Intel Capital is putting $25m (£14m) into a joint venture with Pipex to promote the use of the long-range wireless broadband technology WiMax.
The fruit of the union, to be named Pipex Wireless, will provide WiMax access to homes, businesses and public sector organisations in UK metropolitan areas. London and Manchester will be the first cities to see a WiMax deployment from the new company in 2007.
Pipex Wireless will look to roll out WiMax to the top eight population centres in the UK during 2008 and hopes to eventually sell its services in the top 50.
Pipex already has a licence to operate WiMax services in the 3.6Ghz band, as an inheritance from Pipex, which started trialling the technology last year in the Stratford-upon-Avon area.
Intel Capital and Pipex Wireless are now evaluating potential candidates for the position of chief executive.
Intel launched its first WiMax chip, Rosedale, last year, saying that the next 100 million Internet users will get their connectivity through technologies such as WiMax.
The chipmaker already has other WiMax rollouts under its belt, including a citywide network in Taipei, and says it will be helping out Pipex Wireless by giving advice on trial deployments, partner introductions and go-to-market activities.
While industry watchers believe WiMax has potential for supplying Internet access in rural areas or as backhaul equipment, many have been sceptical the technology will take off in metropolitan areas or countries with already developed infrastructure.
Jerome Buvat, global head of Capgemini's strategy labs, told ZDNet UK sister site silicon.com WiMax is likely to have a hard time competing with both existing unbundled DSL and mobile networks.
"I think WiMax raises a lot of interest because it promises to solve some of the limitations of Wi-Fi, but in the short and medium term WiMax is unlikely to have a big impact," due to issues of cost and speed, Buvat said. "There are many operators testing the technology but the trials haven't been very successful. In urban areas, it's not cost-effective."