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Wireless broadband auction could raise £1bn

Government set to make another packet from wireless data auctions

The government is to begin the auction for licences allowing companies to deliver fixed fast Internet and videoconferencing services over the airwaves on 10 November.

Nine companies including Eircom, Energis and Norweb have qualified to take part in the auction, which analysts estimate could raise around £1bn for the government. Chorus, an Irish telco, was excluded from the bidding, while mobile phone operator Orange withdrew its application to take part.

Announcing next month's 28GHz Broadband Fixed Wireless Access (BFWA) auction Patricia Hewitt, minister for e-commerce and small business, said it would enable companies to launch new services offering high speed Internet access to people in smaller towns and rural areas. Remote areas are expensive or difficult to reach through fibre optic and cable TV networks.

There will be three spectrum licences available in each of 11 English regions as well as in Scotland, Wales and Northern Ireland. Winning bidders face a 'use it or lose it' restriction intended to force them to develop services quickly, said the DTI.

These high frequency licences will allow companies to offer videoconferencing and data transfer services, but only to fixed locations, through radio signals. As a result they are likely to be far less lucrative for the government than its much criticised 3G mobile phone auction earlier this year.

The government netted £22.48bn from April's auction for lower frequency third-generation (3G) mobile phone licences. Consultants Arthur Andersen LLP and JP Morgan estimate it will take up to 15 years for mobile network providers to recoup the huge outlays they made.

The 20-year 3G licenses allow telcos to operate networks based on the UMTS (universal mobile telecommunications system) standard. In addition to voice, the 3G networks are designed to provide data rates of up to 2Mbps (megabits per second). The 3G licence auction went through 150 rounds and lasted eight weeks.

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