O2 takes the mobile network indoors

Patchy indoor mobile coverage could be consigned to history by O2, which is evaluating two new ways of extending its mobile network.

The mobile operator said on Thursday it will offer small mobile base stations to firms that experience poor mobile coverage in their offices. It is also lobbying handset manufacturers to introduce 3G phones which will work at a lower frequency. A lower frequency will enable mobile signals to pass through office walls much more easily, eliminating office blackspots.

The first option has been made possible by the tumbling costs of so-called pico-cells — small base stations which can be fixed easily to an office wall or ceiling. Pico-cells work on the same frequency as normal base stations so ordinary handsets can be used, but they are far cheaper than full sized base stations to manufacture.

"There has been a compelling change in technical costs: you can get one of these for sub-$100," said Dave Williams, O2's chief technology officer, brandishing a WLAN router with a GSM radio. "we are looking to port the radio inside the home, and inside the office."

The second option uses GSM spectrum to supply 3G services. Because GSM spectrum is at a lower frequency than 3G spectrum, calls are more able to pass through walls into an office. Earlier this week, Nokia announced that it had conducted the world's first successful 3G call on a commercial network at a frequency of 900MHz — which is currently used for GSM in the UK.

"We are mid-way through a trial of UMTS900 on the Isle of Man," Williams explained. "It's going very well with five sites in Douglas [the main town on the island]. But the challenge is how do we free up 2G spectrum in the UK to use this technology?" He added that the freeing up of spectrum would have to involve both technical experts and the UK telecoms regulator, Ofcom.

O2 also sought to distance itself from the oft-talked about fixed-mobile convergence (FMC). FMC allows both cellular and Wi-Fi radios to be built into a single handset, eliminating the problem with patchy indoor coverage.

BT has 30,000 customers using its Fusion FMC proposition, while Orange is trialling FMC in France. But O2's chief executive Peter Erskine said, "Fusion is an interesting concept, but it's small potatoes. It is quite a difficult space to succeed." Williams added that he was not so keen on FMC because of the interference issues surrounding Wi-Fi, particularly in businesses.

In accordance with this, neither Wi-Fi nor WiMax are high priorities for the mobile operator. The chief technology officer said that HSDPA was a much better proposition, particularly with the higher speeds and better in-building coverage that it offers.