Hutchison's 3G network

Telecommunications Australia has entered into an ambitious $830 million contract with Ericsson Australia to supply and build a third generation (3G) mobile network incorporating Sydney, Melbourne, Brisbane, Adelaide and Perth.

The network will be rolled-out over the next two years with payments to Ericsson planned over a period of four years. In addition to the supply, commissioning and integration of network equipment, the contract includes training, civil works and one year network operations and maintenance. Motorola has been sub-contracted to provide radio access network for Sydney and Brisbane licence areas.

Hutchison's decision to build its own mobile network, effectively rules out the possibility of Hutchison buying Lucent's $600 million spectrum, originally built for One.Tel. However, the recent announcement by Hutchison heralds work for hundreds of IT network and service suppliers.

Ericsson will provide a wideband CDMA radio access network, IP core network and transmission technologies, advanced network management systems, network operations and a number of key network platforms to enable high quality 3G services. The base network design will utilise 2100 MHz spectrum technology. Ericsson has also committed to working with HTAL on the future delivery of an 1800 MHz capability in network infrastructure and dual mode terminals.

Funding for the network will be underpinned by the cash equity of $1 billion to be provided by Hutchison Telecoms and Telecom New Zealand through their recent alliance. Both Ericsson and Motorola have indicated they will assist in this syndicated funding process.

The Hutchison/Ericsson deal is the second of its kind to be announced this year.

Cable & Wireless Optus announced a seven-year, $900 million infrastructure deal with Nokia in April for the supply of a 3G RAN (radio access network), for both WCDMA and Edge, as well as a 3G circuit and packet core network.

Other spectrum licence holders - Telstra, 3G Investments (owned by Qualcomm) and Vodafone Group - have yet to announce plans for 3G networks.