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UK auction delay would be major blow to WiMAX

Industry could lose headstart over LTE

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The UK’s upcoming auction of 2.GHz mobile broadband spectrum is intensely anticipated - partly because it is the first major European market to make the move, and so will provide some clear indicators for the rest of the region; but also because it represents the best chance for a WiMAX operator to gain a national licence in a leading EU economy.

But the auction, which has already been delayed once and is now expected this fall, may now be postponed again, as T-Mobile launches legal action to force regulator Ofcom to hold back on the sale until it has finalised its rules on the refarming of 900MHz GSM spectrum.

The UK 3G operators have no particular desire to see an early auction. If BT (or another bidder from outside their ranks) does win spectrum, they will have to face yet another competitor in a hugely pressurized market at an early stage. And they do not have an urgent need for 2.6GHz themselves yet – most are just rolling out HSPA and the 3G networks are not at capacity, and are performing pretty well in terms of most mobile data services.

Since the five cellcos will almost certainly use Long Term Evolution (LTE) if they get 2.6GHz licences, they will not be able to start build-out for at least another 18 months anyway. In the meantime they will hope that economic uncertainty will prove a blessing in disguise, at least in terms of driving down spectrum costs, and that they will be able to assist that downwards pressure further with tactics like network or spectrum sharing deals.

Blow to WiMAX

For WiMAX vendors and other supporters, a delay in this flagship auction would be a major blow. To get any inroads into mature mobile markets, WiMAX needs to exploit its availability headstart over LTE, since the two technologies are very similar in what they actually deliver, and LTE is a more natural choice for 3G operators (commercially if not technically). But the advantage of having systems ready to purchase, probably 18 months ahead of LTE, is pointless if potential customers cannot get their hands on suitable spectrum. If the operators have to wait for a year or more for auctions, the playing field with LTE will have levelled, even for non-3G carriers.

The UK has been the great white hope for WiMAX in the west European UMTS heartland. This is because, unusually, incumbent telco BT has no mobile arm, and so is likely to bid for a licence - and if it wins, to adopt WiMAX rather than LTE in order to gain a headstart in its chosen business model.

BT has made it clear it will drop out of the race if prices go insanely high, as they did during the 3G auctions at the turn of the century, but it is still widely expected to acquire a licence, since wireless would enhance several of its businesses. While it would be craziness to launch a retail mobile brand against the five existing ones – especially as several of these are no BT customer on the backhaul and convergence front – BT could use an advanced mobile broadband network to support enterprise multimedia services for fixed/mobile offerings to enhance its fixed broadband business, and as a wholesale network for innovative providers, media players, public sector initiatives, and any cellco that does not gain its own 2.6GHz licences.

As BT rolls out its 21CN all-IP network, it will be impatient to know whether it can include broadband wireless in its service plans for 2009 onwards, and an auction delay would be a frustration. It would also make it more likely that, if it has to wait, BT would decide to go with the LTE mainstream and simplify aspects like roaming with other European carriers.

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Next page: T-Mobile’s case

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