As prospective bidders last week got on their marks for the auction process for UK fixed wireless broadband licences, e-minister Patricia Hewitt failed to allay fears that high prices will be passed on to business users.

Twelve companies have registered to bid for the 42 licences in the 28GHz spectrum. Hewitt expects a "very competitive auction", which industry observers have interpreted as showing the government's intention to collect as much revenue as possible, regardless of the effect on prices, quality and levels of support.

The Chancellor expects to receive between £78.3m and £1.5bn for the licences.

Yair Eran, marketing director for broadband fixed wireless access (BFWA) supplier Floware, said the heavily criticised auction process would discriminate against non-incumbent operators.

"In countries where the regulators want to encourage the competitive development of services, the 'beauty contest' approach is best," he said.

"In auctions, incumbent operators have a distinct advantage. Newcomers face the problem of having to spend money not only on the bid, but on building their own infrastructure as well."

Eran added that so-called beauty contest winners have the money to invest in data and customer services.

"Selling these services to SMEs [small and medium-sized enterprises] is going to be licence-holders' bread and butter. They would have funds to spend on marketing and, importantly, service level agreements. Companies that don't get their service level agreements right are going to be in trouble," he said.

Kim Howells, Minister for Competition and Consumer Affairs, defended the auction. "The bids will reflect the bidders' own valuations of the licences and the opportunities that they see for BFWA," he said.

The 12 companies that have registered are under no obligation to bid when the auction starts on 16 October. They will learn on September 20 whether they can actually take part.

The 12 are: Atlas, Broadnet UK, Chorus, Energis Local Access, Faultbasic, FirstMark, Formus, Norweb Telecom, Orange Personal Communications, Priority Wireless, Templeco 489 and Winstar.

First published in Network News

See also:

Bidless broadband auction fiasco

Telcos ignore fixed wireless auction  19 Nov 2001

Radio spectrum auction delayed

The UK government has decided to delay the fixed wireless radio spectrum auction, which was due to begin next Monday, to allow it to review applicants in more detail.  10 Oct 2000

Are 3G licences a waste of money?

Network operators are now admitting that third-generation mobile technology is not going to be all it's cracked up to be - and it will cost.  29 Sep 2000

A year in the life of ane-minister

UK e-minister Patricia Hewitt talks exclusively to Computing about her first year in office, the RIP Act, IR35 tax regulations and the skills shortage.  22 Sep 2000

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!