BERLIN – T-Mobile, the cellphone arm of Deutsche Telekom, said Thursday its long-awaited third-generation network was up and running, with the lack of UMTS phones the only problem remaining.

T-Mobile chief executive Rene Obermann told a media colloquium in Berlin: “We’ve done our homework. The network is functioning.”

He said engineers had solved the last big problem: keeping a connection in place when a user is talking from a vehicle that moves between a UMTS cell and a place where only second-generation service is available.

“The technical handover from second to third generation works without the conversation being cut off,” he said.

UMTS (Universal Mobile Telecommunications System) was available in 200 German urban areas, he added. It would take several more months for manufacturers to turn out enough UMTS phones to meet likely demand.

Obermann denied that plans by Deutsche Telekom’s T-Com fixed-line division to extend phone service to WLAN hotspots posed a threat to his own division’s business. The previous day, T-Com painted a vision of fixed-line phone calls being re-routed to laptops and palmtops.

WLAN hotspots are small areas – an office building, an airport lounge or a short street for example – where computers can hook up to the internet via a wireless network. The service is potentially far cheaper than using a UMTS phone would be.

But Obermann insisted the two services were not in competition. He said new devices would automatically select the ideal connection without the customer needing to concern himself whether this was UMTS, its precursor GPRS, or a wireless LAN.

A user who addressed the colloquium, Lothar Lux, said users were likely to be shocked at the price for mobile data traffic.

Using the German services, they were paying up to EUR nine per megabyte to transmit on UMTS or GPRS (general packet radio service).

The same transmission would cost just 0.3 of a cent on Deutsche Telekom’s DSL network, he pointed out.

Obermann said T-Mobile aimed to cut the unit prices in some subscription plans to as low as one euro per megabyte. Users commonly dial up the connections for mail on the move: a megabyte is equivalent to about 300 E-mails.