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Cellnet/mmo2 plans "mobile data highway" - outsourced

Has Cellnet owner mmo2 found the way to set up a next-generation mobile infrastructure "on the cheap"? It has decided to start by outsourcing its Telfort Dutch mobile network operations to Ericsson; and has set up strategic partnerships with Nortel Networks and Nokia who "will become the principal suppliers of the broadband mobile data network."

"It will help us reduce capital expenditure, increase GPRS revenue, reduce time to market of new data products and services and improve network quality of service," said Peter Erskine, head of mmo2, adding: "It supports our drive towards the creation of future mobile communications in Western Europe and underlines the benefits of our strategy and having 100 per cent ownership of all our businesses."

The group described this as "a move to become the leading provider of advanced mobile data services and products to customers in Western Europe." The announcement follows a six-month review by mmO2 of its network architecture and the suppliers it uses across all its territories, including the UK, Germany, Ireland and the Netherlands, says the company.

Erskine says mmo2 "will build a seamless pan-European broadband mobile data highway to support the development of advanced multimedia services and their rapid launch across mmO2's businesses simultaneously," with these developments. It's a vague, woffly "mission statement" of a plan put like that, but it does sound increasingly as if mmo2 is determined to slash the costs of setting up a third-generation network by outsourcing most of the risk and capital investment.

In the Netherlands, Telfort and Ericsson have signed an initial letter of intent for the outsourcing of network operations, and the deal should be finalised by July this year. "The network will remain the property and under the full control of Telfort. Ericsson will take responsibility for day-to-day operations, as well as other tasks such as network planning, design and implementation," said the announcement.

Much of Telfort's current network infrastructure was supplied by Ericsson and new arrangements have now been put in place made with Ericsson for the rollout of the future third generation (3G) mobile network in the Netherlands. Under this contract, the plan is to transfer most of the 240 staff within Telfort's Networks &' Systems department, to Ericsson.

Ton aan de Stegge, chief executive officer, Telfort, said: "Network operation is not our core business, but it is core to our business. This significant step is a key element of our strategy - enabling us to focus exclusively on offering our customers the services they want, in the most flexible and cost-efficient manner."

Bert Nordberg, head of Ericsson Global Services, added: "This step confirms Ericssons clear leadership not only in 2G and 3G, but also in the market for managed network services, and will be the largest such agreement in the mobile telecom sector to date. Ericsson has signed 34 managed services agreements in total."

Today's announcement predicts that mmO2 will consolidate all its existing supply contracts and replace them with new strategic partnerships. Nortel Networks and Nokia will become the principal suppliers of the broadband mobile data network.

But the announcement also focuses on "Dramatic economies of scale" from the new arrangements. It predicts a 22 per cent cost saving to mmO2 - estimated at €600 million over five years - on network expenditure relating to its 2G, 2.5G and 3G networks. It adds: "mmO2 is now focusing on achieving capital expenditure efficiencies in other areas, including site acquisition, civil engineering as well as other non-equipment spend."