Tower Sharing - Helping to bridge the digital divide

Network infrastructure sharing is receiving strong acceptance from mobile operators world wide as an effective way to curtail coverage costs. With the declining Average Return Per User (ARPU) in developing markets such as Pakistan, telecom operators are struggling with sustaining profits. As the population distribution varies significantly between urban and rural areas of Pakistans telecommunication market; operators face complications when it comes to balancing the cost of operations in congested and saturated urban setups with the costs of new network rollouts in other areas. In this context, tower sharing offers a compelling proposition. Pakistan Telecommunication Authority (PTA) recently informed that the authority is laying down optical fiber cables in Balochistan and offering a subsidy of 92 percent to operators; but despite the incentive, operators are reluctant to invest due to high operational costs. Around 60 percent of operator expenditures (OPEX) go to the running and maintenance of tower infrastructure which include: diesel generators, air conditioning equipment, security and site rentals. These costs are further compounded in rural areas due to lack of infrastructure facilities such as roads and electricitys constant supply. Therefore, the pooling of tower infrastructure helps the operators in expanding their coverage to rural areas without incurring significant Capital Expenditures (CAPEX). For incumbent operators, sharing their existing tower assets helps in reducing the cost of network operations significantly. Tower sharing limits costs duplication and gears investment towards product innovation and improved customer service. Tower sharing also impacts competition and the market to new entrants becomes more attractive as they are spared the labor intensive process where a number of municipal clearances and government approvals are required. Alongside, the burden of installation costs of cell sites is also alleviated. According to analyst estimates, tower sharing can reduce the overall cost of ownership after accounting for the tower lease costs, by 16 to 23 per cent. Tower sharing prevents the proliferation of masts thereby reducing the environmental and visual impact of operator networks especially in urban and ecologically sensitive areas. The regulatory body, PTA, as part of its wider ranging efforts to promote tower sharing and the Federal governments initiative towards a reduction in carbon footprint; prompted Pakistans largest telecommunication operator Mobilink into an accord with Ufone GSM over tower sharing on 13th April 2011 and into a similar accord with Telenor on 3rd May 2011. Sharing his views on the signing of an accord with Ufone, President and CEO of Mobilink, Rashid Khan said, This alliance is mutually beneficial and will

also facilitate us to better align ourselves with our strategic initiatives and become greener. This will further enhance Mobilinks coverage footprint, already the widest, hence, bringing more value to the customer which is our top priority. Mobilinks tower sharing arrangements include power, security along with metro and long haul fiber backhaul to CMTOs, WLL & WiMax service providers; result: a better ARPU. The economic turmoil over the past few years has affected investment pipelines, thus tower sharing can play a significant role in the developing market of Pakistan by offering the incumbents such as Mobilink, new entrants and regulators growth paths to service expansion and enhanced subscriber penetration. ______________________________________________________________________