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March 21, 2005

WiMax Has Challenges

By Nancy Gohring

A new report from Pyramid Research points out some of the hurdles facing the WiMax market: There has been a lot of talk recently about a couple of aspects that are likely to slow down the potential of WiMax. One is the fact that WiMax will operate in multiple frequency bands. That is one major difference between the way that WiMax and Wi-Fi were developed. Wi-Fi uses the same frequency virtually everywhere, which helped drive down manufacturing costs and gave vendors a global market. WiMax loses that advantage.

There has also been a lot of talk recently about how chips and platforms are expected to support different or proprietary features. That complicates deployment because it may require operators to match customer premise equipment with base stations from the same manufacturer.

These complications lead to higher costs for potential WiMax users and that isn’t good news for the market. I spoke to a hotspot operator recently who told me that his company has looked into using WiMax to backhaul the hotspots. So far, however, it doesn’t prove to be cost effective. When he looked at the price of the base stations combined with the cost of buying and installing the CPEs plus the cost of finding and leasing a location for the base station, it didn’t make sense for him compared to leasing backhaul lines from the local phone company. Perhaps over the very long term it would make sense, but it would also require the operator to have the capital to fund the initial WiMax investment. Many of the small or medium-sized hotspot operators would likely struggle with coming up with that kind of capital. Plus, the ongoing site leasing cost means that WiMax isn’t necessarily a one-off investment.

Posted by nancyg at March 21, 2005 9:50 AM

Categories: research

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