T-Mobile and 3 team up on 3G network

T-Mobile and 3 team up on 3G network

But analysts question long-term logic

T-Mobile and 3 are pooling their 3G radio networks in a joint venture aimed at increasing coverage and reducing costs.

The operators claim that the move will lead to "almost complete population coverage for 3G services" across Britain by the end of 2008, and accelerate the provision of new high-speed mobile broadband services.

The network sharing venture will deliver cost savings as well as environmental benefits, the companies said in a statement. However, both parties denied speculation that the move was a prelude to a merger.

New revenue streams from data-related services have proved notoriously difficult to come by, falling well short of operators' original 3G expectations. An obvious way forward is to pool infrastructure and cut costs.

This latest agreement follows a similar deal between Orange and Vodafone announced earlier in the year.

"Sharing network infrastructure offers operators a way significantly to minimise capital and operational expenditure yet maintain control of their networks," said Gartner analyst Jason Chapman.

However, Chapman warned that joint ownership can lead to operational difficulties.

"While a 50:50 ownership structure may help make the deal politically acceptable to both companies, it does not help in terms of governance of the joint venture if the voting rights are 50:50 as well," he said.

"Who has the final say when difficult decisions have to be made? Poor execution has plagued and even derailed promising agreements before."