Nortel Networks, the Canadian-based firm that will build a large part of O2's third-generation mobile network in the Republic, believes commercial launches of the new technology in Europe will begin from around mid-2003.

Current delays due to inter-operability issues between new data-based wireless networks and older voice networks should be solved by late 2002 as a number of technical trials begin, a senior Nortel executive said yesterday.

But Mr Dave Murashige, vice-president, strategic marketing wireless networks, said that European regulators might have to intervene to help wireless operators acquire sites for base stations as this was becoming a big problem for firms.

He said the prevailing "green mentality" in Europe was making it difficult for operators to attain suitable numbers of base station sites to support third-generation launches in Europe.

The strength of the green lobby in Europe was much more prevalent than in other regions such as Asia or the US.

These environmental issues, together with the already high cost of buying base station sites in cities, would have an impact on mobile network operators, he said.

It is estimated network operators will have to build several thousand new base stations in the Republic to launch third-generation mobile services, although a decision by one of the three third-generation mobile licensees to share network infrastructure could reduce this number considerably.

Mr Murashige said a decision by the European Commission to allow infrastructure sharing this week would lower the amount operators spent on building networks. This would enable firms to share sites, towers and some telecoms equipment, although they would still want to differentiate themselves through quality of their mobile networks, he said.

Nortel, one of the key makers of third-generation mobile network technology, has signed deals worth $2.8 billion (€2.86 billion) in Europe and recently sealed a deal with O2 in the Republic to build half its Irish network.

Mr Murashige said Nortel's wireless division was becoming a more important part of its business due to its ongoing restructuring. It now accounted for 40 per cent of revenues as Nortel got out of other technologies such as microwave, he said.

He said by 2005 wireless would be pervasive telecoms technology with 1.8 billion wireless connections as opposed to about 1.2 billion fixed-line connections. The current evolution was to move customers from voice to data on wireless networks, he added.

Nortel Networks employs 1,300 people at locations in Galway, Dublin, and Monkstown, Northern Ireland. Its Galway campus has global responsibility for research and development for contact centre business and the European enterprise market.