The good news for mobile operators is that the cost of building third-generation mobile networks is falling. Meanwhile, the range of technologies for sharing masts and other mobile infrastructure is increasing, bringing the costs still lower.

Mobile networks can be shared to different degrees. The most basic level of sharing occurs when two or more mobile operators share sites, with each putting up their own radio masts and installing their own equipment. KPMG Consulting says this can bring a saving of around 15 per cent.

The next level up is to share the antennae at the site, with savings of at least 20 per cent, according to UK mast-sharing company Quintel.

Beyond that, the base station equipment, which manages the transmission of signals over the mobile network, can also be shared.

The final level is to share the core network. Theoretically, there is also one more level, to share all the databases of customer and billing information, but this would probably take place only in a much closer relationship, such as a joint venture with a mobile virtual network operator.

"Depending on how much of the network is shared, it is possible to save between 20 and 40 per cent of the cost of building the network," says Amrish Kacker, a senior consultant at Cambridge-based researchers Analysys. KPMG Consulting partner Martin Heath believes "savings of 45 per cent can be derived from full network sharing since you are effectively getting two networks in one."

Savings can also be achieved if two operators build their networks in non-overlapping areas. Jarmo Leivo, director W-CDMA marketing at Nokia Networks, points out that allowing inter-network roaming between operators can cut building costs by half, though it has significant drawbacks if network sharing ends.

Many new technologies that make sharing easier are emerging. Quintel, a joint-venture between QinetiQ and Rotch, the UK property group, has been set up specifically to capitalise on its mast-sharing technology. This enables five or six operators to share radio masts.

Quintel's technology was originally developed by the UK-based Defence Evaluation and Research Agency (from which QinetiQ was spun out) for use in military situations where lots of antennae are crowded together, much as they are on battleships.

"It has been adapted for third-generation mobile networks, with aesthetic and environmental considerations firmly in mind," says Clive Harding, chief technology officer of Quintel.

So, for example, it can be used to locate mobile antennae discreetly on church spires. "For the local community," says Mr Harding, "this means that lots of mobile masts don't end up being dotted about everywhere."

The technology also enables the antennae to be tilted in the direction that best fills out each operator's network footprint.

Antennae for different operators, which are in effect mounted on a single tower or positioned in a belfry window, can be tilted in different directions from each other.

New technology for sharing the electronics normally housed in a base station at the bottom of a mobile antenna is also emerging in the form of base-station (BTS) hotels. BTS hotels enable the electronics from a number of base stations to be grouped together as far as 10-15 miles away from the antennae they serve.

This cuts down on the cost of maintaining the electronics and on services such as power and air-conditioning - and it also means engineers do not have to travel to so many remote sites.

Steve Henderson, head of proposition marketing at BT Wholesale, part of British

Telecom, says a BTS hotel could include five 3G base stations, four 2G base stations and a Tetra (Terrestrial Trunked Radio) base station. The base stations could be linked to 10 antennae and have shared access to the fixed network.

The UK-based mobile operator Vodafone is said to be considering setting up a BTS hotel, if after tests the savings are there, says Mr Kacker. He adds: "The hotels will certainly help newer operators who will need to acquire fewer sites."

BT Wholesale is also a fan of the concept. "If there was a network of shared BTS hotels around the country, we could pre-invest in networks to link the sites, which would enable us to offer lower costs to each operator," says Mr Henderson.

However, Analysys believes that the reduced roll-out plans of many operators, compared with last year, may make infrastructure sharing less of a priority and cut potential savings. It expects operators in a country the size of the UK to spend only E1bn to E1.5bn on providing 3G mobile access to 45 per cent of the population over the next three or four years."

The European regulatory environment could also restrict some types of infrastructure sharing. Nevertheless, Alberto Prado of consulting company Diamond Cluster argues that: "Site sharing will be a reality in all European countries. Several European countries have already openly stated their positive attitude towards site sharing - the discussion is now about the extent to which competing operators can share network infrastructure."

He points out that "the burden will be carried by the manufacturers of equipment instead, which will have to deal with lower demand levels as a result of network synergies".

Mobile equipment makers have, as a result, an ambivalent attitude to infrastructure sharing. Despite their somewhat guarded enthusiasm, there is considerable momentum behind infrastructure sharing. Mr Kacker predicts: "We are going to see more operators team up."

Mast sharing, in particular, also has the backing of some environmental groups, although while shared sites reduce visual pollution, they do increase radio pollution.

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