Lucent lands €45m
3G gig for O2

5 Jun 2003

O2 has awarded Lucent Technologies a €45m contract to provide infrastructure and services to carry UMTS voice and data traffic for its operations in Ireland, the UK and Germany.

The three-year framework agreement will see Lucent deploy universal mobile telecommunications service (UMTS) packet infrastructure, software and services to enable voice and data transport for 3G, in an outsourcing deal with a potential value of €45m.

As part of the agreement, Lucent will supply its Packetstar (PSAX) 1000, 2300 and 45000 MultiService Media Gatewasy to allow the development and consolidation of O2’s ATM (asynchronous transfer mode) networks in Ireland, Germany and the UK. This will enable O2 to enhance its existing network to support voice, video and data traffic as O2 rolls out its 3G UMTS offerings while simultaneously reducing deployment and operating costs.

“We selected Lucent because they offered a high level of technological capability and experience, cost effective solutions and the ability to offer us ongoing support and expertise as we carry out this project,” said Dave Williams, group chief technology officer with mmO2. “Given the pan-European nature of this project, we also required a partner with extensive cross border experience.”

Lucent Worldwide Services will deploy and integrate the ATM infrastructure and software into O2’s multi-vendor network and provide ongoing maintenance support. O2 believes that by outsourcing the deployment to Lucent it will be able to focus on subscribers and business development. Lucent will also provide O2 with network management software and the management of the PSAX networking equipment.

Outsourcing such a project to Lucent could be considered an astute, but extremely necessary, move on the part of O2. In recent weeks mmO2, the parent of mobile firm O2 Ireland, reported a full-year loss of £10.2bn sterling (€14.3bn) following a massive writedown on the value of its assets.

The firm, which is the fifth-biggest mobile group in Europe, wrote down £9.7bn sterling in assets, more than half of which related to the purchase of third-generation (3G) mobile phone licences. MmO2 also wrote down £1.3bn of the value of O2 Ireland – almost half the £2.5bn that British Telecom paid to buy Esat Digifone in 2001.

In recent weeks, however, O2 made a submission to the Commission for Communications Regulation (ComReg) requesting use of an alternative 3G technology, known as EDGE, outside urban areas because of the massive costs of deploying a 3G network, which pundits reckon is no longer the whiz-bang technology it was hyped to be. A hybrid technology, EDGE could be fastened to the UMTS service and would be cheaper to deploy in rural areas. It will however, not be as fast.

Last month, Vodafone launched its 3G network in Ireland, ahead of the 1 January 2004 deadline set for all Irish 3G licence holders to have their services live.

By John Kennedy