Although the Unwired, Austar and Soul alliance failed to secure the Federal Government Broadband Connect grant, Unwired CEO, David Spence, believes its ownership of WiMAX spectrum will place the wireless carrier in a winning position.
This week, the Optus and Elders consortium (OPEL Networks) picked up the full $600 million on offer from the Broadband Connect Infrastructure Funding. It will earn an extra $358 million on the basis that OPEL makes its own commercial contribution of over $900 million to deliver a WiMAX and ADSL2+ network to 99 per cent of Australia by 2009.
Spence was disappointed by the decision and claimed the Unwired, Austar and Soul proposal was technologically superior than the one put forward by OPEL. He suggested the alliance's loose legal founding was to blame.
"We thought we had the best proposal by far in terms of delivering affordable and new-age technology based on global standards," Spence said. "But when it came down to it, OPEL's legal structure was probably more suitable and seen as less risky by the government."
Telecommunications analyst, Paul Budde, gave the government's decision to award the funding to OPEL a big tick but warned the consortium would face many challenges.
"There's no doubt that this is a huge and challenging project. But rather than duplicating or reinventing the wheel it makes sense for OPEL to work towards an industry-wide solution," he said.
Once such pitfall Spence identified was that even with the $1.9 billion injection, the consortium would fall well short of funds to rollout the broadband network to the proposed nine million homes.
"You'd need one hell of a lot of spectrum to provide those speeds to nine million homes, especially when you don't own any spectrum," he said. "We just don't think it's doable for that sort of money."
OPEL, unlike Austar and Unwired who have joint ownership of the 2.3GHz and 3.5GHz spectrum bands, does not own any spectrum and has decided to base its WiMAX network on the unlicensed 5.8GHz band. Spence claimed this was prone to interference and slower service. As a result, he is hoping it will open an opportunity for the alliance to sell some of its spectrum to OPEL.
"They [OPEL] have to look at getting access to licensed spectrum in the right frequencies and Unwired and Austar own most of that," Spence said. "The fact that the Government has committed itself to wireless as a future strategy is good news for us and the industry because there's bound to be a lot of innovation in wireless. Australia could become one of the leaders in the world for wireless deployments."
Budde agreed Austar and Unwired were in a good position to sell spectrum to OPEL, but warned if dealings became too unfavourable, OPEL could skirt around problems by taking the matter to ACMA.
"There's no way Unwired will have the monopoly on spectrum forever. Chances are OPEL has already discussed the situation with ACMA," he said. "Despite those concerns, the good news for the industry is that with OPEL rolling out this network, Optus will continue to move towards a wholesale model meaning there will be plenty of opportunity for Unwired and Austar and all sorts of other players in the market to get involved."