Wireless auction suffers fresh setback

Britain's auction of broadband fixed-wireless licences appeared to be heading for a flop yesterday. Bidding failed to restart after one of the participating companies exercised its right to a recess day, frustrating the Government's attempts to drum up enthusiasm for the sale.

Britain's auction of broadband fixed-wireless licences appeared to be heading for a flop yesterday. Bidding failed to restart after one of the participating companies exercised its right to a recess day, frustrating the Government's attempts to drum up enthusiasm for the sale.

The temporary suspension of the auction at the request of an unnamed group left the total bids standing at less than £36.5m, well under the initial estimates of £1bn. The setback came just a day after FirstMark Communications, a private US company, pulled out of the sale, following Unica Communications, which quit before the bidding started on Friday.

Ian Martin, an analyst at ABN Amro, described yesterday's hold-up as "disconcerting". He said: "It remains to be seen if all 42 of the regional licences will be sold."

Eight companies remain in the auction. Of the 14 regions on offer, 8 have so far failed to attract any bids.

Companies that win the fixed-wireless licences will be able to offer high-speed broadband services, such as always-on internet access and video conferencing facilities, to buildings that have been fitted with fixed receptor boxes. It is expected that the technology will be used by firms targeting small and medium-sized businesses.

However, the relatively untested nature of the assets has left bidders unwilling to pay the same high prices which were placed on the mobile licences that raised £22.5bn for government coffers earlier this year. Energis is leading the bidding with a £4.5m offer for one of the three London licences.

The Government's Radiocommunications Agency, which is handling the sale, is attempting to step up the momentum of the auction when it resumes today. The agency has raised the "minimum activity level", determining how many licences a company must bid for in relation to how many initial expressions of interest it made, to 75 per cent from 50 per cent.