If you’ve seen some mobile WiMAX demonstrations at trade shows, you might get the idea that mobile WiMAX is about driving around a local area watching video from the back seat. But for many areas, that’s not the use case – at least, not yet.
Most of the deployed WiMAX networks use 802.16d or fixed technology, but that is changing. Mobile WiMAX overtook fixed WiMAX spending in the first quarter of 2008 and now makes up almost three-quarters of worldwide WiMAX equipment sales, according to Infonetics Research. Mobile WiMAX, or 802.16e, is a newer and better technology, and it can accommodate both fixed and mobile services, so that’s what operators are choosing to roll out. WiMAX evangelists say the term “mobile” is mainly a reference to the standard 802.16e, rather than a description of how the technology is used.
In the United States, mobile WiMAX is available in Baltimore and soon to be commercially launched in Portland, Ore., where users can be in a moving vehicle and surf the Internet. But in many developing countries, the usage model is starting out as fixed. “What is very important is the infrastructure being built out for more of a fixed, nomadic service model is the same that can be expanded to mobile at any point,” said Ron Resnick, president and chairman of the WiMAX Forum and Intel employee.
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| Sharma: Customers collect revenue on day one |
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WiMAX vendor and pioneer Alvarion encourages its customers to deploy mobile WiMAX to replace fixed WiMAX as much as possible because the economies of scale are much better, and the ecosystem around mobile WiMAX is bigger. The larger the ecosystem, the cheaper the devices will be. Plus, the radio for the 802.16e is much more immune to interference and equipped to handle hand-offs, said Ashish Sharma, vice president of corporate market development at Alvarion.
AROUND THE WORLD
Sharma describes three general use cases rolling out worldwide. One is similar to what Clearwire is doing in the United States – going after personal broadband consumers with full mobility, PC cards and small form-factor devices. Last summer, DigitalBridge Communication (DBC) launched a commercial mobile WiMAX network using 802.16e gear at 2.5 GHz in Jackson Hole, Wyo. Users range from business people to tourists, with customers able to set up and use a high-speed Internet connection within minutes.
A second segment is targeted at providing broadband connectivity for desktop PCs, modems and connecting homes and businesses. That’s what companies like Towerstream and Digicel in the Caribbean are doing – it’s mobile WiMAX, but the application is mostly fixed and portable. A third segment targets verticals, like the oil and gas industry or video surveillance for municipalities.
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Moldovan:
WiMAX is a global phenomenon |
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Last year, Nortel combined its WiMAX products with those of Alvarion’s, and despite headlines proclaiming Nortel had exited the business, it is very much in WiMAX, company representatives say. Although it’s not saying how much, Nortel is investing a “significant” amount in its partnership with Alvarion, said Regina Moldovan, leader of WiMAX product marketing for Nortel. “We’re putting a lot of investment into WiMAX,” she said. One of the components Nortel supplies is the gateway function that manages radio resources and helps in the hand-off between one base station and another.
What’s appealing about WiMAX is it can enable a lot of different business models, Moldovan said. “It is a global phenomenon,” she said. Asia Pacific leads by far in mobile WiMAX subscribers, accounting for roughly two-thirds of the worldwide total in 2008, driven by South Korea, India, and Pakistan, according to Infonetics.
ECONOMIC FACTORS
Like a lot of new technologies, and even for some legacy technologies like cellular, the big question is how much the macro-economic troubles will affect business. That’s especially pertinent when you’re talking about building out all new networks.
West Technology Research Solutions (WTRS) concluded in late 2008 that mobile WiMAX adoption is strong in the face of economic turmoil. Analyst Kirsten West said recent economic uncertainty won’t greatly influence the adoption of WiMAX; however, the exception is those services targeted at the mobile professional, which likely will be affected by reduced corporate spending.
Infonetics is less optimistic, saying WiMAX deployment will be inhibited for the next 12 months. Infonetics expects growth to return to the overall WiMAX market in 2010, with growth driven by mobile WiMAX.
The WiMAX Forum’s Resnick doesn’t see the economy having a huge negative effect on WiMAX; if anything, the prices WiMAX operators charge may lure customers away from more costly services.
When there’s a downturn, people don’t go to movies or eat out as much. During the Great Depression, people stayed at home and listened to the radio. Nowadays, people are more likely to use the Internet if they’re at home. “It’s actually a safe investment for them to build out and deliver broadband Internet,” he said. “I think it’s reasonably safe compared to if you’re in the restaurant business” or a high-end retailer whose customers are going elsewhere.
ALVARION TAKES LEAD
Alvarion, Alcatel-Lucent, Motorola and Samsung together have nearly three-fourths of all publicly announced mobile WiMAX customers, according to Infonetics. In the third quarter of 2008, Alvarion overtook Alcatel-Lucent and Motorola in the mobile WiMAX market, having its best ever quarter for WiMAX revenue.
Alvarion won’t be immune if a global recession hits, but for the first three quarters of 2008, “we continue to see very good business for WiMAX,” Sharma said. Alvarion has deployed more than 240 WiMAX networks, and more than 50 of them are based on mobile WiMAX. The company as of early December wasn’t giving any guidance for 2009, but “we are chasing lots of new opportunities around the world.”
And Alvarion’s customers are making money today, he said. “That’s why this is not something being done for the future,” he said. “This is something we’re enabling today. Our customers are making money as they go. They can put one base station on air and collect revenue from day one.” That’s different from the traditional cellular industry, where licensees needed to build significant coverage in a region before selling services.
For now, mobile WiMAX for the most part is considered in its infancy. What will a mobile WiMAX world look like? Moldovan envisions a situation basically where any device can be connected to the Internet. Right now, many devices in the average home, like cameras, do not connect to the Internet. The vision is for a mother to be able to film her daughter’s soccer game and send it immediately to family, without first going home and sitting at the PC. “I think that day’s coming,” she said. For the enterprise, the technology could be used for telecommuting or high-definition videoconferencing.
WTRS’ West said she thinks mobile WiMAX will look different in different areas of the world. In some places, it will be used to provide a VoIP long-distance phone service where no phone service previously existed. In other regions, the technology will enable new uses for devices like cameras.
Regardless of the economy, mobile WiMAX is on its way.
| Clearwire: Best Deal in Town? |
Clearwire has about 46 pre-WiMAX markets that it will be converting to mobile WiMAX; how soon the markets are converted has yet to be announced. Its first market with a mobile positioning will be Portland, Ore., where pricing will look similar to the Xohm service that Sprint launched in Baltimore before the two merged their WiMAX properties.
Having the mobile service in Portland will allow Clearwire to sell a broader portfolio to business customers, said Scott Richardson, chief strategy officer at Clearwire. For consumers, the unique value proposition Clearwire offers is a competitive price for home and mobile broadband. Historically, about 75% of Clearwire’s subscribers come from cable and DSL. “We’ve proven that there’s a market of users that absolutely want a choice in their broadband,” Richardson said.
The first phase of growth in mobile WiMAX involves selling laptop cards and activating laptops embedded with WiMAX. As the network evolves, it will provide a platform for new devices and applications, he said. Because it’s all IP, it can offer a lot of things promised in the past around convergence, like having a phone number that rings at home and on the go. True to the promise of an open network, the idea is to offer a do-it-yourself type of service whereby the customer can bring any device, whether it’s a GPS unit or game player.
Clearwire and its cable partners will have the ability to resell Sprint’s 3G service in dual-mode devices as well. But Clearwire also plans to offer more innovative services than traditional cellular. “We don’t fear speed or usage,” Richardson said. “We think the overall capacity of our network that we can … deliver is far superior” to what 3G networks offer today. “We think we’re the best game in town.”
West Technology Research Solutions (WTRS) analyst Kirsten West said she believes Clearwire will make a profit at some point; the question is how soon. Clearwire itself appears much more optimistic than WTRS analysts, which West described as generally conservative in its estimates. The last forecast she saw from the company was 140 million subscribers by 2010; WTRS is forecasting that by 2010, the world will be home to 40 million chips, so “there’s a big difference and the real answer is probably somewhere in the middle,” she said.
Clearwire says it has the ability to modulate its rate of growth up or down based on customer demand and availability of capital. More information about how fast it plans to build out will be released after the new board meets early this year.
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