BT to bid for WiMax -- but will it be allowed to?

Years after leaving the mobile market, BT will bid for WiMax radio spectrum in Ofcom's upcoming auction.

The telco giant faces a struggle however as existing mobile operators do their best to hang on to "their" spectrum.

BT won't discuss definite plans, but has commented that it is "very interested" in the 215MHz of prime spectrum in the 2.5GHz region, which U.K. regulator Ofcom will be auctioning in 2008. The spectrum has ideal range and penetration characteristics for wireless data use, and is already licensed for WiMax use in the U.S.

"I'd guess BT will be a big bidder," said commentator Steve Kennedy. "They need WiMax for high speed broadband to rural areas so they can offer services like BT Vision. It's at the low end of the WiMax frequencies, so signals propagate well. There's kit out there supporting 2.5/2.6GHz off the shelf, so it is cost effective." BT is understood to have tried to buy Pipex for the 3.5GHz licence with which Pipex plans to deliver WiMax services.

Ofcom is currently consulting on plans for two separate auctions. The spectrum ripe for WiMax, at 2.5-2.69GHz, would be packaged into lots of 5MHz and auctioned online, along with a band at 2.01-2.02GHz. Ten megahertz is enough for two-way communications, but several channels would be needed for a national service. Meanwhile, a band at 2.29-2.300GHz band would be sold as one lot, in a sealed-bid auction .

Overall, the amount of spectrum is larger than that which mobile operators bought for £22.5 billion (US$44 billion) in 2000 for 3G, but Ofcom expects to get significantly less money this time round.

In the initial excitement over 3G, the 2.5GHz band was originally designated for expansion of 3G services, and the GSM Association has been lobbying the European Commission to keep the spectrum in cellular operators' hands, arguing its case in a white paper. Ofcom maintains that it will not have any trouble moving to the "technology neutral."

The European Commission also favors a technology neutral approach, but there are fears that other E.U. states may accept the mobile operators' argument that technology should be mandated in this spectrum, which would cause problems since spectrum use in Europe is harmonized

"We are confident that the proposals we set out on Monday are consistent with European law," said Hirst, repeating that technology-neutral licences are essential for the best use of spectrum: "If we had technology-specific licences, then new technologies wouldn’t be launched. The amount of spectrum to be auctioned is quite significant. We don't expect a single use for this."