The “Iron Tower” is coming: what are the operators waiting for?
2014-07-10 13:13

The “Iron Tower” is coming: what are the operators waiting for?

Recently, a rumor about establishing a “National Base Station Company” (later referred to as the tower company) has been carried around. According to the rumor, the “Iron Tower” company (so it is called) will be in charge of the infrastructure and maintenance of the fundamental appliance (such as towers, tubes, and base stations) of the three main operators in China.

Although the idea is brilliant, things are never that easy. What factors are hindering the advance of base station sharing?

Sharing station location: an impossible task

In order to realize a complete network coverage, the operators have to rent a great amount of station resources. Because of the scarcity of the resources, the three main operators are evidently at a disadvantage when they are negotiating with the station owners. Some owners quote a price and don’t leave any room for bargain. The operators have no choice but to pay the high rent if they want to remain competitive. This kind of situation is more typical in special locations such as subways and elevators.

If multi-user station is applicable, then operators could cut down the costs on station location expenses by a great scale. Regretfully, things are not always as simple. Because the competition largely depends on network coverage, and because the three main operators in this country compete with one another, they refuse to join efforts with their competitors who will inevitably take advantage of their massive station resources. Moreover, the privileged operators always ignore the regulations of MIIT, and make exclusive renting contracts with station owners, forbidding competitors in using the same station location. It is precisely because of this that the unprivileged operators have to spend a lot of money on the rent, despite the fact that a better arrangement could have been made.

Sharing base station? Another beautiful dream

In the past few years, telecom equipment manufacturers have developed a lot of functions in response to the command of communal building and sharing. Base station appliance which are based on the same technology can provide service now for different operators. Therefore, it is not a dream to provide different standard network support such as WCDMA, LTE TDD and LTE FDD through the same base station.

It is a pity that the real situation is far from what we dream of. The three operators have established tens of thousands of communication base station nationwide, enough to cover the whole nation effectively. These stations built in the past use different appliance and different internet standards because they were built by different operators in different districts. The choices are made by historical reasons such as purchase strategies and needs in building 2G, 3G and 4G base stations. The differences between old stations and new ones makes the technically possible base station sharing an impossible mission. This time, the obstacle does not come from subjective forces, but the objective facts.

Will a national tower company promote communal building and sharing?

Since the current situation won’t allow “multi-user station address” and “multi-user base station”, should we lay our hope in the national tower company to be?

According to the statement of MIIT, the establishment of “National Tower Company” is to promote communal building and sharing of telecommunication infrastructure, to cut down the costs of internet construction, and to encourage sense of economy and environment protection. Today, more towers are built today than needed. From now on, the additional towers built every year will be extremely limited. If the company only focuses on the additional towers, it will hardly survive.

Thus, the company will, instead, lay its hands on the integration of the tower assets of the three operators. However, the three operators are all listed companies, which means their tower resources are purchased together with their 2G and 3G assets. If the integration involves this part of assets, it will inevitably cause fluctuations in oversea markets and affect the market value of the three operators, which is unfavorable to the government.

Although MIIT has great expectations of the tower company, its function is limited in a country where the internet are well covered and the towers are redundant. In addition, the tower company is not promoting the sharing of base station resources, which makes “promoting communal building and sharing of telecommunication infrastructure, cutting down the costs of internet construction, and encouraging sense of economy and environment protection” nothing but a good wish.

Conclusion

Without any doubt, communal building and sharing will bring evident profits to the whole telecommunication business. It also fits the developing trend of future mobile communication technology. However, if we rely solely on tower sharing, the effort will be restricted. Joined by the MVNOs (Mobile Virtual Network Operators) and 4G internet, the communication business is in need of a complete and overall revolution. The decisiveness in promoting communal building and sharing of base stations becomes the key to this revolution. So, don’t give too much credits for the upcoming tower company, it is just the first step of a “Long March”.

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