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One year on, what became of Ofcom's spectrum sale?

Absentee landlords and unwanted property

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It's been a year since Ofcom flogged off chunks of 28GHz spectrum at bargain-basement prices, but 12 months on there's not a lot happening at the top of the dial.

One chunk of spectrum in that area has changed hands: last week Urban WiMAX bought 110MHz of Greater London spectrum off Red-M (who acquired the licence as an asset of Broadnet UK), but while the cheap spectrum should have left money for infrastructure the services are still a long time coming, and despite the lack of trading it's becoming increasingly difficult to work out who owns what.

A year ago the government tried again to shift spectrum that it had been hanging onto since failing to sell it after the last dot-com crash. Back in 2000 most of 28GHz was put up for auction, despite the industry having been burnt badly by the 3G auctions that took place a few months earlier.

Not that the crash was visible at the time, as Policytracker reports - the Guardian newspaper predicted another £2bn heading for the treasury as companies threw money at the higher frequencies in just the same way they had at the 3G licences.

But the industry wasn't going to be bitten twice, and of the 42 licences available only 15 got bought, and only £38m raised. The government tried shifting the spectrum again in 2001, allowing companies a whole year to get their bids in, but no one was interested and not a single bid was received.

Even those who did get a bit of 28GHz couldn't afford to do anything with it, and the regulator had to backtrack on the use-it-or-lose-it clause of the licences - but come 2008 there was still an awful lot of unowned spectrum to shift.

So, a year ago, four companies scooped up that spectrum very cheaply indeed. Arqiva got itself two national licences for a shade over a quarter of a million quid, while the other three paid sixty grand between them for three regional licences.

One company took part in both auctions - Faultbasic, a Pipex subsidiary, paid £10.5m for three regional licences in 2000, and then filled those out with £30,000-worth of regional licences to give them national coverage. Faultbasic seems to have had a plan, and is now making some use of the spectrum under the Freedom4 brand, unlike the other bidders.

Policytracker tracked down the four owners only to discover three of them have been busy girding their loins in preparation for business they believe will come knocking real soon now.

Transfinite and Red-M, the latter of whom who still have licences covering most of the country despite divesting themselves of Greater London, are planning to sub-let their spectrum to anyone who wants it, and have spent the last 12 months working on software and systems to manage that. That might seem a long time, but as Red-M Chief Executive Neil Clark pointed out - they only paid ten grand for the spectrum, so they can afford to wait.

Arqiva is planning to sell backhaul services, ideally to new players taking advantage of the forthcoming 2.6GHz spectrum. The continuing delays to the 2.6GHz auction has left that market undeveloped, but Arqiva reckons it too can wait for the market to develop - eventually customers will need that bandwidth.

Which leaves Freedom4 as the only company actually making use of its 28GHz spectrum, running the backhaul for the company's WiMAX network in Milton Keynes, Manchester and Warwick. Freedom4 is a joint venture between Pipex and Intel, the latter company being the primary champion (not to mention patent holder) of WiMAX, but given the squeezed economy it's not clear how long Intel will be able to continue funding WiMAX deployments around the world.

All this planning leaves one big gap in the 28GHz space - Energis bought the six regional licences in 2000, for £13.7m. These changed hands in 2006, for an undisclosed sum, and are currently the property of Fastnet Spectrum Holdings; which is fine, except that Fastnet Spectrum Holdings appear to have vanished entirely, leaving the UK with an unusable band of spectrum and an absentee landlord. ®

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