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Senza Fili Consulting’s latest WiMax report predicts a relatively large market for both mobile and fixed uses of “mobile” WiMax: The report says that 54m subscribers could be signed up by 2012, but that emerging markets and the U.S. will be key to WiMax’s worldwide uptake. 54m subscribers will be a relatively low number compared to broadband—300m broadband subscriptions are in use today, according to a report earlier this week—and quite low compared to the billions of cell phone voice users expected by 2012.
The report author Monica Paolini notes that the truly mobile WiMax access devices—not nomadic ones that require AC power or are bulky—will lead to increased adoption. That’s the goal of Sprint and Clearwire, certainly; they want PC Card form factor WiMax cards next year. Paolini also suggests that portable data devices with WiMax built in will be key in developing nations for adoption.
A company called Detecon has released a study concluding that WiMax won’t be terribly interesting to large wireline operators: Detecon is owned by T-Systems, a Deutsche Telekom division. Despite the many large wireline operators that have recently announced broadband wireless trials, including AT&T, BellSouth, and Covad, Detecon doesn’t expect great interest from large wireline operators. Judging from the ongoing trials, I suspect that Detecon is a bit off base. The Yankee Group’s Lindsay Schroth is one analyst who believes that while many observers may hope that WiMax is a tool that will allow new entrants into the market, it’s ultimately more likely that WiMax will be most widely deployed by the incumbents.
I couldn’t resist linking to this, for the sheer comedy of it: The group representing the interests of the CDMA world has commissioned a study looking at the “opportunities and challenges” of WiMax. Shockingly, the report finds that WiMax will have a “marginal impact, at best” on 3G. Ironically this report basically makes a factual conclusion—that it’s likely that WiMax and 3G will both have a place in the market. But it’s pretty hard to take something like this seriously knowing that it’s backed by a group that could feel some competition from WiMax and when the press release has some defensive-sounding statements. The reality is that while CDMA has a lot of life left in it, it’s relatively accepted that OFDM, the air interface that WiMax is based on, is the future.
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.
In-Stat expects that 3 percent or 8.5 million people will use WiMax by 2009: The researchers also say that only as much as 15 percent of the market will be available to broadband wireless operators in metropolitan cities. The report’s author believes that broadband competition, price pressure, and high subscriber acquisitions will drive margins lower.
An analyst from Ovum wonders if mobile WiMax might be a solution for mobile operators beyond 3G: But he says that it’s just too early to determine whether WiMax might make a good option, given that the mobile WiMax standard is still a ways into the future and because other technologies are also contenders.
I’m suspicious that the mobile version of WiMax will have some very real shortcomings compared to technologies that were architected for mobility. WiMax was initially built to be a fixed solution. The decision to try to add mobility came later. The most efficient application of WiMax will be a portable service; one that allows customers to access the network from a laptop from various locations around town. Other networks, such as the 3G networks, should be used for applications that require actual mobility, like automotive services or applications onboard trains.
I always debate whether to post items about stories or announcements that are just plain wrong, but it’s hard to ignore this one because it comes from such a large, worldwide analyst firm: Actually, it’s hard to tell whether this piece was issued directly from Frost and Sullivan or if it’s meant to be a news story written by a third party. Regardless, there are enough inaccuracies in quotes to wonder how long the analyst has been covering this space. He points out here that one of the big issues facing WiMax will be that it operates in unlicensed spectrum and thus has a chance of lowered quality due to interference. Perhaps he’s unaware that there is also licensed WiMax gear in the works, specifically that which will operate in the 3.5 GHz band which is licensed to operators in Europe.
This piece also includes a confusing description of an “emerging trend” toward combining Wi-Fi and WiMax in cell phones, laptops, and PDAs. The reason for such a combination, the piece notes, is to provide access through Wi-Fi and backhaul over WiMax. There are a couple things wrong with this description. First, the idea of using WiMax to backhaul hotspots is hardly an emerging trend and in fact was one of the earliest ideas for using WiMax. Also, to use WiMax to backhaul hotspots, customers don’t need combined Wi-Fi and WiMax devices. They’ll just need a Wi-Fi-enabled device for access.
There are a few other slightly off statements in this piece. It just seems odd to see an analyst from a big firm having such a tenuous grip on a market segment that it appears is his job to follow.
ABI Research says there’s no reason for concern over the delay in the WiMax certification process: Philip Solis, an analyst, says that the delay is due mainly to the lack of chips and not because of a delay in working out the certification testing. Perhaps, but given that the WiMax Forum just announced today its choice of lab and that the lab will start certifying in July, it’s not clear that the forum would have been prepared to start testing any sooner than July even if chips were available sooner.
Solis notes that operators are buying “pre-standard” equipment anyway. If that’s an argument for no concern, than it would appear there’s no reason for a standard. The fact is, operators have been buying non-standard broadband wireless gear for ages. But that doesn’t mean that a standard won’t be useful.
I agree that the certification delay doesn’t sound a death knell for WiMax. But it does add risk for the potential of the WiMax industry, given that other wireless technologies are continuing to be deployed while potential WiMax operators wait for certified gear. At the same time, vendors have to struggle with doing their best to continue selling gear to operators that want WiMax certified equipment before they can get their gear certified.
A study published during the summer by TMNG suggests that operators, not just vendors, need to be working on WiMax: WiMax, like many emerging standards, has been largely driven by vendors, with operators slow to jump on board. More operators are now at least part of the WiMax Forum but there aren’t many major existing operators that have specifically vowed to build a network of any significant size.
One good reason that operators might want to get more involved in the WiMax development process is to reduce their reliance on local incumbents for backhaul and other service, as TMNG points out. That angle, more so than a desire to build a customer-serving network, seems like a strong reason for operators to take notice.
The study also points to markets outside the U.S. where broadband usage is spotty as ideal locations for WiMax networks.