Assessment of Mobile WiMAX and the CLEAR network in the U.S.

Abstract:

In early 2006 we wrote an article titled, Will the Real “Mobile WiMAX” Please Stand Up!

It’s now almost four years later, with the Clearwire-Sprint-Comcast-TWC rollouts well underway in the U.S.  It’s time for a hard look to see if the mobile WiMAX vision has been realized.   Unfortunately for WiMAX advocates like Intel, it has not.

We now firmly believe that pure performance and coverage are insufficient by themselves to attract a large number of subscribers. This is particularly true in developed countries, where there are many alternatives for nomadic broadband Internet access. These include:

• ever increasing free WiFi hotspots,
• 3G data cards for laptops,
• free DSL in hotels/motels,
• free Internet access at libraries, Senior Centers, etc.  

Instead of just a “best effort bit factory” over the airwaves, we think that differentiated services (besides fast Internet access), new business arrangements between network operators and content providers/ managers, revenue sharing arrangements and tiered pricing of services will all be needed for mobile WiMAX to be more than just a small niche market. With differentiated services and new business models, software developers will be encouraged to create useful applications for notebooks, netbooks, and other devices (hopefully hand held) with embedded mobile WiMAX interfaces. That in turn, will entice more subscribers to sign up for mobile WiMAX service, which will encourage more applications and devices. We submit that such a virtuous cycle will NOT occur if WiMAX just offers fast Internet access on notebooks, netbooks, and through portable WiFi hot spots.

Mobile operators around the world are seeing a huge growth in the amount of mobile data traffic across their networks from smart phones, eReaders, on-line gaming machines (e.g. Japan and Korea).  This trend is expected to continue as more consumers buy smart phones and begin to use the mobile Internet. By 2014, mobile devices are expected to send and receive more data in one month than in all of 2008. Three-quarters of this traffic will be attributed to Internet access, while nearly all the rest will be from music and video streaming, the GSM Association recently said. We believe that mobile WiMAX will need to dramatically change to participate in this growth.   

A Critical  Assessment of Mobile WiMAX today:

Although the IEEE 802.16e-2005 standard supports five Quality of Service (QoS) classes between the Subscriber Station – SS and Base Station- BS, mobile WiMAX operators like Clearwire have chosen to only support Best Effort service (sometimes known as “send and pray”). This means that there are no special provisions for delay sensitive apps (like mobile VoIP or music), real time high bandwidth apps (like premium content streaming video), or other high priority services (e.g. video surveillance, public safety, emergency or first responder communications).    

“The average consumer doesn’t care about peak data rates or network acronyms,” said Dan Warren, the GSM Association’s Director of Technology. “They just care about the experience. They want to be able to watch YouTube or get live traffic updates on their smartphones. And they don’t care whether it’s a new network or a current network (e.g. 2G or 3G) that is being upgraded.” This comment partially negates the Clearwire/ Sprint claim that consumers will be attracted to mobile WiMAX because of its speed and latency advantages over 3G.

A CTIA survey found there are more than 10 million wireless enabled laptops, notebooks, or air cards that are primarily used on 3G networks. Clearwire believes the forecasted growth of these devices and the increasing growth of rich video applications will create a market niche for the company. However, neither Clearwire or Sprint have disclosed how the video apps would be deployed over the CLEAR network, especially without implementing the IEEE 802.16e-2005 based QOS. Clearwire is working on the code to make an application get a better level of service from their CLEAR network, but that won’t be available anytime soon.

As a result, the version of mobile WiMAX deployed today offers nothing more than wireless broadband Internet access for notebook PCs. Sadly, there are very few mobile WiMAX hand held devices available. Intel’s vision for Mobile Internet Devices (MIDs) has not been realized, while Nokia withdrew their WiMAX enabled tablet PC last year. So mobile users don’t have much of a choice in access devices- it’s either an external USB dongle, 3G/4G data card, or personal hot spot. In our opinion, fast Internet access via laptops is not a compelling combination to entice would be app developers for mobile WiMAX. Without one or more popular hand held devices and a variety of applications, we don’t think mobile WiMAX will be able to attract the critical mass of subscribers that network operators need to make money. At least not in developed countries.

Clearwire’s Mobile WiMAX network:

Clearwire’s WiMAX service (known as CLEAR) currently reaches about 30 million U.S. residents. The company plans to reach about 120 million people by the end of 2010. Clearwire has stated that at the end of the third quarter of 2009 it had about 555,000 subscribers, which includes people who have subscribed to the service via its MVNO partners Sprint, Comcast, and Time Warner, which are reselling the service. While Clearwire reported it added 173,000 new WiMAX subscribers in the third quarter of 2009, the GSMA reports that more than 9 million new 3G-HSPA¹ connections are added globally every month, with about 1.3 million of these connections coming from the U.S.

In our opinion, Clearwire’s biggest asset is its huge chunk of wireless spectrum in the 2.5 GHz range. The company says it owns an average of 150 MHz of 2.5GHz spectrum in most major markets. For wireless networks, the amount of spectrum owned directly translates into subscriber bandwidth and coverage area. The more spectrum owned, the faster the data rates, resulting in higher throughput and lower latency. At the Sprint Developers Conference, Clearwire’s Scott Richardson confidently stated that “spectrum trumps technology” and that “the spectrum owned will separate WiMAX from LTE.”

Mr. Richardson made another interesting observation: “Most 4G wireless networks are limited by self interference (i.e. Self NEXT), rather than how far the signal can travel.” We interpreted this to mean that mobile WiMAX does not produce the self interference than LTE, as we don’t know of any other “4G wireless networks.”

In a somewhat ironic statement, Mr. Richardson said, “new applications drive bandwidth consumption.” With an average of only 100ms round trip latency, developers are able to deliver “more snappy applications, at higher speeds than 3G.” We wonder if that performance advantage, by itself, will be sufficient to entice application developers. especially with no hand held devices available?

Continuing, Mr. Richardson very confidently stated, “We have a super fast (wireless broadband) network which you can think of as a bit factory” for all IP traffic- for both households and machine-to-machine (M2M²) applications. The bits will go to retail or wholesale customers (MVNOs). In the future, we will have other wholesale customers that will use CLEAR as a backbone network. Our evolving business model(s) will enable a whole new set of applications. This will enable a richer web experience for mobile users. Clearwire will have U.S. nationwide coverage by 2011 and will be able to fill the broadband mobile Internet vortex. By 2011, the killer 4G application will be cloud computing on the go.”

On its last earnings call, Clearwire CEO William T. Morrow stated: “Our objective remains the same — to aggressively expand our 4G network with nationwide coverage, delivering the best possible user experience in capturing a strong share of the growing mobile data market. At the same time we are building out new markets, we are converting most of the remaining pre-WiMAX markets to 4G. Since we utilize many of the existing network sites, this process is less capital intensive than new market builds and our sales channels are already largely in place. Since we have purposefully reduced our marketing efforts with this service, our expectation continues to be that we will see a higher than normal level of churn within our pre-WiMAX markets until we complete the market conversion.”

“This past quarter we also formally launched our Silicon Valley innovation network, providing developers with network tools, APIs, and free access to our WiMAX network. This new sandbox will enable them to create, test, and build applications that leverage the unmatched combination of speed and mobility delivered by the 4G network. After just under two months, we have developers spanning 400 companies and universities across Silicon Valley. “

Comment: Clearwire’s Silicon Valley Innovation network has not been advertised or promoted in Silicon Valley. And we haven’t seen Clearwire participate in any public event here. In a recent 4G panel session co-sponsored by RCR Wireless, Telecom Council and IEEE ComSoc-SCV, not one person from Clearwire was present. So we wonder how developers here were attracted to the progarm.

Please see the comments accompanying this article:  http://www.wimax.com/commentary/blog/blog-2009/september-2009/clear-4g-wimax-innovation-network-open-for-developers-in-silicon-valley-0920

Morrow stated that the company is “ramping up our systems to be able to support even more wholesale customers.”  We take this to mean that Clearwire will try to entice wireless carriers (e.g. T-Mobile), cable operators, landline telcos, and satellite providers to become CLEAR MVNOs.  We also see a future for CLEAR being used to backhaul traffic from WiFi hot spots.

On wireless net neutrality, Clearwire’s Chief Commercial Officer Mike Sievert stated: “Clearwire applauds the FCC Chairman’s efforts to safeguard an open Internet and his desire to strike a balance between consumers’ need for open, rich access to the Internet and appropriate network management practices.” For some time, Clearwire has stated that it will provide equal access on its broadband wireless network to all Internet services and applications. We wonder how much Clearwire is influenced by Google – one of its investors and partners–which has been one of the most outspoken proponents of Net Neutrality.