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3G headache goes global

European carriers announce more set-backs as Japan's NTT DoCoMo admits similar delays. The jump to 3G is a chasm compared to earlier leaps — and no one’s really sure what they’ll find on the other side.

British Telecom’s aggressive spending on 3G licensing has helped crank up a $43 billion debt — close to its $53 billion market cap. As a result, BT is negotiating the sale of its stake in J-Phone, Japan’s third largest telecom company, to its rival Vodafone. Also on offer is its 18% share of Airtel — again to Vodafone, who already owns 73% of the Spanish wireless operator.

The ramifications for BT as an international player are profound. Japan is a key market for any wireless operator with global aspirations, predominantly due to Japan’s position at the forefront of technological rollouts.

When confirmed, these sales will buy BT the short-term resilience it needs to take control of its spiralling debt. But only time will tell how serious such a loss of international influence might be.

British Telecom is one of a number of European carriers in a jam. Vodafone itself is faring better and the deals described here would only strengthen its position as the world’s largest wireless operator. But the hesitancy that plagues 3G is fast becoming a global headache.

J-Phone recently announced a six-month delay in the rollout of its 3G services and even NTT DoCoMo, hoping to deliver the first commercial launch of 3G, has faced a setback.

Its full 3G platform has been suspended until October, having failed to fully test the new network in time for the original May deadline. A spokesman announced that, while the required hardware had been deployed successfully, issues with the software remained.

Instead, DoCoMo will trial 4,000 businesses on a reduced service as part of a “phased rollout” and the full package won’t operate in major cities until 2002.

The Telecoms giant boasts a market value of close to $200 billion dollars and is unlikely to suffer any fatal repercussions from the delay. But time is of the essence: enhanced wireless networks and the 2.5G compromise are emerging as viable, working alternatives.

US wireless operators were hoping to join the party in mid-2002. The DoCoMo delay means its US partner AT&T is unlikely to deliver 3G to customers before 2003. If investors are cautious now, they may yet have to deal with the fact that 3G won’t live up to the hype long after the pain has gone away.

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