Ionica

» see ionica.co.uk as it lived, on the wayback machine

~ the obit ~

In Turkey there was one telephone company. Not a dominant one, the only one. PTT owned the wire coming into the wall and it owned the bill that arrived for it, and the idea that a household might pick somebody else for that wire was not a choice anybody had until well into the 2000s. So the premise underneath Ionica reads to me as the strange part, before you get anywhere near the microwave dish.

Ionica was founded in 1991 in Cambridge by Nigel Playford, in the first generation of companies that made Silicon Fen a phrase people used. Britain had opened its telephone market and the obvious ways to compete with BT were both bad. You could dig your own trenches, which cost more than most companies would ever raise, or you could rent BT's copper and hand your margin to the company you were attacking. Ionica's answer was to skip the ground entirely.

It worked well enough to become a stock market story. The company floated in July 1997 at 390p a share and raised £156 million, and the market pushed it past a billion pounds, the first Cambridge technology company to get there. The service itself had been running since 1995 in a handful of British towns, and by the end it had 62,000 households on it.

~ the rap sheet ~

~ the box on the wall ~

What a customer actually got was an encapsulated microwave array the size of a biscuit tin, built by Nortel, bolted where it could see a base station tower. It ran at 3.5 GHz and it needed that sightline the way a satellite dish does. Inside the house it presented two telephone sockets, which in 1997 was worth real money to anyone who wanted to be online without cutting the household off from incoming calls.

The pitch was simply cheaper line rental and cheaper calls than BT, delivered by a company that owed BT nothing. For a couple of years that was enough. Ionica had 1,200 staff and a headquarters at St John's Innovation Park, and it was spending on towers faster than it was signing up the households that would pay for them.

~ the cracks ~

The radio had two problems and only one of them was in the engineering documents. Heavy rain interrupted calls, which the company knew about. The other one arrived every spring: site surveys done in winter had measured a clear line to the tower through bare branches, and then the trees came into leaf and the customer's phone stopped working for the summer. A service you could lose to foliage is difficult to sell a second time.

The commercial problem was worse and entirely predictable. Once BT understood that Ionica was real, it cut line rental and call charges down to roughly the level where a wireless competitor could no longer make a profit, which an incumbent with a paid-off copper network can afford to do for as long as it likes. Ionica halted its expansion to fix service quality, went looking for outside investment in March 1998, and by August had failed to find a strategic partner with £45 million left in the bank.

~ what survived ~

Administrators were called in on 29 October 1998 against assets valued at £250 million. Around 600 of the 1,200 staff were made redundant on 2 November. From December the 62,000 customers were moved across to BT on special terms, and the network carried its last call on 28 February 1999. The administration itself did not formally close until March 2009, ten years later.

The technology did not die with the company. Nortel had already decided fixed wireless access was a market worth being in and carried the Ionica-derived product into other territories, where the economics of skipping the local loop made more sense than they ever did in a wet country with mature copper everywhere. Within about two years ADSL arrived and made the whole argument moot, because it turned out the cheapest way to get a fast line into a British house was the copper that was already there. The building in Cambridge was demolished in November 2024.

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