Telcos eye up wireless Internet bonanza

With the collapse of wireless telco Ionica a fading memory, broadband wireless telecoms will get a second chance later this year.

Ecommerce minister Patricia Hewitt confirmed on Friday that licences to use certain radio frequencies will be made available in two blocks from this summer. These frequencies can carry very high-speed wireless data to fixed points, avoiding the need for new entrants to dig up miles of streets to lay fibre-optic cable.

Hewitt said the allocation would be made because of the "high demand for interactive multimedia services", adding that "radio links an offer quick access to these services, and more choice and benefits to the consumer".

The move comes days after the UK government announced a list of 13 bidders for next-generation mobile services, known as third-generation services. These offer relatively quick access at speeds of up to 2Mbps on a mobile basis.

Observers believe the different licences are complementary. Peter Boland, vice president of product strategy at Nortel Networks, a company which sells radio telecoms equipment, said: "Both third generation and broadband fixed wireless should co-exist." Fixed wireless is aimed at businesses and mobile services are aimed at consumers, he added.

The licences will run at 28GHz and 40GHz, and will allow data transfer rates of as much as 150Mbps - ideal for a company seeking to connect branch offices cheaply. However, they only operate over limited distances and require line-of-sight connections.

The government has not decided how it will make the licences available, whether by auction or direct sale, or how they will be distributed around the country.

Telcos involved in the business market are expected to take a serious interest. A spokesman for MCI WorldCom, which is also bidding for a third-generation mobile licence, said the telco would evaluate fixed-wireless opportunities. "It's an area we're looking at," he said.

So far, the history of broadband wireless in the UK is disappointing. Ionica, which launched the first fixed-wireless service, went bankrupt in 1998 after efforts to woo the consumer market failed spectacularly. About 60,000 of the telco's customers were left without a telephone service and had to be transferred back to BT.

Ironically, Ionica's failure could fuel the telecoms licence bonanza. The government has the telco's old 3.4GHz and 10GHz radio frequencies, and is considering how to license them.