Analyzing the Economic Effect of Mobile Network Sharing in Korea

Abstract

As mobile markets in most developed countries are rapidly coming close to saturation, it is increasingly challenging to cover the cost of providing the network, as revenues are not growing. This has driven mobile operators, thus far mostly involved in facility-based competition, to turn their attention to network sharing. There exist various types of mobile network sharing (MNS), from passive to active sharing. In this paper, we propose a model, based on the supply-demand model, for evaluating the economic effects of using six types of MNS. Our study measures the economic effects of employing these six types of MNS, using actual WiBro-related data. Considering lower service price and expenditure reduction, the total economic effect from a year's worth of MNS use is estimated to be between 513 million and 689 million USD, which is equal to three to four percent of the annual revenue of Korean mobile operators. The results of this study will be used to support the establishment of a MNS policy in Korea. In addition, the results can be used as a basic model for developing various network sharing models.

Analyzing the Economic Effects of Past Mobile Network Sharing Deals for Future Network Deployment

“…The third type of research estimates the potential welfare changes (that is, economic effect) due to mobile network sharing. Song and others analyze the potential economic effect of mobile network sharing of WiBro (Korean adoption of WiMAX) technology based on the supply and demand model. By considering six types of mobile network sharing, the study concludes that lower service prices and cost reductions bring about a significant economic effect that is equivalent to 3%–4% of the annual revenue of Korean mobile operators.…”

“…For example, immersive media such as virtual reality and augmented reality and the Internet of things such as smart meters and connected vehicles are providing new revenue opportunities to mobile operators. However, new business development is difficult and operators should always look into viable cost reduction solutions such as mobile network sharing to address the issue of growing costs and stagnating revenue . Indeed, Mölleryd and others indicate that the cost‐to‐revenue ratio of operators is increasing.…”

Modalidades de despliegue de infraestructura en telecomunicaciones

“…Adicionalmente, algunos coinversionistas tienen contratos para desplegar únicamente una pequeña proporción de infraestructura seleccionada, mientras que otros coinversionistas pueden ponerse de acuerdo en desplegar totalmente su infraestructura. Se afirma que el ahorro en costos es proporcional a la intensidad del despliegue de infraestructura (Beckman y Smith, 2005;Song, Zo y Lee, 2012).…”