BT goes for a One 2 One over 3G costs

Debt laden BT has moved to cut soaring third-generation (3G) costs by agreeing to share its current and next-generation mobile phone network infrastructure with the Deutsche Telekom-owned One 2 One.

Under the terms of the deal, which also covers Germany, the telcos will co-ordinate the rollout of their 3G infrastructures and share new and existing base stations including masts and antennae in major urban areas. The deal helps both companies to cut costs after amassing huge debts winning 3G licences.

More than Eu100bn was spent at Europe's 3G licence auctions, and each telco will have to spend around another Eu2bn annually, for each country, over the next three or four years to build and launch 3G services.

Once the deal is completed, BT expects to save Eu2bn in the next decade, while Deutsche Telekom predicted it would help reduce its costs by 30 per cent.

Peter Erskine, chief executive at BT Wireless, said the deal had the approval of regulators in the UK and Germany, and added that the company was still negotiating with UK regulators about further cost saving measures.

The company also said the deal would be non-exclusive and that other networks could join if it meant further savings could be made.

Analysts said that similar deals would be made to help roll out 3G services earlier. One said the unprecedented co-operation was a mark of desperation by telcos which knew they had overspent during the licence auctions.

Both companies will use equipment from Nortel Networks in the UK and will choose from Nortel, Nokia and Siemens for Germany.

Meanwhile, the sixth annual 3G World Congress opens today in Hong Kong. Aiming to reveal new ways for network operators to resolve their 3G wireless communications issues, the event is expected to draw over 1200 delegates from 31 countries.