Eircom, Chorus and Formus Broadband will begin bidding today for UK broadband fixed wireless licences in an auction forecast to raise millions of pounds for the UK exchequer.

The licences - which will enable companies to supply high speed Internet and multimedia via radiowaves rather than wires - are spread throughout 14 UK regions.

Each region has three licences on offer with the reserve price depending on the population density of each particular area. This stands at £100,000 sterling (€167,000) for Northern Ireland and £4 million for London.

The low reserve price of the Northern Irish licences could be good news for the Irish companies involved in the auction. Eircom, Chorus and Formus - which has established its European network hub in Dublin - are all keen to offer an all-island Internet offering.

"It makes sense for us to focus on Northern Ireland and we won't be bidding in any other UK regions," says Mr Willie Fagan, managing director of Chorus.

Chorus is already offering Internet services over its broadband wireless network in parts of Munster on a trial basis. The company is keen to add Northern Ireland to its licence area, which extends right up to the Border areas in the Republic.

The licences on offer in the UK are similar to licences issued in the Republic but are available at a frequency of 28 gigahertz, compared with 26GHz here. This higher frequency does not provide as good network coverage and means companies may have to build more base stations to provide adequate coverage. This could increase network build costs for successful applicants.

Another bidder with Northern Ireland in its sights is the pan-European operator Formus Broadband. It pipped the three other broadband licence holders in the Republic - Chorus, Eircom and Esat Telecom - by formally launching its broadband service in Dublin this week.

"We are first to market here and have signed up 20 customers so far and are talking to another 10 at present," says Mr David Parkinson, technical director at Formus Broadband.

"The Formus iFAST network offers company's broadband Internet connectivity and value added services such as e-mail, hosting and secure virtual private networks.

"It works by installing an antennae, which is about the size of a security alarm, on the roof of a building which is linked to base stations by point of site," he says. "There is no need to dig up the roads for underground cabling so company's can be connected to the system extremely quickly."

Connection speeds on fixed wireless broadband networks vary between 64 kilobits per second and two megabits, and unlike cable Internet connections, these speeds do not slow as more users sign on to the network.

Next year, Formus plans to offer customers speeds of up to three megabits and introduce Internet telephony technology.

"A great advantage of wireless local loop technology is that we can literally turn up the connection speeds for companies at will without having to make physical changes to the network," says Mr Parkinson.

Formus has completed four base stations in Dublin city centre area and plans to extend this to 16 to offer businesses in the capital complete network coverage, he says.

The regional licence in Northern Ireland is unlikely to be the only UK region Formus will bid for. The company is looking to extend its network of wireless licences across Poland, Germany, Austria, Switzerland, Finland, Norway and Spain.

Eircom may also be interested in bidding for some other regional licences. These would support its existing UK fixed line presence in Manchester and London, offering its customers a more seamless solution.

In the Republic neither Eircom nor Esat have formally launched their fixed wireless broadband networks yet but there are signs that competition will intensify in the sector in coming months.

Esat has already established four base stations and is using broadband wireless to fill gaps in its existing fibre optic network, according to Mr Kevin White, product director at Esat Business.

"We are starting with a well-established data, voice and Internet offering and will tailor our prices to meet customers' needs," he added.

Further competition is likely from international players following the decision by telecoms regulator, Ms Etain Doyle, last week to issue two further broadband licences via a beauty contest later this year.

Potential applicants that expressed an interest in the licences during a consultation process included Winstar Europe and Priority Wireless. Broadnet, the pan-European broadband wireless company founded by Irish entrepreneur, Mr Declan Ganley, may also apply.

So whatever the size of the windfall for the UK exchequer there are clear signs that fixed wireless broadband is establishing itself as a viable alternative to the fibre optic cable networks of fixed line operators.