Telecom targets frequencies

By Keith Newman

Telecom wants to buy the five broadband wireless frequencies purchased at auction last year by Formus Communications to complement the fast Internet service it announced this week.

The frequencies, in the 26-28GHz range, were obtained by Formus at auction from the Ministry of Commerce for $2.4 million and are capable of providing nationwide or regional data, voice and video networks.

Formus chief financial officer Bernie Dvorak told the Business Herald from his Colorado offices that Telecom had made an approach to purchase the spectrum outright.

It was one of six New Zealand companies showing an interest in either buying the frequency rights or partnering Formus to build a network.

The frequencies are ideal for providing television, voice, video conferencing, fast Internet or dedicated data circuits, which could supplement the newly-released Jetstream digital subscriber line (DSL) network which provides fast data over the existing copper network.

In the hands of a competitor, the frequencies could be used to establish an entirely new infrastructure. Telecom would not confirm its intentions for the frequencies, which rely on cell sites being established across the country.

They would, however, ideally complement licences owned by Australia's third-largest carrier, AAPT.

Like Telecom in New Zealand, Telstra "owns" the copper all the way to the premises and AAPT plans to use the technology to cover the "last mile" to the customer.

Telecom already owns 19.5 per cent of AAPT and is currently seeking to increase its shareholding.

Using the same equipment and expertise as the Australians would make the roll out of a local network much simpler.

AAPT beat Formus and all other comers to the local multi-point distribution (LMDS) frequencies put up for auction in Australia late last year. It paid $A60 million for the licences which cover the whole of Australia. Formus wasn't prepared to pay more than $A40 million.

AAPT plans to spend $A250 million rolling out its network and expects to begin services in Melbourne, Sydney and the Gold Coast by Christmas. After losing out to AAPT, and having no confirmed partners for its New Zealand roll out, Formus shut down offices in Australia and New Zealand earlier this year.

It had formed a joint venture with Bell Canada to run both its Australian and New Zealand operations. Formus had planned an estimated $A170 million investment in Sydney alone.

Formus had promised a nationwide roll out across New Zealand but couldn't find a financial partner prepared to put up about $30 million over three years.

Meanwhile, Clear Communications, now under total control of British Telecom, is way behind in its planned testing of LMDS technology.

Clear had selected Nortel and Newbridge networks for a $50 million project to help fill in its local service network and planned trials with 20 customers.

The arrival of new generation LMDS technology has forced it to take another look at the kind of trials it will run and at its suppliers.

What was once essentially a one-way broadcast system has ramped up the next level, where it can be used to deliver two-way services including telephony, high speed Internet access and video streams.

Previously LMDS was seen as a business solution for large corporations but now equipment is available for small to medium businesses, and it is looking extremely promising as the technology to break the last mile monopoly.