Observers could still describe the response to the DTI’s auction of 15 regional broadband fixed
wireless licenses for the 3.4 GHz band as lukewarm. But the very fact that the process managed to attract bidders for all the regions, despite a lot of initial apprehension,
means that it cannot be termed a total failure, at least not from the government’s point of view.
The exercise that was completed in June, saw Hong Kong-based PCCW which participated through a bidding company called PoundRadio, emerging as the clear winner with 13 of the 15 licenses, including the popular Greater London license.
The other two winners were Public Hub, the only company that has already announced its intention to use it for ADSL-type broadband services using the spectrum, and Red Spectrum, a company with experience in free space optics (FSO) that now wants to get into wireless. Both Red Spectrum and PCCW have not yet announced what they would do with the spectrum.
This has made some industry observers to speculate on whether the spectrum would be used for broadband at all. The Broadband Stakeholder Group (BSG), an industry group that along with research and consulting company, Analysys, advises the UK government on national broadband strategy, has expressed fears that the spectrum could be
used for connecting 3G wireless base stations to the core network, instead of providing broadband services to end users. The group has demanded that the government open
other frequencies like 2.4 GHz and 5.8 GHz for the services.
Also the lack of any rollout obligations in the licensing has made analyst group Ovum to opine that the cheaper spectrum may mean the winning companies can just keep it for a possible future use, rather than rolling out broadband services on them anytime soon. Some licenses like the one for Scotland went as cheap as 125,000 pounds. Except for Greater London, which commanded about 1.9 million pounds, other licenses have been won at prices averaging just about 360,000 pounds. The government made a total of 6.95 million pounds from the auction.
However, all discussions on whether the spectrum will be used effectively or not will remain speculative till PCCW
announces its plans. A few others think that if the company actually goes out and
rolls out aggressively, it could garner a good share of the fast growing UK broadband market.
There is a point in their thinking. The major reason behind the UK government’s decision to go for fixed wireless auction
was to spread the services to areas where broadband penetration is low. The overall growth of UK broadband subscribers
has been impressive at about 320 percent last year to reach an estimated 1.37 million subscribers in December 2002,according
However, this impressive showing has not been uniform. In comparison to the 71 percent people in urban areas who had access to
some kind of mass-market broadband solution in end 2002, only five percent people in the rural areas had the same privilege. That is too wide a gap for the government
Fixed wireless, it hopes, will be the vehicle that will bridge that. So hopeful is it that the e-commerce minister Stephen Timms expects wireless to account for as much as 18 percent of total broadband
connections by 2007.
PCCW certainly has an opportunity to gain immensely out of this. The cheaper spectrum could result in cheaper services. That means it can not only reach out to the areas that are not currently attractive for wired broadband rollout, but it can also price the services lower. Pricing has so far played an important role even in the urban areas. Pipex, a broadband service provider who has offered services at lower rates has been able to garner a better market share than some of its bigger competitors. The onus is completely on PCCW–with a limited presence in the UK and negligible presence in other European countries–to make it happen.
With the UK broadband market having a track record of accepting multiple technologies–it is probably the only major European country, that has a market that is almost equally split between DSL and cable–wireless could actually turn out to be another good and cheaper alternative. It could well be the catalyst for fulfilling the government’s wish to close the urban-rural broadband divide in UK.
But it all depends on how, and more importantly, when PCCW makes its next move.