Share Mobile Networks, Seduce Customers

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That means a telco's most important asset is diluted and its value reduced. That's not a great proposition for shareholders—or for a privately owned business.

Sharing existing networks also presents vexing staffing issues: If you halve the network responsibility, you theoretically need only half as many workers, so which partner makes the painful cuts? There's also usually one partner that is either financially or culturally dominant, so the balance of power has to be agreed to up front and the new structure implemented well.

These challenges nevertheless afford operators the opportunity to develop new, more streamlined approaches to infrastructure deployment and management. The more complicated long-term issue is this: If, as with utilities such as electricity and gas, consumers are being served on a common network, how will mobile operators adapt the rest of their businesses to ensure they build on and generate value from their customer base?

It's pertinent to note that after more than 20 years of GSM service, differentiation between operators today is more than ever about devices. One need look no further than the Apple (AAPL) iPhone: Limiting a must-have device to one operator is a pretty effective way of cornering customers. Operators must learn to think and act differently if they are to build a new asset to replace network nuts and bolts. That new asset is the customer base—and if it takes a cool device to get customers' attention, then operators must accept and act on that reality in order to retain control over their business.

With two of the biggest names in mobile services now joining the ranks of the network-sharers, the past two decades' worth of marketing talk about coverage, service quality, and baseline prices will become outdated fairly rapidly. Because there is no room for network service differentiation, operators need to plan and build their business plans based on incentives, innovation, and a reversion to true marketing practices. Differentiation for tomorrow's network operator lies in sourcing devices and services, working with the Internet community, and offering compelling choices to support and seduce customers.

Bengt Nordström is the co-founder and CEO of Stockholm-based telecommunications consultancy Northstream.

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