China Telecom and China Unicom have reached a tentative agreement to jointly build a 5G network and share network infrastructure. And it’s possible that China Mobile may join them.
The three Chinese operators co-own a tower company, China Tower Corp, so that would make it easier for them to collaborate on building out all the thousands of base stations necessary for a new 5G network in China.
At a press conference attended by analysts from Counterpoint, China Telecom’s chairman said that jointly building a 5G network would result in huge cost savings. And China Unicom’s chairman had previously said that sharing infrastructure could result in capex savings of between $28 billion to $38 billion.
Counterpoint analyst Peter Richardson explained that there are various forms of network sharing, including:
- Mast/site sharing where mobile operators use the same tower sites to co-locate equipment, but otherwise everything else is separate.
- RAN sharing where operators share all the equipment in the network as far back as the base station controller/radio network controller.
- Network roaming where competing operators agree to host one another’s customers on their network in certain geographic areas.
Wholesale networks and MVNOs could also be included in the definition of network sharing, where the owner of the network infrastructure leases the assets, and each carrier provides its own branded service on the same infrastructure.
In the case of the Chinese operators, they are planning to build a stand-alone 5G network, not an upgrade of their existing cellular networks, according to Reuters. And it appears that they would share everything from sites, masts, and RAN equipment.
Network sharing in the U.S.
Asked why American operators don’t strike network sharing agreements, Richardson said, “It may be difficult from a spectrum point of view.” He pointed out that the four main carriers operate their networks on different spectrum frequencies and there might also be license restrictions. In addition, they have different network roots. “Verizon and Sprint come from a CDMA background, and AT&T and T-Mobile trace back to GSM,” he said. Their networks still rely on these 3G technologies as a fallback to LTE. And even though T-Mobile and Sprint are hopeful their merger will be approved, Richardson said from a network sharing perspective, it would “be more logical for Sprint and Verizon to share infrastructure and T-Mobile and AT&T to share infrastructure.”
In addition to spectrum issues, the American carriers also use their coverage footprints as marketing differentiators.
For 5G, the big carriers are tapping mmWave spectrum in dense urban areas. This could be an opportunity for them to practice some network sharing. In the high-frequency mmWave bands, the radio signal fades very quickly, so many more base stations are needed. And municipalities are starting to object to the multitude of new small cells springing up in their cities. “To build out these networks, there’s logic in some way trying to share that,” said Richardson. “But it requires some alignment in spectrum.”
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In China, the three operators may practice network sharing not just in cities, but in rural areas where the cost of deploying a new wireless network is very expensive compared to the potential revenues.
This network sharing scheme may be another blow to Huawei and ZTE, China’s telecom vendors that have been shunned in the U.S. and other parts of the world. Rather than selling 5G network equipment to three Chinese operators, they may only have one combined customer.