3G causes Vodafone rift

A dispute has arisen over the use of incompatible 3G technologies

Incompatible technology for third-generation mobile phones has caused a disagreement between Vodafone and its 45%-owned US operator Verizon.

The two companies are at odds because Verizon is considering building a 3G network using US technology that is incompatible with European standards.

We are both talking about the issue and hope to offer the sort of service that our customers require

Vodafone

The network would be developed by Verizon Wireless, which is a joint venture controlled by Verizon, which has a 55% stake.

The US technology - called CDMA2000 - differs from the standard used by Vodafone's other overseas networks.

This could mean that business travellers would not be able to use the same phone on different sides of the Atlantic.

"We are both talking about the issue and hope to offer the sort of service that our customers require," said a spokesman for Vodafone, declining to comment further.

To sell Verizon stake?

Talk of a discord between the two partners surfaced after Verizon reportedly purchased hardware that uses the CDMA2000 standard from Lucent Technologies.

Vodafone, however, has insisted that Verizon is still looking at using other standards.

According to the Financial Times, Vodafone could be forced sell its stake in Verizon Wireless if the disagreement is not resolved.

Officials close to Vodafone maintain that the selling of the stake would be "the nuclear option", adding that this would be unlikely.

But under this outcome, the company would look to handset manufacturers to design a dual-mode handset so that travellers between Europe and the US could use the same phone.

3G initiative

Last Friday, Vodafone shunned an initiative to help telecoms firms cut the costs of building the high-speed mobile networks needed for 3G phones.

Competing mobile phone firms are pushing to establish a shared infrastructure in order to cut costs and help reduce debt-mountains.

A proposed link-up, aimed at shaving 20-30% off the cost of setting up the new high speed mobile network, is expected to be unveiled in the coming weeks.

The huge cost of 3G licences - which will allow mobiles to provide access to the internet or video material - is the key reason why telecoms stocks have plummeted on the world's stock markets over the last 18 months.