3G and LTE squeeze WiMAX- is the market window still open?

Summary:

Many pundits have declared the window of opportunity for WiMAX has closed.  Squeezed between he enhanced capability of 3G technologies (e.g. HSPA/HSPA+ for GSM) and accelerated LTE roll-outs, (notably Verizon Wireless) the claim is that WiMAX is DOA.  We disagree!  In particular, we believe there is a reasonable market for WiMAX fixed and nomadic/portable service in developing countries.  We also see possibilities for mobile WiMAX in Korea, Taiwan, Japan, Malaysia, Russia and other developing countries (but not necesarilly in the U.S. or Western Europe).

For more details on WiMAX in emerging markets, please refer to:

WiMAX Continues to Make Progress in Developing Countries

http://www.wimax360.com/profiles/blogs/wimax-continues-to-make

When used for either nomadic/portable or true mobile service, both LTE and WiMAX devices will need to have roaming and handoff between either HSPA/HSPA+ or EVDO rev xyz.  That is because those latter 3G networks will still be the predominant way users access the Internet- especially during the early days of LTE/WiMAX deployment.

While LTE is thought of as a mobile technology, it will be also used for BWA (e.g. Century Tel and VZW plan on LTE for rural BWA).  Similarly, IEEE 802.16e compliant WiMAX can be used to deliver both fixed/nomadic and mobile services if permitted by the regulator in the country where service is offered.

The LTE Express- has it really accelerated?

In the U.S., VZW’s aggressive LTE roll out plans have put pressure on Clearwire, which asserts that its mobile WiMAX network is superior to the LTE service Verizon Wireless will soon launch. Once projected to reach 100 million subscribers by the end of 2008, the new Clearwire joint venture is commercially available in just two metropolitan areas – Baltimore, MD and Portland, OR. What about the 7 other cities that were to be operational by end of 2009?

Clearwire plans to provide more details about its WiMAX deployment strategy on March 5, when it announces its financial results for the fourth quarter of 2008. Those details may include dates for commercial availability of mobile WiMAX service in Chicago, Washington, Boston and Dallas-Fort Worth, Texas, possibly very soon. Sprint Nextel’s WiMax division was already building networks in those cities before the joint venture with the original Clearwire was completed in December. Clearwire is also working on converting its more than 40 pre-WiMax networks to true, standardized WiMax over time. No plans have been announced yet for VoIP over WiMAX which negates any WiMAX smart phones (which Sprint has announced for its mobile WiMAX MVNO unit).  For more information see:

Clearwire readying WiMax game plan as rival LTE gains steam

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9128221&intsrc=news_ts_head

Robert Syputa of Maravedis disagrees with all the hype about the VZW stepping up its LTE deployment.

"Verizon has not recently accelerated the roll out of LTE in their 700 MHz spectrum. If anything, recent announcements including Barcelona (WMC) amount to a 2-3 month push out from previous statements that they would luanch commercial networks by the end of 2009.

We have held that Verizon was posturing in their earlier announcements because suppliers could not be ready for commercial state deployment. What’s more, there has been no chance that there would be many devices available and too little time to do conformance and compatibility testing among vendors.

Verizon is pushing their own requirements which presage official LTE standard conformance and compatibility. This can be looked at as being similar to the way Sprint pushed the supply ecosystem including running their own test labs outside of those established by the WiMAX Forum. But this is jumping the gun; the LTE standard has yet to be published and chips, devices, and network equipment is at an earlier stage of commercial maturity.

This jousting of PR about availability should be evaluated in the context of what Verizon and other firms are attempting to achieve: Verizon has achieved the market position and PR image as being among the world’s leading networks. That contributes to their ability to hold onto and gain subscribers. Meanwhile, Sprint has succumbed to problems stemming from conversion of iDen, and upgrades to their 3G network and service problems. Even though they can now claim high 3rd party service reliability ratings, their image continues to suffer. Combined with pull from new phone and service offerings from Verizon and AT&T including iPhone, Google Android, and expanded push to talk, Sprint has continued to lose market share.

3G operators like Verizon can continue to build out higher density 3.5G HSPA & EVDO networks but added capacity comes at an escalating price tag. Both WiMAX and LTE next generation networks are, according to the competing camp’s AT&Ts network director, 1/4-1/2 the cost of delivering similar capacity on an advanced 3G network. Despite the higher cost, they say that they will continue to put most of their capital behind 3G over the next 2-3 years. The reason they don’t switch to LTE or WiMAX for the bulk of deployments is because LTE is at least 2-3 years away from being a mature ecosystem and it will require multiple mode or a transition to new devices in order to transition the customer base. The issue is hardly as simple as which technology works best.

What works best for Verizon is holding onto the image of being the leading network and not cannibalizing their fat 3G revenues more than is necessary until the market pressures them do to so. Eventually the market will press on for ever higher bandwidths and combined services that drives operators to adopt 4G. WiMAX and LTE are at a ‘pre-4G’ stage of evolution.. the systems and device evolution, needed disruptive re-farming of spectrum, and marketplace demands are building toward but are still years away from widespread adoption.

Verizon’s pursuit of LTE is pressing on but it will be more about holding onto image and 3G customers than about carving out revenue on a comparative scale for a few years.

A major advantage of 700 MHz is they can deploy thinly to achieve broad coverage. They will leverage that but it is not a panacea."

Opinion:   One thing I’ve learned in over 38 years in the telecom industry, is that new network infrastructures- especially a new high speed wireless network – takes much more time to be fully operational than anyone thinks. Once the infrastructure is in place, several levels of interoperability testing are required along with provisioning systems, monitoring, OSS and back end billing/accounting.

Will 3G Improvements Kill WiMAX?

The Ericsson view of comparisons between 3G/HSPA abd mobile WiMAX was outlined in a white paper released last month (January 2009):

"While the peak data rates, spectral efficiency and network architecture of HSPA Evolution and Mobile WiMAX are similar, HSPA offers better coverage. In short, Mobile WiMAX does not offer any technology advantage over HSPA. What is more, HSPA is a proven mobile broadband technology deployed in more than 100 commercial networks… [and] can be built out using existing GSM radio network sites and is a software upgrade of installed W-CDMA networks. Compared with other alternatives, HSPA is the clear and undisputed choice for mobile broadband services."

http://www.ericsson.com/technology/whitepapers/hspa_and_mobile_wimax…

But there’s a contrary point of you that favors WiMAX performance over 3G.  Many think that HSPA/GSM 3G will be overloaded when more mobile users access the Internet, upload photos and videos and watch streaming video on their devices.  Essentially, 3G is a TDM voice network with a data overlay. WiMAX is a flat (non-hierarchial) IP only network.

For EVDO/CDMA 3G, WiMAX avoids expensive royalty payments to Qualcomm, which owns most of CDMA intellectual property. Still, building a ubiquitous WiMAX network would be far more expensive than buying wholesale access to 3G with a Mobile Virtual Network Operator (MVNO) agreement.  But there is also the possibility of being a WiMAX based MVNO.  That is exactly what Sprint plans to do- using Clearwire’s mobile WiMAX network and supplying its own multi- mode (CDMA/WiMAX/WiFi) mobile phones that will operate on the CLEAR network. 

For more details, please refer to:

Sprint may sell tri-mode phone in 2010 that will include VoiP over WiMAX

http://www.wimax360.com/profiles/blogs/sprint-may-sell-trimode-phone

Conclusions

We do not believe the market window is closed for WiMAX.  The technology works, is available now, and can offer download speeds of 2 – 4 M b/sec per user (depending on cell size- number users per Base Station).  However, we continue to believe the most lucrative market for WiMAX will be for fixed/nomadic services in developing countries.   While most WiMAX (IEEE 802.16e compliant) deployments will actually be used for fixed BWA, the same network can also support mobile BWA at 2.3G, 2.5G, or 3.5GHz spectrum.  That’s a key advantage for network operators that want to deploy a combination of fixed/nomadic and mobile services to subscribers.

You need to segmrent the market for WiMAX.  It is definitely the answer for fixed/nomadic broadband wireless access in developing countries and rural areas.  It is also a success in South Korea (WiBro) as a fixed/mobile technology

It may or may not succeed as a globally ubiquitous mobile wireless technology.  The places to evaluate that are Japan, Taiwan, India, and other Asian countries.  I do not think people should be so hung up on whether or not Clearwire suceeds in the U.S.  Think global, especially Asia, for mobile WiMAX.    Once WiMAX netbooks, MIDs, other CPE, and smart phones are available, then there will be a better outlook for mobile WiMAX.  But that will happen, if and only if,: the regulator in the country permits mobile service at the licensed frequency(s), the operator builds out the mobile network, and implements roaming agreements with both mobile WiMAX and 3G carriers.  That remains to be seen. 

There is another market segment where WiMAX has huge potential- backhaul (WiFi hot spots, video surveillance cameras, etc) and wireless backbone for campus/ private networks.  This is a dark horse growth area in my opinion!

Addendum: In-Stat: 30% of subscribers will be 3G or 4G by 2013