Page 81 - Trends in Telecommunication Reform 2016

Box 2.5: Tower Limits in Indonesia Chapter 2
In Indonesia, the sector Ministry has restricted the construction of new towers in the vicinity
of existing towers in order to persuade operators to undertake infrastructure sharing. Under
the terms of the regulation, a new tower can be constructed only if, for some reason, the
existing tower cannot be shared . The regulation provides a guideline for the construction
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and development of joint mobile towers. Owners of mobile towers are required to give non-
discriminatory access to other telecommunication operators. The tower owners also must give
information about their tower’s capacity to potential access-seekers in a transparent manner.

about the rules governing mandated network mobile sector, there is little competitive benefit
sharing, then there can be little objection as long in expanding pure coverage, so infrastructure
as they have the choice of whether or not to invest. sharing is unlikely to harm competition. Similarly,
But regulators should take care not to stymie with most types of active network sharing in
investment in the first place by instituting overly the mobile sector, the impact on competition is
rigorous requirements for mandated sharing. fairly benign as long as sharing operators have
the ability to differentiate their services from one
another. However, once a sharing arrangement
2.5.5 Grants and subsidies has achieved integration at the infrastructure
layer, it’s very difficult to unwind, leading to a
There have been some successful examples of potentially permanent reduction in infrastructure
government use of modest grants and subsidies competition.
to overcome stiff resistance to network sharing,
particularly from incumbent fixed-service
operators. Box 2.3 showed how Singapore used 2.6.2 Potential for collusive dealing and
a financial incentive to promote a co-investment information sharing
arrangement. In New Zealand, the government
used a grant to provide an incentive to deploy There is also the potential for collusive dealing
an ultra-fast, FTTH network, inducing the fixed between sharing operators. Regulators need to
incumbent to structurally separate in order to carefully evaluate this issue and engage in ongoing
participate in the initiative. monitoring. Sharing of commercially sensitive
information among co-investors is a concern,
as well, but it may be an inevitable feature of
2.6 Potential downsides to network sharing arrangements. Appropriately structured
sharing procedures and protocols can be implemented to
reduce the competitive impact of such information
While there are potential downsides for sharing.
governments of network sharing and co-
investment, they are generally regarded as fairly
manageable, in the right circumstances. This 2.6.3 Reduced options for services-based
section explores those downsides and how to competitors
cope with them.
A reduction in infrastructure competition may
lead to reduced options and more limited capacity
2.6.1 Reduction in competitive intensity being available for service-based competitors
such as MVNOs. This may not be such an issue
Reduction in competitive intensity can be a where sharing operators retain their competitive
concern with network sharing, as competition independence – the motivations for entering into
will be confined to the services layer, rather MVNO-type arrangements should not change
than to both services and infrastructure layers. in these cases. Limited capacity can be an issue,
The common stance regulators have taken is but most sharing or co-investment arrangements
that, at least for passive network sharing in the can be expected to provide sufficient capacity

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