Vendor Owned Networks: Is network ownership the next step for network vendors?
by Cartesian (formerly CSMG) on May 29, 2012
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An overview of the potential opportunities, risks and rewards of network ownership for telecoms equipment vendors. ...
An overview of the potential opportunities, risks and rewards of network ownership for telecoms equipment vendors.
Network equipment vendors have an established track record in building, operating, and financing networks. Is there logic in taking the final step to network ownership?
Twenty five years or so ago, the value chain in the telecoms industry was simple and straightforward. Telecoms vendors manufactured network equipment for vertically integrated operators which in turn built and operated networks to deliver services to end customers. Since then, several variations have emerged: the wholesale/retail service provider split; managed services for build and operate; and, third parties leasing infrastructure e.g. towers to mobile operators.
This evolution of the telecoms operating model has called into question the value of a network as the core strategic asset. In nearly all telecoms markets, network infrastructure is now being shared or divested, and network operations are being outsourced.
Network vendors are therefore already building, operating, and financing networks - is network ownership the next step? The most obvious operating model for this would be one where the vendor owns and operates the network, and charges multiple operators an access fee for the usage of the network. We call this the Vendor-owned-Network model or “VoN” model…
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