BT delays first 3G mobile launch

Mobile users will have to wait a little longer for 3G

The launch of the world's first third generation mobile phone service on the Isle of Man has been delayed by at least three months because of malfunctioning handsets.

British Telecom, which had been due to start the service at the end of May, said its Manx Telecom subsidiary was postponing the launch because of a software problem in phones supplied by NEC.

The service on the tiny island off north-west England would have been the world's first after Japan's NTT DoCoMo delayed its launch in Tokyo from May until October.

BT said it will now launch the Isle of Man's high-speed mobile internet service at the end of summer or early autumn.

A BT spokesman said the NEC handsets lose their connection when the caller moves into a new mobile "cell" - or a new area covered by the network.

A software problem in the phone prevents the network seamlessly passing the call to the radio mast in the new cell.

The problem is the same one that forced DoCoMo to delay, the spokesman said.

Cost-cutting

The setback comes as British Telecom steps up its battle to win back the confidence of its investors.

The debt-ridden telecom giant has revealed further details of a major cost-cutting programme aimed at shaving about £600m off its operating budget.

BT's new chairman Sir Christopher Bland will travel the country briefing investors on the plan this week.

Sir Christopher Bland has ordered the cost-cutting programme

The company also hopes to shed 5,000 jobs this year through "natural wastage", a spokesman confirmed.

He said that the company had also cut 5,000 jobs last year.

The company hopes to avoid any compulsory redundancies.

Sir Christopher retains his previous position as chairman of the BBC until a successor is found.

A float for Concert?

In another move to overhaul its strategy, BT is considering the option of creating a new telecom company in conjunction with the US telecom giant AT&T.

The new company would combine Concert - BT's global telecom joint venture with AT&T - and BT's Ignite unit, which provides broadband services.

The company, which would also include AT&T's own business services division, would be floated on the stock markets in London and New York with an estimated value of £5bn.

The plan is one of a dozen options being considered for Concert, including downsizing.

Concert's performance has been disappointing, as was shown when BT reported a £2.8bn ($4bn) pre-tax loss for the fourth quarter.

Concert racked up a loss of £89m after a previous profit of £69m.

BT, which has a 50% stake in the company, is also discussing options to sell its stake in Concert to AT&T.

BT announced last week it is to demerge its mobile telephone and internet division BT Wireless.

The remainder of BT, which includes the core fixed-line business, is to be renamed Future BT.

Existing BT shareholders will hold shares in both companies.

BT has told shareholders it was necessary to demerge BT Wireless because of tough market conditions and increasing competition in the mobile phone sector.