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Mobile phone operators are keen to claim a larger share of the broadband market in the next couple of years, but one factor may hold them back - a lack of radio spectrum to deliver them over the air.
Swedish telecoms equipment maker Ericsson believes the current European mobile operators will have run out of radio spectrum by 2010. That makes imminent auctions of 2.5GHz (gigahertz) spectrum in Europe important to mobile operators who six years ago shelled out billions for licences in the first wave of 3G spectrum auctions.
The mobile industry sees the radio spectrum as crucial to maintaining the flat-rate charging that has emerged in Europe for mobile data services.
"In Europe we have 3.6Mbps [megabits per second] service and no data cap for ¬20 ($36) a month," said Ericsson's director for government and industry, Mikael Halen.
Halen met Government officials this week, urging them to ensure December's state auction for 2.5GHz radio spectrum is structured to make it attractive for mobile operators to obtain spectrum.
"It's an extremely important band for providing mobile services and it's critical for the introduction of Long Term Evolution (LTE) technology which will come to market in 2009," he said.
By 2009, Ericsson claims, LTE, an evolution of the system now used by Vodafone and many other operators, will have download speeds of up to 100Mbps. That is enough for most voice and data services, except high-definition TV.
Communications Minister David Cunliffe last week said two blocks of 2.3GHz and 2.5GHz spectrum would be auctioned in December.
"The new auction can allow for up to six nationwide users and a generous managed park of at least 30MHz and potentially up to or exceeding 50MHz," he said.
"This will ensure plenty of space for smaller and regional providers, including those with a focus on services for Maori."
Both bands are suitable for wireless broadband services based on the WiMAX service, and operators CallPlus and Woosh have expressed interest in obtaining spectrum to develop national networks.
But Halen believes CallPlus and Woosh are unlikely to have mass-market services based on WiMAX.
"They have an uphill struggle. They're smaller and they have spectrum in the higher bands which makes it more difficult to penetrate buildings and build coverage."
But the biggest problem they face, says Halen, is a lack of global scale.
That means higher technology development costs, less choice in handsets and an inability to match the mobile operators on pricing plans.
"Generally mobile operators aren't interested in WiMAX," said Halen.
"Their enthusiasm has diminished considerably in the last half year."
While Halen believes WiMAX services can be delivered using the 2.3GHz spectrum, bidding for the 2.5GHz block between established mobile operators and fledgling WiMAX start-ups is likely to be fierce.
Ericsson, which built Telecom's now-decommissioned 025 mobile network, may be left out of local mobile developments for some time.
As the Herald reported last week, Telecom is understood to be finalising a $300 million to $400 million deal with its existing outsourcing partner, Alcatel Lucent, to build a new network based on the GSM/UMTS standards used around the world.
Ericsson had begun building TelstraClear's Tauranga-based "Unplugged" network before the project was cancelled last month and the network dismantled.
New Zealand Communications is using Chinese vendor Huawei to build its mobile network, and Nokia is well entrenched in the Vodafone camp.
But Halen's message seems relatively non-partisan and advocates giving mobile operators in general first bite at 2.5GHz spectrum.
The Government will issue a discussion paper by August, outlining how it expects to carve up spectrum in the auction. Halen said broadband was being viewed as essential infrastructure in most countries, hence the growing interest government funding of broadband networks.
