Woosh hedges bets with Telecom internet deal

Woosh Wireless is hedging its bets and cutting a broadband internet deal with Telecom, despite the impending regulatory shake-up of the industry.

The WiMax radio spectrum deal will allow Woosh to offer WiMax services in urban areas, while in exchange Telecom will be able to boost its wireless broadband offerings in rural communities.

"This is very valuable spectrum as it has become the standard around the world for broadband wireless services," said Nick Clarke, Woosh's commercial and legal manager.

Under terms of the deal, Woosh will get usage rights to some of Telecom's 2.3 gigahertz spectrum, which is WiMax frequency.

In exchange, Telecom will get use of Woosh's non-WiMax 2.0 gigahertz spectrum. No financial details were disclosed, but Woosh said the deal was in perpetuity.

Woosh, which provides wireless broadband and phone services to about 20,000 customers, has been criticised by industry analysts for relying solely on non-WiMax technology. Analysts have said the WiMax wireless broadband standard, which boasts download speeds up to 50 megabits per second, could be the death knell for Woosh and the company would be smart to get into it.

Woosh uses the competing UMTS-TDD standard, which is similar to the technology used by Vodafone to offer third-generation (3G) mobile phone services. UMTS can only offer a theoretical top speed of 14 megabits, which is still years away. Woosh currently offers a top speed of about 1 megabit per second.

A number of providers in New Zealand are testing WiMax technology, with CallPlus expected to roll out commercial services - with download speeds starting at 10 megabits - in the next three to six months. CallPlus has called UMTS-TDD "yesterday's technology".

WiMax is also emerging as a global standard, which means that users will be able to roam between countries, much like they do with cellphones. By having access to WiMax spectrum, Woosh can now deploy multiple wireless technologies and offer roaming. The deal also gives Woosh the option to shift fully into WiMax if the technology proves to be a winner, Clarke said.

The company also said it was pursuing similar deals in other parts of the world, especially Australia.

Analysts questioned whether the company could in fact do this.

Woosh has accumulated losses and investment in the business of $130 million so far, so a shift in technology would further strain its finances.