Mobile phone firms want new 3G deal

MOBILE phone companies are planning to return to the government to renegotiate the billion pound contracts they signed for the third generation of mobile phones.

Scotland on Sunday has learned that a number of the successful bidders in last year’s £22.5bn auction, are seeking to change the coverage terms of the deal, which mean they will have to service 80% of the UK population by January 31, 2007.

It is understood that a number of companies are keen to trim their coverage targets and are considering "buddying up" with rivals to share the infrastructure costs of the new service.

A government spokeswoman said that if mobile companies failed to reach their targets, the telecoms regulator would decide on suitable action at the time.

"Any ‘buddying up’ - which can cover a multitude of commercial arrangements - would need to be considered on its merits," she added.

A spokesman for BT denied its mobile arm, BT Cellnet, was looking for any changes, adding that the company was "very happy" with the current licence terms.

"We are not looking a changing the terms of coverage. We expected to exceed the target of 80% earlier than the desired 2007."

Vodafone refused to comment on any negotiations taking place with the government. One2One is believed to have already met with telecoms regulator David Edmonds to discuss concerns over 3G licences.

Third generation mobile phones promise a range of new services including video conferencing, movies on demand and shopping services. However, much of the technology is still underdevelopment and companies have been beset by technical difficulties.

In Japan - a global leader on 3G technology - one leading telecoms operator has already announced the postponement of its 3G plans. Japan Telecom has delayed the planned rollout of the new phone service from December to June 2002.

The company blamed the move on delays in developing equipment, while company President Haruo Murakami said the group was curbing investment in 3G mobiles because of concerns about low profit margins.

In Europe, mobile phone companies have seen their share prices fall over concerns about the cost of the new phone services and the return on investment. UK operators are viewed as having paid too much for 3G licences, both in Britain and Germany.

"The worrying thing is that they now have mountains of debt because of the auctions and all they have to show for it are paper licences. There is still huge investment required in systems and infrastructure," said one telecoms analyst.