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According to reports, the UK's mmO2 and Germany's T-Mobile will receive approval from the EU this week that will let the two wireless network operators share the cost of deploying their third-generation (3G) infrastructure in their respective home markets.
Meanwhile, mmO2, the parent company of Ireland's O2, has said that it would like to replicate this kind of deal in Ireland, where its 3G competitors include Hutchison Whampoa and possibly Vodafone. "We are on record as saying that we see scope for repeating the deals we made in the UK and Germany," John Gunnigan, O2 Ireland's strategy and business development director, told ElectricNews.Net
According to Gunnigan, the operators in Ireland would build their own networks in high population density areas, but would divide thinly populated areas between them, with one operator building the network and both operators servicing it. "I think that it will actually lead to more competition and better service, because it will mean that there are two operators providing an economically viable service in each area," he added.
An infrastructure-sharing agreement in Ireland would need to be approved by the Irish government and Gunnigan said that such a strategy would be in-line with the government's wireless broadband agenda.
Network sharing is an idea that the EU has hitherto been slow to embrace. Although Erkki Liikanen, the EU's Enterprise and Information Society Commissioner, has encouraged network sharing, Mario Monti, the EU Competition Commissioner had not encouraged it until now.
The European Commission had previously suggested that Europe's telecom providers be given the opportunity to re-negotiate the cost of their 3G licences. The EUR100 billion spent on the licences in auctions and beauty contests is often cited as a primary reason for the economic difficulties the companies are now facing.
Three 3G mobile licenses have been awarded in Ireland. The "A" licence was awarded to Hutchison Whampoa and O2 was awarded one of the "B" licences, which are more costly but require roll out over longer term. Vodafone was also a "B" licence but has not yet accepted it.
The Hutchison licence is for 20 years and requires 53 percent coverage of the population by 2005 and 80 percent coverage by 2007, and cost EUR50.7 million.
There have been other notable recent moves in Europe by 3G operators, including Sonera, KPN and Telefonica's decisions to write down the value of their 3G assets. And all of these moves come as research organisations and industry groups re-consider the true value of Europe's soon-to-launch 3G networks.
In May, the World Markets Research Centre (WMRC) forecast that there will be 84.1 million 3G subscribers in Western Europe by the end of 2007. These users, according to WMRC, will generate revenues of USD36.3 billion from traditional voice services, SMS and multimedia messaging, as well as from infotainment and Internet access.
But this figure is 15 percent lower than current market figures of USD42.3 billion published by UMTS Forum and Telecompetition in August 2001, which means that 3G will account for only one-third of total western European mobile revenues by 2007. WMRC believes that only 27 percent of all mobile subscribers will have a 3G phone by 2007, one-third less than current published figures of around 40 percent.
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