Rural 3G could be a problem, says O2

With the Telefonica acquisition going smoother than a greased eel, according to O2, the operator is focusing its energies on becoming a mobile broadband player.

According to Dave Williams, O2's CTO, the network provider won't be distracted from its 3G path by the likes of EDGE and mobile WiMax.

Speaking today in Barcelona, Williams said: "There's a 20 year payback [for 3G]. The services developed on that aren't there today but 3G is the technology of the future."

He added that the advent of HSDPA - the high speed connectivity technology also known as super 3G - will not provide greater cost efficiencies for the operator but will make the idea of 'mobile broadband' a reality. "HSDPA is probably the 3G we always wanted," he said.

However, there are problems ahead. O2 believes in order to take 3G right across the UK, and into less populated areas, there will need to be some regulatory changes.

He said: "The long-term challenge with 3G will be as it goes further and further into rural areas. We've got to start a dialogue with the regulator on how to reuse 2G spectrum - we will have to be allowed to use 2G spectrum for 3G." According to Williams, getting 3G into the countryside won't be cost effective unless the 2G spectrum the company already owns can be recycled for 3G.

O2's CTO believes that will soon start to happen in the French market. "They do not want anymore cell sites," he said. Without such moves, Williams said, regulators run the risk of fostering another digital divide between 3G have and have-nots.

Rival operator Orange is aiming to fill in the speed gaps in rural areas by rolling out EDGE, a bridging technology between 2.5G and 3G. It's not a strategy that is likely to be replicated by O2, Williams said. "We do not see any huge benefits in customer experience."