Construction is set to begin during the 2nd half of 2011, with service commencing in selected urban areas as soon as next year.

PCCW believes that it can finalise deals with equipment manufacturers quickly enough to meet its ambitious timetable. Handsets that can use a 4G network operating on the radio frequencies PCCW owns will need to be on the shelves in time for launch as existing 3G devices will not be compatible.

The project will be operated by UK Broadband, PCCW’s British subsidiary, as a ‘virtual network’, with wholesale access offered to companies that want to sell mobile data services without having to build a network of their own.

The Financial Times reported on Tuesday that UK Broadband has approached companies including Virgin Mobile to see if they would be interested in running 4G services over its network. Virgin Mobile has declined to comment on this.

BT and Everything Everywhere are currently establishing a commercial trial of 4G in and around Newquay, Cornwall. It is intended to establish the usefulness of the technology for filling in broadband ‘not spots’ that are poorly served by traditional, wired broadband services.

Unlike PCCW’s proposed network, the Newquay experiment will target around 200 homes and will rely on supplying 4G dongles (USB plug-in modems) to allow existing home computers and laptops to access the service.

PCCW, on the other hand, is looking to a new generation of handsets and other devices with built-in 4G connectivity.

Nicholas James, UK Broadband’s chief executive, said: “We are currently working with our vendors to finalise the equipment offering on our spectrum. And we are finalising our network planning and our business plan.”