Factions within the telecommunications industry are fighting it out over whether wireless local area networks (W-LANs) should finally be commercialised. In one corner is the pro-lobby, led by UK telco BT. In the other corner is the anti-lobby, led by Vodafone, the world’s biggest mobile operator. And European governments are caught in the middle.
Pierre Danon, head of BT’s retail division, has just laid out a vision of how BT intends to build one of Europe’s biggest wireless local area network (W-LAN) services, offering business users and consumers broadband web access from hotels, railway stations, airports and coffee shops. BT will have 400 W-LANs up and running across the UK within 12 months and 4,000 by June 2005, says Danon, by which time, the company expects to be generating £500 million (€814m) annually from the service.
Heady stuff – and great news for W-LAN suppliers, who have been hoping for just such an announcement from one of Europe’s top-tier telcos to kick-start the embryonic market. But BT seems to be jumping the gun. After all, commercial W-LANs are still illegal in the UK. (The Radiocommunications Agency, or RA, which regulates the UK’s airwaves, was due to rule on whether this restriction would be lifted as Infoconomist went to press.) The governments of France, Italy, Greece and Luxembourg are also examining whether to loosen the rules. They too are under pressure from all sides.
The one thing to be said about BT’s pre-emptive move is that it was a clever political tactic. On 10 April 2002, when Danon made his announcement, the RA was still working on its long-awaited and much-delayed report on the future use of 2.4GHz and 5GHz – the section of the radio spectrum used by W-LANs. At present, these bands are set aside for ‘licence-exempt’ (non-commercial) use. The UK operator, which has been lobbying for months to allow those airwaves to be used for commercial purposes, could be accused of trying to force the issue. Surely the RA would not pour cold water over a plan to help create a broadband economy?
Philip Coen, the founder of W-LAN provider Netario, which has run trials of the service in the UK, has watched developments with interest. “There’s been a load of lobbying from BT Retail,” he says.
Infoconomist has seen BT’s response to the RA’s original consultation document. The operator does not pull its punches. “BT believes [commercial W-LANs] are an essential element of the road-map to a truly Broadband Britain,” the operator wrote. It drove the point home even more explicitly when it claimed the UK was already “18-24 months behind the Scandinavian and US economies” in this area.
But BT’s big guns have been met by those of an equivalently sized rival: Vodafone. Like other third-generation (3G) mobile network operators, Vodafone is nervous about the effects of unrestrained competition at 2.4GHz on its proposed 3G services, particularly if new entrants are licensed for free. Vodafone paid around €6 billion for its 3G licence in April 2000, when little was known about W-LAN technology.
In its submission to the consultation process, Vodafone spelled out the perils of granting “unrestrained” access to the spectrum. “To countenance [this] may put at risk early adoption in the UK of wideband, mobile services.” If commercial W-LANs are to be permitted, then access to the spectrum should be reserved for certain “indoor” use, the operator said. “Outdoor” use might cause interference problems with existing services. What the operator did not say was that W-LANs would also be likely to ‘interfere’ with its 3G business plan.
There have been suggestions that Vodafone and other 3G operators used their influence with the UK government to stop, or at least delay, the commercialisation of W-LANs. Similar lobbying efforts have been linked with 3G operators across the continent. Such conspiracy theories are hard to substantiate. But, says Bruce Laidlaw, director of Arup Communications, the consultancy arm of the engineering group, who has followed the process closely: “Obviously 3G operators are in the background. They have a natural interest in stopping anyone providing public services without paying lots of money [for licences].”
Most observers believe the end game of such political posturing is that European governments will settle on a compromise. W-LAN providers will be able to charge for services, as BT and others want; but their size and scope will be clearly restricted by a new class of telecoms licence, to keep the 3G community happy.
