Broadband fixed wireless technology -- the platform the government hopes will fill the considerable gaps left by ADSL in its plans to wire the nation with high-speed Internet services -- is still beset with problems, it emerged on Thursday.
At a Broadband Fixed Wireless (BFW) conference in London, Oftel admitted that there might not be "an economic case" for the technology. Delegates seemed to agree, suggesting that rollout obligations meant it was nearly impossible for firms to make a business case for BFW when spectrum was auctioned last summer. The auction reflected this, with only 21 of the 42 licences being bid for.
With the government planning to resell the unsold licences this summer the issue of BFW is firmly back on the agenda. Companies are annoyed that the government is putting a reserve price on the spectrum and also angry that rollout obligations -- forcing firms to agree to deploy at least ten percent of the spectrum by June 2002 -- make it impossible to present a business plan for BFW.
Responding to an Oftel presentation on the issue, technical director of MLL Telecom Andrew Somerville asked why a reserve price is being put on the spectrum. "Setting a price means firms have to make a business plan. Those that value it the most are most likely to use it," explained Oftel's radio spectrum project manager Roberto Ercole. He went on to concede that "the market might be saying there isn't an economic case for it".
"Why are we here then?" responded Somerville.
Ercole defended the auction strategy. "During the process I didn't hear anyone complaining that the rules were too onerous and everyone was consulted," he said.
The pricing problems don't end with buying the spectrum, according to Somerville. According to him it will cost around £100,000 to set up one base station and an extra £30,000 to connect to another. The fact that there are very few manufacturers of the necessary equipment and that the prices are high does not help.
There are also technical issues with BFW. The 28Ghz spectrum available for auction this summer only covers distances up to three kilometres away from the base station, about the same as ADSL coverage. "You would be hard pressed to find people within three kilometres of the cell [base station] that aren't already covered by BT," Somerville pointed out.
Oftel is hopeful that BFW will be a useful niche technology for the 20 percent of the country that doesn't have either cable or ADSL. With fears of an urban/rural divide growing by the day this will also be the hope of government. However, even Oftel doesn't have very high expectations of BFW.
"It is a difficult market and hasn't made the impact Oftel had hoped," admitted Ercole. "As much as we want to see competition in the local loop, if people can't make money they simply won't deploy it."
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