Between the lines - Clear faces critical test over network

By Richard Braddell

Clear Communications' plans to extend its business market reach by using wireless are hardly surprising.

It said it would do so nearly a year ago - and the approach it is taking using the new technology LMDS - makes a lot of sense.

Originally developed as local area television broadcast system, LMDS is now regarded as a credible alternative to building fibre based telecommunications networks, at least while traffic loadings are moderate.

The big advantage is avoiding the huge upfront cost of a fibre network, at least until customer numbers warrant rolling one out.

Also, LMDS is scalable, which means a fair proportion of the network cost comes only when customers are signed on and transmission equipment has to be installed in their premises.

In Clear's case, it also has the handy benefit of bypassing Telecom's local loop, while enabling it to deliver the full range of telecommunications services at the appropriate quality of service.

Well, that's the theory. LMDS is a young technology and the assumptions Clear has made about the cost of base station and customer equipment have yet to stack up.

But while Clear has yet to sign up an equipment supplier (that is expected next month) it seems on solid ground.

That's not only because AAPT (the Australian subsidiary of arch-rival Telecom) is taking a similar punt - but also because of technical input from parent British Telecom.

The most important signal of all from Clear's LMDS rollout is the evidence that the company has a coherent plan to compete in an increasingly difficult marketplace.

Since British Telecom took 100 per cent control in 1998, it has injected $210 million into Clear - with little to show other than a business that is stagnating.

It can only be hoped that the next $120 million for stage one of its network rollout (including LMDS) will do more.

While Clear has suggested that the business market is its target, just how the rollout would be effected has been sketchy. It turns out that the stages one, two and three it mentions are simply the financial years in which the rollout will take place. How much it will spend in years two and three has not been stated.

Once the undisputed number two in telecommunications, Clear has much to prove. It has already lost too much ground, partly due to an unsatisfactory regulatory environment, but equally through its determination to change that environment rather than accept it.

Along the way Clear or its shareholders have passed up alliances, including one with Saturn that looked made in heaven, and its own sale to Telstra. LMDS may be Clear's last chance of holding its place in the big league of New Zealand telecommunications.