Wireless digital data stream on the horizon for New Zealanders

CHRIS BARTON reports on the quest to deliver fast internet, interactive TV and telephone services to the home via one wireless digital data stream.

It is the Holy Grail of wireless communications - a digital data stream beaming fast internet, interactive TV and phone calls to and from the home.

Wireless network provider Walker Wireless aims to realise the quest for consumers, possibly by this time next year.

The firm has shown it can deliver fast internet to roof-mounted antennas at hundreds of Auckland businesses, using transmission equipment in the Sky Tower and at other high points around the city.

It is also testing adding voice calls to the bit stream with a technology known as voice-over internet protocol. Businesses could soon be using Walker Wireless airwaves for video conferencing, as the company continues its $20 million national network expansion.

The next step is to bring the same wireless digital pipe to aerials atop kiwi homes. With Sky TV already delivering digital television channels to dishes on about 177,000 New Zealand homes, it is easy to imagine what else Walker Wireless wants to see coming through its air gate.

Enter SkyCable, a subsidiary of Canadian regional broadcaster Craig Broadcast Systems. A few months ago the company parlayed its ownership of two 8MHz bands of New Zealand MDS (multipoint distribution system) frequency for a 10 per cent stake in Walker Wireless.

In Manitoba, SkyCable has used a similar frequency band since 1996 and today delivers up to 120 digital TV channels to about 10,000 subscribers.

It will soon roll out another MDS wireless network in British Columbia.

The basic package, with about 30 TV and 30 audio channels, including television-top box and no installation charge, starts at $C29.95 ($48.75) a month.

SkyCable also uses the frequency, which requires line-of-sight from antenna to transmitter, to provide fast internet (between 1.5Mbps and 3Mbps) to home PCs at $C40 a month for unlimited access.

So why would a Canadian regional broadcaster invest in New Zealand?

"I like it here," says SkyCable president Boyd Craig. "You have a population of 3.8 million. From our experience of the markets we're in, that's a substantial number of people. It's got the same growth potential that we see in Canada."

In truth, SkyCable also had a bit of luck. About three years ago Mr Craig received a call from someone in Honolulu hawking New Zealand MDS frequency. In July 1990, our Government sold 12 lots of the now valuable 2300MHz to 2396MHz band by "second-price sealed bid" for a total of $1.39 million - an average of $116,000 per 8MHz chunk.

The big beneficiary of that auction was Telecom, which took eight lots. TVNZ's transmission arm, BCL, and Sky each bought one, and two lots went to a firm called Multiband Television.

Multiband sold to the guy in Honolulu, who sold to Boyd Craig for $US1 million ($2.4 million).

In May, Mr Craig sold the MDS frequencies to Walker Wireless in a cash-and-share deal worth $US2.5 million. The frequency is a valuable asset for Walker Wireless, which has been using general licence 2.4GHz, 5.8GHz and 900MHz frequencies to deliver fast internet to businesses. But with other players - Wilson Neill subsidiary Radionet, Savoy Equity's IPfinity and Clear Communications - offering similar wireless services, the general licence band threatens to become overcrowded.

The potential for clutter in a frequency range that anyone can use free explains Walker Wireless' keen interest in the current 2G and 3G spectrum auction.

The company has been in a three-way tussle in recent weeks with Telstra and BCL for a segment of spectrum just below MDS.

The eight lots, labelled "1098," are not arranged in natural pairs like the other 2G and 3G frequencies. That makes them unsuitable for use with next-generation cellphones - also destined to receive and send internet and video communications to consumers. But 1098 is suitable for fixed line-of-sight links to send and receive broadband data.

It is easy to understand BCL's interest. It is in the business of delivering both analogue and digital transmissions for TVNZ and other businesses.

And despite concerns that it might be using its deep pockets to hoard 1098 frequency to keep competitors such as Walker Wireless out, Telstra/Saturn can also make a case. It intends to roll out national cable infrastructure over the next three or so years and could use the 1098 and other 2G frequencies to supplement its cable plans - particularly in less-populated areas where digging trenches or slinging wires between existing power poles is uneconomic.

Mr Craig believes spectrum auctions are not always in the public interest. He is concerned that, with no "use it or lose it" clause, auctions can encourage hoarding. The MDS frequency is a case in point - unused by Telecom for the past 10 years except for a brief stint during the America's Cup when it was leased to TVNZ.

In Canada, MDS frequency allocation follows a very different process. Would-be users must apply to the Canadian Radio-Television and Telecommunications Commission and make and state their case. Once the frequency right is assigned, the user returns a percentage of revenue.

And in Canada, Mr Craig points out, speciality channels are required by law to sell their TV programmes to all other broadcasters at the same price. That enables SkyCable to carry the major networks' content, as well as movies and sport.

"The [Canadian] Government is encouraging competition among providers. That way you don't get the problems, say, Saturn had here with its cable network because Sky wouldn't make its sports coverage available," he says.

Walker Wireless thinks it can sidestep the problem of who gets what TV content by promoting itself as a neutral wireless network available to all.

The approach has had some success, with several internet service providers employing the network to provide fast access to business. But while that strategy may translate to the home for fast internet access, the addition of other wireless services - such as toll calls and TV content - is likely to be more problematic.

If Walker Wireless' plans continue at their rapid pace, the convergence of telecommunications and broadcast services is something the Government will need to grapple with - and soon.

TVNZ has already pointed out that the TV-top box needed to receive digital content and services should not be left at the mercy of the free market. It argues that access to consumer TV-top boxes should be governed by a regulator, in much the same way as access to consumer telephone lines is proposed.