however, operators are likely to adopt resource sharing to provide higher-capacity backhaul for areas with sustainable high demand. A key challenge will be the high Capex required for new technologies. “The high Capex and Opex associated with deploying and maintaining backhaul infrastructure will influence investment into higher capacity technologies. Furthermore, the inadequacy of other supporting infrastructure, like reliable power supply, will slow the deployment of new technologies,” remarks Ozianyi. Sharing infrastructure will enable operators to cost effectively deploy backhaul networks that meet the increasing demand for data services. Outsourcing of backhaul services can also be used to reduce OPEX in areas with limited demand. Mobile operators need to ensure that their backhaul networks are upgraded to avoid creating a bottleneck between access and core portions. Backhaul networks should be upgraded in response to increasing network traffic. “Since upgrades can be expensive, operators need to segment their markets,” advises Ozianyi. “They can deploy high capacity fibre technologies in high demand areas while wireless backhaul technologies can still be used in low demand rural areas.” In general, co-location is moving or placing things together, and is used to mean the provision of space for a customer’s telecommunications equipment on the service provider’s premises. In the internet world for example, a Web site or an ISP could place its network routers on the premises of the company offering switching services with other ISPs while in the GSM/Telephony world, Operator could decide to share facilities/sites for cost savings reasons. Co-location is sometimes provided by third party company that specializes in collocations. Why share infrastructure Operators can derive savings on Capex and Opex required for site infrastructure build allowing for more efficient utilization of Capex to expand for coverage and capacity. Scarce capital and management attention can be diverted to key value-creating activities such as customer acquisition, service quality, operational and strategic excellence. Infrastructure sharing provides solutions to problems on capital-constrained, high interest rate, high growth environments. By adopting sharing, there is no need for operators to maintain in-house expertise to build, operate and service site infrastructure. There is reduced cost to operators under Towers/Equipment lease, on built in Capex costs and Opex costs resulting in increased operating margins. Addresses regulatory pressure to co-locate and admin costs to operators of managing the co-location process and activity, increased entry speed for new companies. It reduces environmental hazard caused by having so many sites. There are two options available to operators for co-location: Operator to operator agreement where an operator will offer one or more operators a space in his location to share some infrastructure. Third party service provider can provide a site and facilities, for example a Tower for one or more operators to mount their equipments like radios and antennas. What can be shared through co-location? Shelter Space, Tower or Mast Structures Cable Ducts, Earthing Protection System, Lighting Protection System, Rack Space, Fence-wall or palisade fencing, Equipment Shelter Plinth, Transmission Link, AC power (public & private source), among others. Steps required towards co-location According to Gbenga Adebayo, chief executive officer, Communications Network Support Services (CNSS), these steps are identification of the technical requirements of co-location with a view to strategizing on meeting the requirements, development criteria for achieving a fair, effective and balanced site co-location evaluation and implementation arrangement with other operators. Others include development of operator’s policy for co-location and provision of framework for accommodating statutory guidelines within the operator’s policy document, and provision of basic information to Operator’s management to enhance management decision making on proposed infrastructure sharing with a view to harnessing economic advantages derivable from the project. Engr. Ernest Ndukwe, immediate past executive vice chairman, NCC, said that co-location is the next stage of telecommunications revolution in the country, which informed the commission decision under his leadership to license some companies to provide co-location infrastructure. He said that, if operators share infrastructure there will be great reduction in cost, proliferation of mast that distorts beauty of the environment among others. He noted that the commission partnered with Lagos State government to destroy all the mast erected by cyber cafés and others that are no longer in use.
Reducing Capex and Opex through Infrastructure Sharing
