Last major player grabs at wireless pie

Karim Hussona. Picture / Brett Phibbs

While one internet service provider buying another isn't startling news, Compass Communications' purchase last week of Wired Country from parent Counties Power sets the table for some intriguing future possibilities.

Wired Country's key assets were its management rights to two chunks of microwave spectrum. Compass, traditionally a business ISP that now has residential customers, inherits one of these chunks and, in a related deal, so does Telecom.

That spectrum - in the 3.5-gigahertz range - is the launch pad for what is being touted as the next big wireless broadband technology: WiMax.

WiMax remains pie-in-the-sky as global players lumber through a standards-setting process, but within a couple of years it could be reality, delivering roaming-capable high-speed broadband to the next generation of laptops.

Through the Wired Country deal, Telecom becomes the last of the major local players to grab a slice of WiMax airwave real estate.

Telecom's announcement in August that it would spend $1.4 billion upgrading its fixed-line phone and internet network suggests it is making a solid punt on wired services being an attractive option for customers well into the future.

But its application to the Commerce Commission for clearance to buy part of Wired Country's spectrum sheds some light on the company's strategy around WiMax and wireless services in general.

Telecom says it wants to be able to access developing technologies and considers it "prudent" to have management rights to a spectrum "in which technical developments are being made and which several other parties (including Telecom's most significant competitors) hold".

But it concedes that "it takes a risk in doing so in that future technical developments may render the 3.5GHz spectrum less valuable and/or useful than predicted".

Woosh Wireless, which uses different frequencies and technology to offer a wireless internet service, has shown that affordable, high-speed wireless broadband service is a reality, Telecom said.

Perhaps as a measure of its success to date, Woosh, whose backers include The Warehouse's Stephen Tindall and Sky TV founder Craig Heatley, is reportedly on the verge of announcing a sharemarket float - possibly this week.

In a bid to appeal to the commission's enthusiasm for competition in the market place, Telecom has argued in its submission that if it gets the spectrum it will do more to fuel competition than others could.

"Telecom has the resources and expertise to deploy and utilise the technology being developed for use in the 3.5GHz spectrum more effectively than an alternative smaller third party that might pursue the management rights," it says.

If the Commerce Commission approves Telecom's application to buy into the spectrum - as industry observers expect - it will join TelstraClear, Vodafone, BCL and Compass in holding rights.

The other players are also taking a wait-and-see approach to WiMax, but generally making use of the spectrum while they do.

Compass chief executive Karim Hussona said the ISP's new frequency would enable the company to expand its existing wireless network, currently offered in 12 centres, and add voice services.

"We've been looking for some time for the ability to get an access network that would allow us to offer voice services directly to our customers rather than having to go through some sort of intermediary like Telecom," Hussona said.

"The Wired Country network allows us to do just that. It's got a proven voice capability. There are hundreds of voice customers on it right now."

He said WiMax comes with a lot of promise, but was not a present focus for Compass.

TelstraClear, which has been using the spectrum to link business customers to its fibre network, is also taking a wait-and-see approach to WiMax. "It's always difficult to look a couple of years down the track at technology roadmaps," said group product manager Glenn McDonald.

"But we are always looking at new technologies and infrastructure that would help us augment our on-net capabilities."

BCL says WiMax has the potential to offer new and cost-effective ways of accessing data-intensive communication services.

Geoff Hunt, chief executive of parent company THL Group, said BCL was working with customers and technology vendors to scope the future of wireless technology and was planning to begin WiMax equipment trials before the end of the year. "We're looking at how WiMax-based technologies will be able to help us improve what we can offer our telco and ISP customers, particularly in terms of enhancing the services we already offer and what opportunities WiMax opens up to deliver services to new markets," Hunt said.

A spokeswoman for Vodafone said the company continued to invest in research and development by trialling various technologies. "We invested in the 3.5GHz spectrum for this purpose and to keep our options open in this space," she said.

"We are still very confident that 3G is the future and have invested heavily in developing the ongoing roadmap for 3G. If WiMax proves that it can complement our evolution of 3G then we will consider this in the future but currently have no plans to roll out WiMax in the New Zealand market."