Simon Hendery: Shaky ground and shaky air

For challenger telco company Woosh Wireless, the past year has been, well, challenging.

There have been redundancies and the abandonment late last year of plans to float on the share market.

The float was cancelled because fund managers voiced concerns about the volatile nature of the industry Woosh is in, and could not be convinced that going public was the smartest move.

Those industry volatility concerns were highlighted in May by the Government's decision to regulate away Telecom's control of the local loop.

Overnight, the ground shifted under Woosh. It has built up its 20,000 customer base mainly through being the upstart competitor that has found a way to provide phone and internet services by circumventing the monopoly operator's network

But with "last mile" access opened up through unbundling, other providers will be able to offer a faster, cheaper non-Telecom alternative to Woosh.

The company has maintained a brave face, pointing out that unbundling hasn't happened yet.

It has a head start because it already has a service others are only talking about providing at some unspecified time.

"Our strategy has always been that we're out there doing it today," said chief executive Bob Smith in May. "We've been building another highway, not sharing the same highway."

And certainly, Woosh has not been sitting on its hands waiting for its competitors to catch up.

Part of the process of building its own highway has been the acquisition of spectrum - the radio-wave equivalent of the land the highway is built on.

A couple of weeks after the Government's May unbundling announcement, Woosh revealed it had accumulated rights to a significant chunk of spectrum in the 2.0GHz and 2.3GHz bands.

The 2.0GHz band is what Woosh now uses to run its network.

The 2.3GHz band is seen as ideally suited for that most vogue of wireless technologies, WiMax.

The international telecommunications industry is jumping on WiMax as the next big thing. A revved-up version of the wi-fi technology that connects a laptop at the cafe, WiMax is seen as a serious contender to the ubiquitous DSL connection.

It promises competitive speeds and a reach measured in tens of kilometres rather than tens of meters, and without the fixed-line constraints of DSL.

So for Woosh to have secured a slice of the WiMax action seemed to be good news.

But it now seems the ground has shifted under Bob Smith and the team's feet yet again.

This month, the Ministry of Economic Development issued a discussion paper on radio spectrum allocation. In part, the ministry is reacting to the WiMax phenomenon, because the most interesting discussions in the paper relate to how New Zealand positions itself for this emerging wireless standard.

What the ministry is proposing involves slicing, dicing and redistributing the 2.3GHz spectrum Woosh has been accumulating.

As it points out: "Broadband wireless access is increasingly being viewed as a viable alternative to wired and cellular broadband delivery."

It also notes that the 2.3GHz band is a plumb piece of spectrum for use in this regard, but notes that those who hold the rights - Woosh, Telecom, BCL and Sky TV - are not making use of them.

The reason the band is dormant is that when the rights to it were auctioned in 1990, it was earmarked for Multipoint Distribution Systems, a networked television technology which never took off because it turned out to be too expensive.

The rights expire in 2010 and the ministry is suggesting reconfiguring the band into three lots.

One of those lots would be set aside for WiMax services provided by smaller broadband providers wanting spectrum at a local and regional level.

The ministry says its proposal is a way of enabling the introduction of broadband wireless as quickly as possible.

Woosh is understandably livid and counters that the move would delay the introduction of WiMax on the band by up to five years.

The company's commercial and legal manager, Nick Clarke, told the Dominion Post: "The big issue is that if they were to re-auction it, no buyer could use it until November 2010 and then there wouldn't be any broadband wireless deployments in New Zealand in that band until 2011."

The ministry goal, of hurrying along another broadband option to option-starved New Zealanders - is an honourable one.

But Woosh, with accumulated losses of more than $70 million, is also desperate for a win here.

Let's hope a sensible compromise can be thrashed out, as it would be a shame for an underdog company which has shown vision to get clobbered again.

The ministry's discussion paper is simply that, and submissions on its proposals close on August 4.

Hopefully, the challengers at Woosh HQ are already well on their way to penning a strong and compelling counter argument to the ministry's carve-up proposal.