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OPTUS and Vodafone yesterday formalised an alliance in which they will together spend $1 billion on third-generation mobile phone networks.
Optus mobiles chief Allen Lew said it would cost the two companies $600-$700 million to build a joint radio access network for 2000 3G base stations.
The 3G partners will each spend a further $100-$150 million to build two separate "core" networks that will include the complex software platform and applications needed for 3G.
Operators are betting that different applications and services will provide their selling point for 3G services.
"We plan to launch the network in Q3 2005 and have been working together for some time. We've finalised the radio plan -- determining what sites are required to deliver the best performance - and have started constructing the network," Mr Lew said. Last week Vodafone's international parent launched 3G services - which promise customers faster data speeds, video calling and pared down always-on internet services.
"This is a world first - no one in the world has done this before," Vodafone Australia chief executive Graham Maher said.
But Optus and Vodafone already lag behind the other Australian 3G alliance between Hutchison and Telstra, which is in the last stages of being finalised. Telstra will pay $450 million for 50 per cent of Hutchison's network, which began operations last April.
Telstra will also spend about $150 million on its core network. While this would appear to give Optus and Vodafone a slight cost advantage over their bigger rival, Telstra has the advantage of buying into a fully operational network.
This should allow it to avoid much of the pain of a start-up network. Hutchison experienced a raft of glitches last year during its initial operations, and observers have warned that Optus and Vodafone might expect the same problems.
Optus mobile networks chief Andrew Smith will move across to be the chief operating officer for the unincorporated joint venture, with a finance chief also to be appointed to head a small alliance team.
Optus would run the network operations for the alliance, which was announced in July, and Vodafone would pay Optus an undisclosed fee for that work, Mr Lew said.
Nokia, a Finnish telecommunications equipment maker, will provide the core network and radio access networks for Optus, Vodafone and the alliance.
The two companies will share networks across Australia with the exception of Sydney and Melbourne where there will be a mix of shared networks and joint utilisation (co-location) of facilities.
 News source: Australian IT
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