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April 03, 2006
Intel backs second Wimax operator in Europe with $25M injection
Last month, it invested in a German wireless broadband operator, Deutsche Breitband Dienste (DBD), and now this week Intel Capital, the venture capital arm of the chipmaker, is backing Pipex Wireless, to offer the same kind of services in the UK market.
Intel Capital has formed a joint venture company with Pipex, a British Internet access provider that has been in business since 1991. Intel Capital is providing $25 million while Pipex is providing its entire 3.6GHz UK spectrum license. The amount Intel Capital injected into Germany DBD, which offers two brand name services in its home market, DSLonair and MAXXtelekom, was not disclosed, but if it was a similar-sized deal, then Intel must be planning on selling a heck of a lot of Wimax chips in the consumer and business market in order to make these bets pay off.
The newco, Pipex Wireless, will provide wireless services in major metropolitan areas in the UK.
Read on for the alarm:clock euro's background on Wimax in Europe.
In order to offer Wimax, operators in Europe have to win or buy a license (depending on the regulatory environment). A few short years ago, during the tech speculation bubble, the same spectrum was auctioned off under the name, Wireless Local Loop. WLL providers were many but most of them failed for basically three reasons:
a) the hardware was not mature and was costly
b) the licenses were expensive (in contrast to Wimax licenses which have been going cheap in Europe due to the lack of demand for them) and
c) marketing failures by WLL license holders (market as a point to point service or last mile alternative)
This time it might be different, what with Intel pushing the emerging Wimax (Wireless Interoperabilityfor Microwave Access) standard, which should in theory ensure widely available and priced-right gear. Having said that, the Wimax operators will have to get the pricing and target markets right.
If they do, then Wimax service providers could emerge with nn alternative to services promoted by the mobile network operators (such as 3G and hotspots as many of the larger hotspot networks belong to the cellcos). Even better for the newcomers would be if they could develop and emerge as a broadband alternative to xDSL and cable network.
If not, they may end up with a much smaller sized business, a niche business, selling Internet access only to those communities neglected by the fixed Internet access providers, and where comparable wireless services are more expensive, or unreliable.
Read -Intel Capital, Pipex Create Broadband (press release)
Read - Intel invests in DBD (alarm:clock)
Posted on April 3, 2006 10:39 AM | Posted to Venture Capital | Permalink
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