The 3.4GHz wireless broadband auction commenced on Friday morning, with some in the industry fearing that it may fail in its aim of making high-speed Internet access available to the whole of Britain.
An early flurry of activity on the auction floor saw heavyweight Hong Kong telco Pacific Century CyberWorks (PCCW) start strongly by bidding for all the licences, but there is concern that operators may cherry-pick the most commercially attractive areas while neglecting broadband blackspots in rural areas.
A total of 15 licences are on the table. Seven cover metropolitan areas and seven cover rural areas, with a further licence covering all of Northern Ireland. Reserve prices are £300,000 for three of the metropolitan licences, and £100,000 for the other 12.
Twelve companies are taking part in the auction.
Given that the UK's major telecoms firms have all declined to join in, PCCW appears to have a clear run at winning control of a key part of the UK's radio spectrum -- allowing it to operate wireless broadband services anywhere in the country.
But according to another company involved in the auction, rural areas are unlikely to benefit from one company controlling the 3.4GHz band.
Basil McCrea, chief executive of Ballyclare-based KBL Online, told ZDNet UK that he fears that if one company wins all the licences then less commercially attractive areas -- such as Northern Ireland -- will be neglected.
"If PCCW, or any of the other bidding groups win all 15 regions, I very much doubt that they will concentrate their efforts on Northern Ireland. Like every other telco, they will approach the large population centres as the most viable economic propositions and it will be many years before they even consider Northern Ireland," McCrea says.
Similar fears were voiced by Welsh politicians earlier this year when they learned that Wales would not have its own licences, but would be bundled in with areas of England. This led to criticism of the government for not imposing any rollout obligations on successful bidders.
KBL Online also bid for the Northern Ireland licence in the first round of the auction -- which will continue until all the licences are awarded.
KBL Online already offers some services in Northern Ireland, including a broadband-based mobile office application. This means it could roll out wireless broadband more cheaply than an incoming firm, according to McCrea, but that might not be enough to win the licence in the first place.
McCrea explained that although a small company would not require as much income from a licence as a large telco, it is unlikely to have the resources required to win the licence in the first place.
"If PCCW really wants all the regions in the UK as part of a bigger strategic play, I doubt if any of the current bidders could stand in its way, and even if we were to win a bidding war, our resources would have been better-deployed building networks," he added.
PCCW did not respond to requests for comment at press time.