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BT Cellnet, the UK concern of mobile communications operator mmO2 plc, Thursday agreed to 10-year outsourcing deal with IBM Corp., which will help the UK business build and manage IT systems infrastructure for wireless data dispensation in voice, text and mobile Internet markets.

The deal is worth some $71.83 million in its first year. The first phase of the agreement will focus on the integration of existing systems, including the Genie Mobile service and process support for customer care, e-payment, product and services development. Helmed by its Global Services arm, IBM will provide industry consultancy and systems integration.

Both mmO2 and IBM stressed the importance of preparing for what they anticipate as a rush for 2.5G and 3G services and infrastructure.

"As mobile operators increasingly move to 2.5G and 3G data-centric services, IT systems now take center stage," Frank Kern, general manager of IBM Global Services in Europe, Middle East and Africa. "Wireless e-business presents operators with opportunities to transform their business but creates technology challenges that few IT vendors are equipped to resolve."

While hype over 2.5G and 3G services has quieted a bit in recent months, some industry analysts believe short messaging systems will be a bridge of sorts in the wireless data space -- at least, in Europe. Market research firm IDC said offering SMS versions of wireless applications and transitioning users to 2.5G or 3G platforms can help generate interest in data services and support the market until a mass market for next generation wireless services materializes.

2.5G and 3G use in the U.S. is another story. Cahners In-Stat Group analyst Becky Diercks said SMS will never experience widespread adoption in the United States.

"Instead, wireless instant messaging, with presence information, and e-mail will be more successful domestically," Diercks said in a research report.

While In-Stat believes wireless data offerings have become more widespread in the U.S., she said the technology has its problems, namely slow data speeds and high service prices. The research firm said horizontal applications such as e-mail will drive the mass market and cautioned that while the "broad availability of wireless data services will assist this market's growth, cost must continue to decline. Carriers must strive to offer fixed rates, or risk stunting the market's growth."

Meanwhile, mmO2 said in March that it will puts its xda communicator on sale in Europe in May. The xda will be the first product using Microsoft Corp.'s Pocket PC 2002 Phone Edition platform in Europe, Microsoft chief executive officer Steve Ballmer told audiences at the CeBIT trade show.

mmO2 oversees mobile network businesses in four countries. In addition to BT Cellnet, mmO2 runs Germany's Viag Interkom, the Netherlands' Telfort Mobiel and Ireland's Digifone. Additionally it has operations on the Isle of Man (Manx Telecom) and a leading mobile internet portal business, Genie. Its businesses will be re-branded as O2 from Spring 2002.

mmO2, a BT Group plc spinoff whose U.S. headquarters is based in New York City, has secured 3G mobile telephony licenses in the UK, the Netherlands, and Germany, and has applied for one in Ireland. With all of this European exposure, mmO2 boasts 17.25 million customers and some 15,000 employees.