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Broadband auction result could be an own goal

This month's wireless auction brought a touch of Lovejoy to Broadband Britain but some industry figures fear the episode will end in tears
Written by Graeme Wearden, Contributor

The UK government's confidence in the success of the 3.4GHz wireless auction is misplaced, according to some key players within Britain's technology sector.

Critics of the auction, which closed last week, believe serious mistakes were made in the way the licences were designed, meaning that the winning bidders are under no obligation to use them to provide broadband services to homes and businesses.

Intellect, a trade body that represents Britain's IT, telecoms and electronics industry, fears that the auction will fail to give a boost to Broadband Britain, at a time when the crisis over broadband availability in rural areas is reaching a crescendo. "There's a growing feeling that the spectrum will be used to provide services other than wireless broadband," Graham MacDonald, senior radio executive at Intellect, told ZDNet UK News on Monday.

Following the failures of the notorious 28GHz auctions, the government decided not to include any service obligation or rollout restrictions on the 3.4GHz licences. This means that winning bidders could use their spectrum to carry mobile phone traffic, for example, rather than services for end users. They could even do nothing at all with the spectrum.

The 3.4GHz auction ended on 17 June and raised around £7m. Thirteen of the 15 licences on offer were won by Pacific Century CyberWorks, the Hong-Kong based telco. Two UK companies each won one licence.

As ZDNet UK reported last week, the government insists the auction was a success and will help to drive the UK's broadband market.

"The aim of the auction was to see the licences in the hands of the operators best able to take advantage of them, and in turn, to see consumers -- including those in areas currently without ADSL or cable -- benefit from fixed wireless broadband access," said e-commerce minister Stephen Timms shortly after the auction closed.

"Our aim is to make sure every community in the UK, regardless of location, should have the opportunity to access affordable broadband services," he added.

Intellect, though, is unconvinced that hawking off the UK's wireless spectrum to the highest bidder without including strong licence conditions is the best way of ensuring that the spectrum ends up in the hands of companies who will make the very best use of them.

"We can't say at this stage that the auction will be the panacea that is needed for wireless broadband in rural areas," a senior industry source warned. "It's good that the process has been completed with all the licences being taken up. But we need to know the plans and intentions of the companies involved before we can say that the job is done."

Public Hub, which won a licence covering some of Southern England, says its ambition is to "address the problem of placing broadband fixed-wireless access communications into rural locations in the UK".

According to Public Hub's Web site, its 3.4GHz licence gives it "exclusive access to this premium bandwidth that best serves the more than 500,000 mostly rural households in the region".

The company says it is also looking to offer wireless broadband services in other parts of the UK by using other parts of the radio spectrum.

It is PCCW, though, that now controls most of the UK's 3.4GHz band. It isn't yet clear, though, whether it will use the spectrum to provide broadband services to homes and businesses, or for other uses, as the company hasn't responded to requests for information about its plans.

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