http://www.businessspectator.com.au/bs.nsf/Article/Sevens-set-top...

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As Telstra and Optus begin the jostling over the Labor Government’s big pot of cash for fibre to the node broadband, one of the mysteries of the year is how they let the Seven Network slip in and snatch the spectrum for 4G wireless broadband.

Seven now has 86.6 per cent of Unwired Ltd as a result of its $170 million takeover offer. Unwired owns the only two bits of radio spectrum that can be used for Wimax, the acronym used for 'worldwide interoperability for wireless access', and is otherwise known as 4G.

Telstra says its 3G network is better than Wimax/4G, and that unlike Wimax it actually exists. The first statement is questionable, but the second is not – a full roll-out of Wimax is still some time off.

But while 3G might be operating now and might always be better for voice, it could soon be clogged by data if Telstra's customers use it to access the internet and email from portable devices as a full wireless data service.

The future for wireless internet access looks to be Wimax, and Intel has already started putting chips for this standard into laptops and PDAs. In the US, Sprint has backed Wimax and so has DoCoMo in Japan.

Unwired’s ownership of the only two pieces of Wimax wireless spectrum – 2.6 MHz and 3.5 MHz - is a unique asset and Seven has picked the company up cheaply. It seems both Telstra and Optus have been focusing on 3G and decided not to bid.

However Seven is an accidental telco – in fact it says it’s not all that interested in the “modem business�, as it calls providing telecommunications services to people as Unwired currently does. It will do it, but it doesn’t expect to make a lot of money from it.

The reason Seven has bought Unwired is to provide a delivery platform for its content. Seven has also bought the Australian rights for TiVo digital recorders and bought the voice-over-IP operator, Engin, as well.

The catch-word at Seven is “optionality�, but the core of the strategy is to use TiVo boxes to deliver IPTV into lounge rooms, and with an unlimited number of channels.

The TiVo boxes will contain Intel Wimax chips and will therefore be continuously connected by fast broadband to the internet wherever they are. There will be no need for customers to connect them to their home broadband service and worry about the effect of video streams on their capped data plans.

Seven in fact calls this 'Project Troy' because they see the TiVo/Wimax box as a Trojan horse for multi-channeling.

Up to this point, IPTV strategies in Australia have had two big problems: high cost of the data on Australian plans, and the lack of appealing content.

Telstra launched Bigpond TV in July this year with Eric Bana and a fanfare, but it seems to be struggling a bit with content. For example, the top item on the news channel at the moment is Sol Trujillo at the Telstra Investors Day briefing a month ago which, while unquestionably a major national event and a stunning individual performance, is perhaps getting a bit long in the tooth to be today’s main news item.

Seven is coming at the problem of IPTV from the point of view of content – something it already owns tonnes of. To that it is adding easy lounge-room access via TiVo and Wimax. So, for instance, one of the channels on everyone’s TV will be YouTube.

Seven says it will have an open approach to serving content on IPTV, and will mix its own material with the proprietary content of others, as well as open channels like YouTube.

In addition, it will continue the Unwired business of offering mobile internet access via laptops and Blackberrys and will also plug into it the Engin VoIP system.

Seven is quite open about the fact that it is taking on Telstra on its home turf, although it is hiding its best weapons inside a wooden horse for the moment.