Introduction
Globally, mergers and acquisitions are the highest strategic move in the company's strata because of the benefits that will be felt. This merger occurs when two companies merge to create a new company, but mergers in the telecommunications sector are mostly horizontal mergers simply because the entities are involved in the same operating industry, namely the telecommunications industry. From the operational side, the merger of one company occurs due to the following reasons (Koi-Akrofi, 2014) deregulation, the presence of new and advanced technologies, innovative products and services, building infrastructure in a faster way, mergers bring network benefits or reach to be wide, a variety of products and services with larger customers. Currently, Indonesia has 7 cellular operators, namely, PT. Hutchinson 3 Indonesia (Tri), PT. XL Axiata (XL), PT. Indosat, PT Sampoerna Telekomunikasi Indonesia (STI), PT Telekomunikasi Selular (Telkomsel), PT. Smartfren and PT. Bakrie Telecom. Nevertheless, the number of Indonesian cellular operators itself began to decline, after XL officially acquired Axis last year. Then in February 2020, news circulated that Indosat planned to acquire Tri which would certainly have an impact on major operators (MNO-A) in Indonesia. Gdp growth in the information and communication sector strengthened the terms of the information communication sector (Venardos, 2010). The telecommunications (Telco) subsector is still the main driving force that has transformed so quickly in line with the rapid development of technology. The increase in the value and distribution of the information and communication sector to GDP has increased steadily. Its quarterly distribution average was 3.69% in the last five years (Alexander, 2021). In terms of mobile operator customer data, it reached 348.26 million registered customers at the end of 2020. The three dominating cellular operators are Telkomsel, Indosat and XL Axiata. This figure shows a growth of 3.7% YoY. Considerable growth occurred given the dominance of prepaid services and multiple SIM holdings. The operator's focus on launching mobile networks in rural and disadvantaged areas can also support growth in the sector. Business performance (revenue) trend of cellular operators (Supriadi & Haryadi, 2016) competition slope revenue MNO c+d (merger) is improving past MNO B and reducing the revenue performance gap of MNO A. revenue operator c+d can be an indicator to improve industry competition, which is expected to nourish the telecommunications industry (ARPU). MNO c+d (merger) has a very complete frequency spectrum landscape both at the low band (coverage) and mid/hi band (capacity) range levels. In addition, the C+D MNO (merger) will have a golden spectrum (wider) as a spectrum with a target of 5G Seem less coverage in the mid-band (1800Mhz / 2100Mhz) which has the potential to deploy a massive 5G that can reach all regions (threat MNO-A) and also in terms of 4G coverage will break the gap of competition (close the gap) national coverage with Ops-A. in total the frequency spectrum for mobile MFOs in the country is very limited with a very large amount of user data and population second only to China, thus impacting the quality of service (speed data). With data users (broadband) in Indonesia reaching 461.15 million, it means that cellular MFOs in Indonesia need a frequency spectrum to maintain service quality to compete with other countries. The frequency spectrum division for MNO in Indonesia is currently still very limited, for MNO-A with a total data user of 169.19 million it only has 135 MHz, MNO B with a total data user of 55.44 million has 95 MHz, MNO-C with a total of 59.45 million has 90 MHz and MNO-D with a total of 44.09 million has 50 MHz while MNO-E with a total of 29.63 million has 50 MHz, this means that the customer load/MHz is already very high. The frequency spectrum for mobile MNO in Indonesia is indeed very limited, MNO-A with a load of 1.25 million subscribers/MHz, while other MNOs are much smaller with a load of 0.62 million subscribers/Mhz. with the merger of the c+d MNO brings good hopes to continue to provide quality service with a very wide total frequency bandwidth (145 MHz dl/ul).
Mergers not only have a positive impact on business
revenue and frequency spectrum allocation, but can also make it easier for
mobile MNOs to build networks very quickly to all corners of the country or
what we know as frontier, remote, and underdeveloped areas (3T). Site builder
competition between MNOs is quite pronounced considering the demographics of
the region which are quite challenging, both in Java and non-Java (Alexander, 2021). Competition for the
number of sites is a challenge for MNO-A in the face of the competition for the
merger of MNO c+d. although currently, MNO-A is very dominant as a mobile MNO
that has a very wide range visible from the point of the site owned. This point
site is the point where cellular MNO can provide signal coverage services
through the transmitter tower, the more site points, the wider the signal
coverage to reach the area, and the better the signal level (RSL) received by
data subscribers (Pratono & Suyanto,
2012).
The calculation of the receive signal level (RSL) is the level of the signal
received and the value must be greater than the sensitivity of the receiving
device (RSL ( Rth), the sensitivity of the receiving device is the sensitivity
of a device on the receiving side that is used as a threshold. The RSL value
standards on each mobile MNO vary, the determination of the standard is the
full right of the relevant MNO. It can be said that in this regard, there is
indeed no standard that can cover globally, but the standards between one MNO
and another MNO are not much different and there are even some that have the
same standards. Cellular MNO signals have provided services in 513 districts/cities.
MNO-A was very dominant in Java at 98.47% and outside Java at 78.99%, but after
the MNO-c+d merger, the dominant signal from MNO-A became not dominant in
several cities, especially in districts/cities in Java and outside became a
threat from this merger both in terms of term and quality of service (Okoeguale &
Loveland, 2018).
Today, traditional RAN vendors provide MNOs with out-of-the-box RAN solutions,
which have been fully tested and pre-integrated in each vendor's in-lab
facility. Each vendor manages its lab and test resources, so the associated
overhead in integration complexity is transparent to the MNO. The hardware and
software are integrated, and the roadmap for the product is made according to
the 3GPP specification for radio functionality. Logical interfaces between
subsystems of radio are defined exclusively, so no interoperability between
different vendors is possible (Rachman, 2011). Open RAN provides
increased flexibility and potential by enabling the selection of proper network
components from a multivendor ecosystem, which means a significant reduction in
TCO costs for MNO. For an open ecosystem to encourage innovation and new
technological developments while reducing costs, product development efforts
need to be carried out jointly by all stakeholders (Tyagi, 2019). A coordinated community
will ensure full interoperability of the solutions offered. This coordination
discusses the full interoperability of multivendor solutions (Aimene et al., 2021). System Integration is
one of the key areas to consider, as there is no longer a unique entity
responsible for complete E2E, including software lifecycle management, KPI
assurance, service management, etc. Most of the countries that implement the
Open RAN are developing countries. This is because the Open RAN trial is mostly
carried out in rural areas. Even so, today Open RAN is carried out not only in
rural areas but also in dense urban markets. Open RAN can be a strategic
solution in expanding the network to face the merger of two major MNO in
Indonesia.
Method
Identification System Model
This paper uses a qualitative approach with data collection techniques through several stages with the tactical model benchmarking ORAN Solution:
Figure 1. Flow System Model
dan Method
Based on the background
regarding the merger of mobile MNOs and their impact on MNO-A in preparing its
strategic steps, the formulation of the problems raised to obtain the purpose
of writing the paper is to obtain possible strategies that are effective, flexible,
and also simplification with ORAN technology and scenarios that need to be
carried out to face the merger of MNO c +d which is a threat in the future in a
competitive climate. To answer the formulation of existing problems, data
collection is carried out including business data obtained through financial
business data reports, holding, and articles and journals related to mergers in
the field of telecommunications and primary data processed from crowdsourcing
data tools to process network coverage data. The data were analyzed
descriptively using literature data relating to existing business parameters in
telecommunications companies. Furthermore, an analysis of technological
strategy steps was carried out to deal with the MNO's war competition, which
merged with ORAN Strategi and the tactical model benchmarking (Parcu, 2022).
The data
processing method in this paper uses the benchmarking method. Benchmark is the
process of comparing certain aspects of a company or organization with
comparable aspects belonging to companies that are considered the best in the
same industry or broader market (Abdalla et al., 2022). The purpose of the
benchmark is to get an accurate view of how a business process is carried out
in a company with that of competitors to come up with ideas to improve processes,
approaches, and technologies. With this benchmark method, an overview of the
strategy needed by the MNO will be obtained through the Open RAN is by the
needs needed by the MNO in making a strategy to compete with the merged MNO so
that smart investment, simplification, and flexibility of the MNO network can
be carried out so that the quality of service remains better. In this paper,
the benchmark is carried out on network infrastructure architecture both in
terms of spectrum, infrastructure sites, and service coverage from MNO to the
merged MNO, so that this paper can make a strategy with ORAN as a solution both
as a basic strategy, optimal and aggressive strategy. with this tactical model
benchmarking analysis to improve the performance and position of MNO-A with
ORAN solution so that a strategy recommendation (mitigation) is obtained that
allows MNO-A to remain an MNO that always remains dominant and superior and
exceeds the best performance of the company with a benchmarking level:
Strategic benchmarking is used
to encourage continuous improvement and sharpen the overall corporate strategy.
Basic Strategy
Benchmarking modeling by
comparing the infrastructure and how big the network expansion is, the type of
infrastructure tower, and consolidating the infrastructure of each MNO's
network and what the next MNO strategy is.
Optimal Strategy
This modeling is by optimizing
frequency resources (resources) to service needs and the number of customers
and how MNO uses frequencies efficiently for both capacity and reach expansion.
Aggressive Strategy
Modeling in this strategy by
carrying out initiative verticals such as by converging services with open RAN
so that it has the strategic value of products that are converged to
competitors and accelerates the process of building a simple, flexible and
efficient network.
Competitive benchmarking is leveraged to
match or surpass direct major competitors Spectrum
The impact of this merger can
continue to provide service services (QoS) with good competition so that MNO-A
can compete with the frequency bandwidth currently owned both in terms of low
band frequency, middle band, and high band frequencies so that an ideal
spectrum that can be used by MNO-A in the implementation of ORAN will be
obtained for network optimization.
Site Infrastructure
Calculating and mapping infrastructure
site data as a point that provides transmitter signals, competition for the
number of sites impacted by the C+D MNO merger is very dominant, especially for
java island with a fairly tight competition map, with ORAN strategy expected
MNO-A network deployment quickly and simply.
Coverage
Measure signal coverage using
receive signal level (RSL) calculations. with the merger of MNO, c+d will
provide a competitive map that makes the dominant signal of MNO-A non-dominant
in several cities, especially on the island of Java, Open RAN strategy can
quickly help MNO-A expand so that coverage of MNO-A can compete.
Open RAN Standard Analysis MNO Strategy
The three issues of
architecture and infrastructure that can be a solution for MNO-A in competing
with a flexible open RAN strategy to be able to maintain dominance in the
network. The open RAN system used by MNO-A is Open Radio Access Networks, or
Open RAN, referring to a disaggregated approach to building cellular networks
using open and interoperable protocols and interfaces, which allows for
increased flexibility over traditional RAN systems. So that open RAN can be
implemented with vendor-neutral hardware and Software-Defined Technology (SDT)
based on Open Interface and industry-developed standards and acceleration in
network deployment will be faster simple and flexible. In addition, with the
ORAN strategy, MNO-A, which is competitively inferior to middle band
frequencies (gold frequencies) will get radio efficiency. [20]
Figure 2. Comparison of Traditional
RAN vs Open RAN Model [20]
Currently in the open
RAN-related world still using each strategy of each MNO according to the needs
of each table 1. The world's MNO incorporated open RAN into its business
strategy, with the hope of cutting CAPEX by 40% and OPEX by 30%. This strategy
can also be carried out by MNO in Indonesia in the face of mergers between MNO
so that they can remain dominant both in business and network. Table 1
illustrates the MNO strategy in the world and uses the standardization of open
RAN architecture.
Table 1. ORAN-Globe MNO
Strategy [22]
|
MNO |
Partner |
Open RAN Starategy |
|
AT&T |
Samsung |
AT&T trialed ORAN architecture
with a successful data session using an enhanced common public radio
interface (eCPRI), over an mm-wave ran network. |
|
Rakuten |
Nokia |
Completed the greenfield ORAN 4G
deployment |
|
Vodafone |
Mavenir |
Vodafone had become the 1st
UK mobile to switch on a live ORAN 4G site |
Result And Discussion
Based on business parameters, spectrum holding and load, site infrastructure, and service signal coverage which are the key factors of the cellular MNO as a business model to strengthen the initiative scenario in the development of strategies to deal with the merger of MNO c +d, so that in this case the discussion will be more focused on the spectrum, network infrastructure, and service coverage as follows:
Ownership of Spectrum (Holding)
From table 2 related to the
spectrum and load of mobile MNOs, the key insight c+d MNO is as follows.
Table 2. Bandwidth Frequency vs Load MNO
|
MNO |
800/ 900 |
1800 |
2100 |
2300 |
User Data |
Load |
|
MNO-A |
30 |
45 |
30 |
30 |
169 |
1,25 |
|
MNO-B |
15 |
45 |
30 |
|
55,4 |
0,62 |
|
MNO-C |
25 |
40 |
30 |
|
59.4 |
0,63 |
|
MNO-D |
|
20 |
30 |
|
44,1 |
0,88 |
|
MNO� C+D |
25 |
60 |
60 |
|
103 |
0,71 |
|
MNO F |
20 |
|
|
30 |
29,6 |
0,59 |
The c+d (merger) MNO has a
complete spectrum landscape from the low band (coverage) to the medium/high
band (capacity), which has the potential to increase user addition and
coverage. For the low band spectrum, the MNO c+d merger has a frequency band as
wide as 145 MHz, while the MNO-A is only 105 MHz. with the islands in
Indonesia, it will be a threat for the MNO-A to expand the range with a large
capacity. The steps that MNO-A must take to stay ahead of the curve in
providing the network are adding a low-band frequency spectrum to continue to
expand the range with good capacity. The merger of MNO c+d, having a wider gold
spectrum for 5G coverage seamless and massive 4G in the medium band spectrum
(1800MHz/2100MHz) has the potential to launch 5G national coverage on a large
scale and also existing 4G, in the MNO c+d band has a spectrum as wide as
120MHz, while MNO-A is 75MHz wide, the competition is low/mid-frequency
competition will make MNO-A have a long distance to be able to continue to
expand coverage with the wide capacity of the frequency band which Sufficient.
Infrastructure Network
Figure 3. Site Competition MNO
From figure 3, it can be seen
that infrastructure competition between cellular operations is quite tight in
the Java region, while in non-Java regions it is not so tight for
infrastructure network competition. The MNO c+d merger made the competition in
Java even tighter, the MNO-A which previously lead 27k sites and is currently
far below the MNO c+d merger to 39k or with a gap of 12k sites.
Coverage
Table 3. Signal Dominant Profile
|
MNO |
Before Merger |
After Merger |
||
|
Java |
Non Java |
Java |
Non Java |
|
|
MNO A |
94 |
388 |
30 |
371 |
|
MNO B |
4 |
4 |
3 |
4 |
|
MNO C+D |
21 |
2 |
86 |
19 |
From the
discussion
point
b,
the
impact
felt
for
MNO-A
with
a difference in the infrastructure
of
39K
in
Java
island
there
was
a
decrease
in
the
dominance
of
coverage
services
which
was
previously
dominant
in
94
cities/districts on the island
of
Java
to
only
be
dominant
in
30
cities/districts or experienced a
decrease
of
~
(-68.09%)
this
is
a
threat
that
will
be
faced
by
MNO-A
when
MNO
c
+d
carries
out
a
merger
which
has
the
potential
to
consolidate
the
network
by
having
network
efficiency
costs
and
expanding
coverage
massively
with
a
wide
capacity
and
coverage.
Based
on
the
qualitative
data
discussed
above,
there
was
a
change
in
the dominant composition related
to
networks,
coverage,
and
frequency
bands,
so
MNO-A
needed
a
simple
solution
by
doing
a smart investment in
the
face
of
fierce
competition
with
open
RAN.
ORAN
architecture
has
three
pillars
of
standardization
that
can
be
chosen
by
MNO-A
in
carrying
out
network
construction
or
expansion
in
Java
Recommendation And Implementation
Strategies
The development of open RAN technology can be applied by MNO-A to face competition from the impact of this merger, including (i) application carried out in urban areas with an overlay method and (ii) application in rural areas with extension or complement methods, with different levels of efficiency and complexity.
Figure 4. �ORAN Solution Recommendation & Strategy
Aspects for the application of
ORAN technology for MNO-A according to figure 4 there are five aspects of ORAN
solution recommendations and strategies, (i) architecture ran and MNO performance
business, (ii) hardware RAN vendors including RF and Baseband, (iii) market
adoption and technical input, (iv) ORAN simplification and operational
efficiency, and (v) solution strategies for MNO among the three choices of ORAN
architecture concepts and all aspects related to ORAN, table 4.
Tablel 4. ORAN type aristektur [22]
|
|
C-RAN |
V-RAN |
O-RAN |
|
BB HW |
Proprietary BBU |
COTS-based BBU |
|
|
BB SW |
Proprietary SW |
Proprietary SW |
Open Interface SW |
|
RAN HW |
Proprietary RRU |
COTS RRU |
|
|
Fronthoul |
Proprietary Interface |
Open interface |
|
|
Interoperability |
HW/SW same vendor |
HW/SW same vendor |
HW/SW multiple vendors |
The
recommendations and implementation strategies for MNO-A to be implemented in
Java are a combination of C-RAN (rural area) and ORAN (urban area).
Conclusion
Based on the results of the research discussion and recommendation, it can be concluded several things about the winning strategy that MNO-A can do with open RAN strategy: (i) Strategy Basic strategy Infrastructure: reconcile all existing resources (existing) with ORAN in areas where MNO-A there is a reduction in coverage dominance, Impact: MNO-A will experience a decrease in the dominance of coverage services, so it requires a large enough CAPEX to strengthen fingering and capacity, especially in java with ORAN TCO value can be more effective and efficient, (ii) Optimal Strategy, Spectrum Strategy: spectrum limitations in low band frequencies with broadband, MNO-A requires a consolidation approach with regulators related to the process and clearance of spectrum ownership. MNO-A has a gap of 40 MHz in the low band frequency so it must have additional spectrum at the low band frequency of 700 MHz (currently still active for analog TV), Impact: MNO-A requires the allocation of low band frequency and large capacity (bandwidth) to be able to continue to expand (expansion) as one of the solutions to the competition strategy., and (iii) Aggressive Strategy, Technology Strategy: carrying out a new consolidation with the concept of FMC (fixed-mobile convergence), this convergence certainly requires a new architecture radio access (open RAN) so that the acceleration of infrastructure development will be simpler, faster and low cost. Open RAN is one way to break down the supply chain from dominant vendors so that the acceleration for technology expansion will be more effective and flexible. Impact: by implementing this technology strategy, MNO-A will still be able to become the number one #1 operator in Indonesia by strengthening technology fundamentals with FMC and open RAN.
Apart from the three conclusions above, this paper related to the strategy with open RAN as standardization in helping MNO-A to be able to win in competitions with low capital, a simple network so that it can become the leading MNO impact of the merger of two major MNO in Indonesia, then a study can be carried out with this ORAN whether each MNO will become more efficient with revenue and network sharing schemes so that it can maintain the pace of competition for all MNO in designing a network and opening up the digital divide.
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Copyright holder: Andi Oktarian1, Muhamad Asvial2 (2022) |
|
First publication right: Syntax Literate: Jurnal Ilmiah Indonesia |
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