Swedes to Switch Frequencies and Cut 3G Costs?

June 16, 2005

Two major Swedish 3G licence holders are on the verge of switching technologies on some parts of their networks in a dramatic bid to cut costs. The two, Vodafone and Hutchison, are currently rolling out W-CDMA networks across Sweden. However, a recent ruling by the telecoms regulator, PTS, means that the pair may be allowed to use a rival technology, CDMA in the 450MHz frequency.

As signals in this spectrum band travel further, the two operators may opt to use base stations transmitting and receiving signals in 450MHz band in rural areas of Sweden. According to the privately owned Nordisk Mobiltelefon, which is building a 3G CDMA network using the 450 MHz frequency band, Hutchison and Vodafone could save a combined SKr3 billion (US$388.5 million) between them if they use its network.

With competition in the Swedish mobile market intensifying this option will become more attractive for the two operators. Nordisk reports that it is in negotiations with Vodafone and Hutchison over the use of its network.

Nordisk accepts that it would have to invest a further SKr200 million to SKr400 million in its network to bring it up to scratch for the two mobile powerhouses, but it points out that this will be a small price for the pair to pay compared to the amount they would save on not having to roll out W-CDMA base stations across rural Sweden.

Vodafone and Hutchison are cooperating on building a 3G network in areas outside major cities in Sweden. It is estimated that to complete their coverage obligations they will need a further 2,000 rural base stations. Hutchison believes that one CDMA 450MHz base station could cover the same area as 15 W-CDMA ones in the non built-up areas of Sweden.

So far the PTS has not yet given the final go-ahead to any network replacement plans, but significantly it has said it will consider the idea and allow the two operators to prove that quality will not be affected by any such switch.