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T-Mobile UK and 3 UK, two British mobile phone operators, recently said they would combine their 3G networks in an effort to save each of them £1 billion over the next decade. Vodafone and Orange, two other British mobile phone companies, have been talking since February about making a similar deal.Think of it as McDonald’s and Burger King getting together to share the cost of the trucks that deliver meat, potatoes and tomatoes to their outlets. While unthinkable in most industries, including fast food, this sort of collaboration is under way between mobile phone companies and is likely to accelerate.

“Everybody in Europe will be watching to see if this works,” said Steven Hartley, a senior analyst in London for Ovum, a consultancy whose clients include Deutsche Telekom, the parent company of T-Mobile. “If they can make this work as fast as they say they will, you’ll see a flurry of these agreements in 2008 or the year after.”

European mobile phone companies spent about £100 billion, or $198 billion, in 2000 buying 3G licenses, and then spent billions more building new networks that were supposed to revolutionize the industry by making the mobile Internet fast, appealing and - most of all - profitable. But seven years later, text messaging still dominates among non-voice services and mobile phone operators continue to struggle to convince their clients to pay for Internet surfing, video downloads and other services.

“What they are doing is trying to improve the bottom line by getting operating costs down while creating a situation where you can improve the top line by having better services,” Hartley said.

read the whole story at Herald Tribune