Libera, the London-based wireless ISP, said it has purchased six 28GHz spectrum licences from Cable & Wireless to back up its emerging WiMax network. The purchase is the UK's first trade of radio spectrum under Ofcom's liberalisation programme, which began to come into force in 2004.

The move comes on the heels of a new Capgemini study finding significant roadblocks for WiMax outside of the developing world.

The purchase may seem like something of a puzzle: in mid-2004, start-up Libera made much of its plans to use 28GHz licensed spectrum, only to scrap those plans in favour of WiMax and the unlicensed 5.8GHz band by the end of the year.

That move, explained Libera founder and chief executive Robert Condon at the time, was largely down to cost - 28GHz base stations were priced around £90,000, compared to about £20,000 for WiMax gear.

The explanation is simple enough: Libera says it is using 28GHz for backhaul, with WiMax at the edges of the network. The company's expansion is proceeding somewhat more slowly than planned - a year ago Condon was hoping to have 50 UK cities covered by the end of 2005, but the company has only recently begun offering commercial services in London.

It has been offering commercial services in Bristol since early 2005 and is building networks in other UK metropolitan areas. It is aiming at larger businesses looking for a cheaper alternative to fibre, and offers speeds of up to 1Gbit/s. Libera also offers turnkey WiMax networks for emerging markets, and offers consultancy services.

As for C&W, the company is keen for any extra bit of cash it can get. It recently announced the details of a massive cost-cutting programme, which will include cutting its UK headcount by half in the next four to five years. "Congratulations, we work for an underperforming business in a crappy industry and it's going to be hell for the next 12 months," said John Pluthero, C&W's UK chairman, in a leaked internal memo.

The 28GHz licences were acquired during C&W's purchase of Energis and are surplus to requirements, according to C&W.

Ofcom last year announced its future plans for managing the radio spectrum, starting a fundamental liberalisation programme in the UK's airwaves. The regulatory body intends to make sweeping changes into the way the spectrum has been managed for 100 years, practically regulating itself out of existence.

It ultimately plans to open up about 70 percent to the free market, keeping strict controls over only portions with international concerns.

WiMax challenges

In a recent report, Capgemini said operators are unlikely to invest in WiMax because of the millions of pounds already spent on 3G licences and the necessity of rolling out more base stations.

The firm said pure-play WiMax operators such as Libera face a difficult competitive environment, as the cheaper ADSL squeezes them on the low end and growing competition from 3G networks for business customers.

3G networks upgraded with HSDPA (High Speed Downlink Packet Access) technology can give WiMax a run for its money with download speeds of 1.8Mbit/s, Capgemini said. For operators to turn a profit with the emerging mobile version of WiMax, they would have to sign up 300,000 users - a third of those currently using wireless data cards.

The best prospects for WiMax are in the developing world, where wired infrastructure hasn't already been rolled out, according to the report.