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T-Mobile taps BT for backhaul

T-Mobile UK made a landmark agreement this week when it tapped BT wholesale to be its backhaul provider, initially using leased lines but later with Ethernet.

Financial details of the contract were not released but analysts say that with mobile call prices falling, wireless operators need to ensure their networks are the lowest cost possible and in some cases it makes economic sense to move off their own fixed infrastructure and onto a more cost efficient wholesale one.

Although integrated operators such as Telecom Italia have already made decisions of this type, mobile operators are increasingly reaching this conclusion too.

“Clearly this is good for BT. In building its next-generation network (NGN) it set out to create a technology and service agnostic infrastructure,” said Mike Cansfield, telecoms practice leader at Ovum.

“In this scenario, technologies such as UMTS, broadband and Ethernet become access technologies to a common core. Interestingly BT Wholesale is to provide a managed service, so it is not just providing capacity. This also shows how BT Wholesale is using 21CN (21st Century Network – BT’s NGN) as a stepping stone into new revenue opportunities,” he said.

This is also a good deal for T-Mobile, which wants to concentrate on running the business. “This is a recognition that it wants primarily to be a retailer, not a network operator/wholesaler in the UK. This is an important declaration of its strategic intent, and also indicative of how Deutsche Telekom CEO Rene Obermann is driving the business to make the right commercial decisions for the future of the business and not preserving the status quo,” said Cansfield.

“It is probably good for customers too if it means T-Mobile can compete more effectively in the UK with Vodafone, Orange and O2. In doing so it also puts pressure on these other three operators to respond in some way,” he said.

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