Smaller operators need to innovate, and partner, to survive...and thrive

ORLANDO, Fla.--Make no mistake, smaller operators are not about to sit back and let the challenges of the wireless industry--escalating data usage, finite spectrum assets and limited available capital--keep them from innovating and competing with the large Tier 1 operators.

The common theme I'm hearing here at the Rural Cellular Association's Competitive Carriers Show this week is that wireless operators need to partner and innovate if they want to survive. That message was loud and clear during Leap Wireless (NASDAQ:LEAP) CEO Doug Hutcheson's keynote address. Hutcheson proposed that operators consider pooling their spectrum assets and sharing various parts of their networks so they can meet escalating demands for data until more spectrum becomes available. Hutcheson noted that his ideas aren't necessary groundbreaking--in Europe, many operators are sharing parts of their networks, but it is something many U.S. operators have been hesitant to do, at least until now.

The NetAmerica Alliance is all about sharing assets. The group, which is an alliance of independent carriers, is currently in the midst of launching its new 4G LTE brand, called "Bonfire." NetAmerica CEO Roger Hutton said the alliance is based on the premise of small operators banding together to share their operating costs. "There is strength in numbers," Hutton said in an interview with FierceWireless.

That sentiment was echoed by NetAmerica Alliance member Ron Strecker, CEO of Panhandle Telephone Cooperative. Panhandle recently launched LTE in its 700 MHz spectrum in Oklahoma. Strecker said he went to three infrastructure vendors to get bids on LTE gear but found that NetAmerica's program offered extensive cost savings because it allows operators to share an IMS core through the association's IMS SuperCenter, which houses both IMS technology and a Network Operators Center.

Strecker noted that if he had decided to deploy LTE on his own, he would have ended up paying an infrastructure vendor more for maintenance costs every year than he plans to pay NetAmerica to be a part of the alliance. "We are too small to do this alone. We need the support," Strecker said.

Although network sharing could mean fewer cell sites and a reduction in equipment sales, Sandra Motley, Alcatel-Lucent's (NASDAQ:ALU) vice president of U.S. accounts for the Americas region, said that her company is supportive of network sharing. "It may mean less revenue for us, but it is a good thing if it helps smaller operators be competitive in the market," Motley said.

It's certainly difficult to picture the Tier 1 wireless operators talking so freely about partnerships and cooperation with their competition. But among Tier 2 and Tier 3 operators, this notion of partnering is not only acceptable, it's encouraged. --Sue