Operators in southern Europe will be unable to afford the huge investment costs associated with LTE unless the current network business model is fundamentally changed, according to an Orange executive.
This stark message from Eduardo Duato, CTO of Orange Spain, prefaced a call for operators to move ahead rapidly and share active RAN and backhaul networks. The Orange executive said that using this approach on a 50-50 basis could see each operator saving 25 per cent of the total cost of ownership (TCO) of the LTE network, according to Mobile Europe.
While LTE is 100 per cent more spectrally efficient, and 30 per cent cheaper in TCO than 3G, Duato said that costs remain too high given the huge LTE deployments being called for.
Duato said that to monetise LTE services, operators will be required to make significant investments. "We keep doing calculations on how to monetise this service," he told delegates at the LTE World Summit, according to Mobile Europe. "Mobile broadband revenues are falling faster than costs, there is continuous margin reduction, signalling traffic is a fixed fee. We need co-operative architectures to reduce the impact."
Commenting on the comparison with other regions that are deploying LTE, Duato said that network sharing is the only way forward for the more than 100 operators in Europe compared to the handful in the United States. "It doesn't make sense to have this many networks [in Europe]" he said, according to Telecoms.com. "We have to move to LTE network sharing."
Duato called on national and European regulators to do everything possible to support operators intent on building pan-regional shared networks, as well as the vendor community. He also indicated that Orange could be willing to free up spectrum to enable this strategy, given the right circumstances. While he stressed that Orange has little to spare in urban areas, he said "we don't need all the spectrum we have in rural areas." Duato added that if operators were allowed to pool frequencies, then negotiations would be made easier.
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