WiMAX Day Newsletter of May 16, 21, 22 and 23, 2007
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Swisscom completes Fastweb purchase
ZURICH (WiMAX Day). Swisscom AG announced that it has completed the acquisition of shares in Italian alternative telecoms provider Fastweb SpA. Swisscom has acquired 82.4% of the shares in Fastweb for a total of €4.2 billion Euros. Fastweb has been seen as the leading candidate to gain licenses to WiMAX spectrum at auction in Italy next month, however this is no longer certain. According to a report in Reuters, Swisscom CEO Carsten Schloter said that the participation of Fastweb in the spectrum auction will depend on how the spectrum is priced.
[WiMAX Day will not be published May 17, 2007, due to holidays in Europe.]
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Mobile WiMAX expansion for BrT
SÃO PAULO (WiMAX Day). The Brazilian telecoms operator Brasil Telecom Participações (BrT), which owns 3.5 GHz spectrum in Brazil, will offer mobile WiMAX based on the 802.16e standard to business customers in São Paulo and Rio de Janeiro by September this year. According to a report in Cellular News, BrT intends to begin commercial operations of mobile WiMAX in the cities of Porto Alegre and Curitiba later this summer.
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2.3 GHz auction in New Zealand clouded by uncertainty
AUCKLAND (WiMAX Day). The Communications Minister in New Zealand, David Cunliffe, announced last week that the auction of 2.3 GHz spectrum scheduled for this month has been delayed as the government must consider still more proposals concerning the spectrum.
“The issues are complex and we are carefully considering submissions received from stakeholders,” Cunliffe said. It was in April that the government requested proposals for the spectrum auction, and now, according to an official press release, the Minister said that a further announcement should be made by the end of May.
Currently the government is considering two proposals that were made by the Communications Ministry in April. The first proposal is that the 2.3 GHz band would be split into three lots with a maximum of 30 Mhz each.
This plan also called for a small lot of spectrum, a “managed park” that would be made available for “geographically limited wireless-broadband proposals that may involve local government,” the New Zealand Herald reported last week.
Splitting controversy
The delayed auction comes after months of controversy over the spectrum. Several companies such as Woosh Wireless, NZ Telecom and Sky TV already own 2.3 GHz spectrum licenses that were allocated in 1990 and are set to expire in 2010. The government decided that it would re-allocate that spectrum when the licenses expire, however the current license holders claim that they have the right to renew the spectrum automatically.
Woosh has already invested millions of dollars in building its network, and it also acquired management rights over the spectrum owned by Sky TV. The company contends that if it does not have automatic renewal rights to the spectrum, it may be shut out of bidding on the spectrum when put up for auction.
Excluding the incumbents
Another operator building a WiMAX network in New Zealand is CallPlus, which is using 3.5 GHz spectrum in the Auckland area, for which it acquired a license last year. CallPlus has lobbied the government to exclude the large telco operators from bidding on the 2.3 GHz spectrum.
“There is only enough spectrum to allow two or, at the most, three bidders to gain access to sufficient spectrum to deploy nationwide networks,” CallPlus CEO Martin Wylie was quoted last month in the New Zealand Herald. “Telecom and Vodafone, with their deep pockets to bid, can ensure emerging competitors do not get their hands on spectrum that could be used to effectively compete with them.”
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Clearwire completes 802.16e testing
KIRKLAND (WiMAX Day). Clearwire announced yesterday that it has completed the first phase of field tests for mobile WiMAX. In a leafy suburb of Portland, Oregon, the testing was conducted by Clearwire with Intel and Motorola using 2.5 GHz spectrum and 802.16e equipment. In a press release, Scott Richardson, Clearwire chief strategy officer, said “The successful completion of the first phase of our mobile WiMAX trial is a significant milestone in our efforts to commercially deploy true mobile broadband services in the US.”
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EU sees € billions from flexible spectrum policies
BRUSSELS (WiMAX Day). At a conference last week in Brussels, Viviane Reding, Member of the European Commission responsible for Information Society and Media, delivered a startling speech on the status of broadband in Europe.
Reding began her speech by stating that Information and Communication Technology (ICT) “is the key for competitiveness and economic growth… Broadband means better access to business services, faster and cheaper ways of doing business, overcoming the disadvantage of distance, attracting inward investment and retaining jobs.”
The thrust of this speech was pointed at including remote and rural regions of Europe in the information revolution, or what is known as the “Digital Divide.” Such regions, Reding argued, cannot remain competitive in the current economy without access to the tools which the rest of the economy utilise.
Next Generation Services
Increasingly, Internet users demand high-speed broadband services that can support the web 2.0 services such as YouTube and MySpace. However, Reding notes that Next Generation services are not just for consumers. Most companies, large and small, rely on the Internet for their business, and “without high quality, fast and symmetric connections, these businesses will in a few years be in trouble!”
Based on current statistics, the rural areas of Europe are well behind in having even low quality connectivity to the Internet. Reding said “at least 10% of EU population (or 50 million individuals!) are still excluded from the benefits of broadband.”
Spectrum reform
One of the key factors that will enable Europe to grow its digital infrastructure is a flexible and market driven spectrum policy. The EU commission has been pushing for a reform of the EU’s policies, and Reding said she will initiate these reforms this summer.
New technologies are seen as key to increasing access to broadband in Europe, and “wireless technologies are crucial for rural areas,” Reding said. Thus radio spectrum in Europe for new technologies is seen as paramount importance, and freeing the 2.6 GHz frequency is a priority “for innovative fixed wireless access applications such as WiMAX so that services can be delivered in both urban and rural areas.”
Reding noted that this flexible spectrum proposal will be “a big windfall of potentially billions of euros a year for the mobile communications community by making the GSM spectrum flexible.”
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Broadband access a universal right
ROME (WiMAX Day). The Italian Minister of Communications, Paul Gentiloni, has re-confirmed that licenses for 3.4 ~ 3.6 GHz spectrum will be auctioned this summer in Italy. Minister Gentiloni also said at a public forum today that access to the Internet should be considered a “universal right” of each Italian citizen. He said the government hopes that the issuance of WiMAX licenses will help to bridge the “Digital Divide” in Italy by extending Internet access to citizens in the country who otherwise are unable to receive broadband connectivity by DSL or fibre optic. The Minister noted that WiMAX can achieve this due to its low cost to deploy, and should become integrated with other technologies to form a “total access” package for Italian telecommunications.
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Pipex suitors question spectrum compatibility
LONDON (WiMAX Day). The broadband operator Pipex Communications plc began accepting bids from potential acquirers earlier this year, and in the last few months several suitors have come and gone. Last week, Massimo Cristofori, the chief financial officer of Italian alternative telecoms provider Tiscali, “revealed that it is in early-stage talks with its UK competitor,” the Independent newspaper reported.
Early on, Pipex believed it could fetch as much as £500 million. Several sources now report that Pipex will be sold in pieces, and a recent analysis by Goldman Sachs valued the telecommunications and broadband business of Pipex at £211 million, and its hosting business at £178 million.
The sale of Pipex reportedly will include the joint venture it has with Intel, which was formed in 2006 to develop a national WiMAX network. Intel invested $25 million in Pipex Wireless, and Pipex contributed its radio spectrum licenses. In the last year, the company has announced several successful field trials, and further plans to launch a national network.
Analysts have suggested that despite a network of 570,000 broadband customers, the real value in Pipex is its spectrum license, for which an acquirer would pay a premium. The Independent report quoted a financial analyst who said Pipex’s “WiMAX license” is an “ace” in its deck of cards.
Caveat emptor
However, it seems that some potential bidders may have drawn a different conclusion. Tiscali may be among them. The company issued a statement to the London Stock Exchange on Friday that clarifies “its current interest is only in the Broadband and Voice Services division of Pipex.”
According to bankers familiar with the bidding process, potential acquirers have not been impressed with the Pipex spectrum, primarily because it is not exactly fit for WiMAX. Pipex owns a “fragmented” license for spectrum in the UK that lies between 3.6 GHz and 4.0 GHz, which is not included in the 3.4 ~ 3.6 GHz WiMAX spectrum profile.
The frequency range of 3.4 ~ 3.6 GHz has been identified by the WiMAX Forum as one of the principal spectrum profiles for WiMAX. Many equipment and device manufacturers are developing products that will work with this profile, and the European Union also has recommended that “mobility” be permitted for the use of this spectrum.
Unless manufacturers intend to incorporate frequencies above 3.6 GHz in their future products, some experts believe that the Pipex license might not be compatible with standard multi-band WiMAX devices being developed for 2.3 GHz, 2.5 ~ 2.6 GHz, and 3.4 ~ 3.6 GHz frequencies.
Sources say this will not prevent Pipex from deploying a successful wireless broadband network, but may have a decided influence on the valuation of its spectrum if there is any question of future compatibility with WiMAX certified products. A telecoms analyst at Deutsche Bank noted that for WiMAX network operators to realise their full value, it is critical that they adhere to the standards that will ensure participation in the growing WiMAX ecosystem.
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