The availability of wireless internet access across UK cities will be accelerated after Pipex Communications, the Aim-listed telecommunications operator, landed a joint venture with Intel, the world’s largest computer chip maker.
Intel, the world’s biggest computer chip maker, is investing $25 million into a project to roll out wireless broadband services across Britain’s major metropolitan areas, starting with London and Manchester, as part of a joint venture with Pipex, the British internet group.
With $25 million investment by Intel, the new wireless service is looking to begin its network roll-out in London and Manchester in 2007 with eight areas targeted by 2008. Ultimately, Pipex has ambitions to roll-out the service to around 50 of the most densely populated areas of the UK.
If successful, the move will see large urban areas across the UK transformed into "internet hotspots" where subscribers to the service can surf the net. Analysts say such networks could lead to an explosion in mobile computing and gadgets that allow people to travel with access to the internet in their pocket.
The move will see Pipex’s 3.6 gigahertz spectrum licence, which allows wireless internet services to be provided over large distances, spun into a new company, Pipex Wireless.
We see creation of this new wireless service provider as an incredible opportunity to provide new services to major cities in the UK, Pipex chief exec Peter Dubens said. With a wireless service, PIPEX Wireless will offer unique broadband access and services that are very complementary to Pipex’s existing business of DSL access, hosting and network access.
Pipex is already running trials of its WiMAX service with Airspan Networks at the US-based firm’s test facility in Stratford-upon-Avon.
Currently, most internet users rely on traditional fixed lines to access the web. Meanwhile, beset by glitches, mobile internet technologies such as 3G have failed to capture the public’s imagination.
The new venture, to be called Pipex Wireless, will use the embryonic WiMAX mobile internet access technology standard. Pipex owns one of only two such national licenses for the UK.
Pipex’s WiMAX connections have turned the operator into hot property amid reports that BT was mulling a bid for the ISP, which is one of two operators (the other is PCCW) to hold a licence to develop WiMAX networks in the UK. BT wants to use WiMAX to help support a mobile service based on the technology, but needs the licence to precede.
The venture will create a new company to roll out Wimax wireless broadband services, with the investment arm Intel Capital putting in $25m (£14m) with a minority stake. In turn, Pipex will control the joint venture and transfer its entire 3.6GHz UK spectrum licence to the new company.
Wimax technology offers wireless broadband access much like wi-fi, but over a far larger area, up to several kilometers. It is seen as a potential competitor to third generation mobile data services.
Pipex’s spectrum licence prevents the company from sending Wimax signals to mobile devices such as handsets, but such restrictions may be lifted in future.
Pipex’s wireless license, which has been valued at around £100 million, has already garnered interest in the market. Shares in the company have almost doubled in the last six months on talk of a possible takeover by BT. Ben Verwaayen, the BT chief executive, played down the possibility earlier this year, insisting that BT did not need an acquisition to get into WiMAX.
In another development, Ofcom, the telecoms watchdog, relaxed the conditions on Pipex’s spectrum licence to allow the company to offer WiMAX commercially. Intel has been trailing the technology as part of its development of the chips that will power the technology, which is one of several competing standards currently being developed around the word.
Intel is keen to foster companies that will help make Wimax the dominant network. It has also backed Wimax companies in Australia and Germany.
The company said that having a wireless broadband offering would help set Pipex apart from the likes of NTL, BT and Sky, which have all launched or are planning "triple play" packages of voice calls, broadband and TV. BSkyB is 37.2 per cent owned by News Corporation, parent company of Times Online.
For Pipex, it meant that the company would benefit from the firepower a giant such as Intel could offer in rolling out what was still a very early stage technology, analysts said.
Dubens said that apart from the expense of building a new network, a "massive" marketing campaign will be needed to build awareness of the service around the UK.