Broadband fixed wireless auction flops

Three months on, and not a bidder in sight. Is the 28GHz auction doomed to failure?
Written by Graeme Wearden, Contributor

The government's latest attempt to sell off the broadband fixed wireless licences has totally failed to get off the ground.

In the three months since e-commerce minister Douglas Alexander restarted the auction of the 28GHz spectrum, not a single bid has been received by the Radiocommunications Agency. This is despite the government consulting the industry in the first half of 2002, and setting the reserve limit for bids at £2m or less -- which analysts believed would be low enough to boost interest.

A 28GHz licence allows a company to offer high-speed wireless Internet access to homes and offices. For areas too remote or under-populated to be offered ADSL, broadband fixed wireless is thought to be the most economical way of providing high-speed services. Following an earlier failed auction in November 2000, which only saw successful bids for 16 of the 42 licences on offer, this latest flop deals another blow to the government's ambitions for Broadband Britain.

The auction will remain open for bids until October 2002, and the Department of Trade and Industry (DTI) insists that it is not concerned by the total lack of visible interest in the process. "The auction was always meant to run for a year, and we never expected to be inundated with bids in the first few months," a DTI spokeswoman insisted.

However, the auction was reopened in the belief that there was demand for the licences. Back in July 2001, when Alexander announced that the auction would be relaunched, he explained that the decision had been made after "discussion with the industry".

It's unclear whether the industry has had a change of heart, or whether the DTI was unduly optimistic. But Energis, which won six licences in the November 2000 bidding process, has already told ZDNet UK that it is not planning to bid for any more.

Some commentators have suggested that the government should just give the remaining licences away, even if this did mean compensating those who paid a total of £38m in the first auction.

Such an investment in the UK's broadband future could win the government many plaudits, but the indication is that such a move is highly unlikely. The DTI spokeswoman insisted that there are no plans to change or stop the auction.

There is one hope for the struggling auction, though, as BT is currently testing a technology called "mesh radio". This gives high-speed Internet access to individual homes, via a wireless link to a base station, and it will even be possible for signals to "hop" between houses -- thus spreading the network beyond the standard range of the base station.

If this trial is successful, it is very possible that BT will use it as a way of providing broadband connections to rural areas.

A few bids from BT could easily set the auction process alight -- as an endorsement from such a big player might encourage investors to give other companies the finance needed to cover their infrastructure costs.

See the Broadband News Section for the latest on cable modems, ADSL, satellite and other high-speed access technologies, including a comprehensive guide to the best deals out there.

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