The good and bad of WiMAX

11 Apr 2007
00:00

WiMAX is very much a good and bad news story. The good news, from a cost and efficiency point of view, is that it's three to four times more spectrally efficient than 3.5G. That's the story at least from Nortel, which having shucked off its cellular business has tacked WiMAX high on its mast.

The bad news is HSDPA is coming in a big way, offering 1-2 Mbps on the move, followed by Long-Term Evolution (LTE), which will notionally deliver up to 100 Mbps.

It's good news that Asian regulators are starting to free up spectrum for the standard.

The bad news is that it's still difficult to get common spectrum bands opened up across the region. WiMAX runs in the 2.3-, 2.5- and 3.5-GHz bands. For the mobile deployments, the lower bands are a must.

The other good news is that KT is going ahead with its launch of mobile WiMAX-compatible WiBro in Korea. The bad news is that WiBro service in Korea collected just a thousand customers in six months.

WiMAX Wave 1 (as it is known) is a fixed wireless broadband play. Around Asia it's being deployed for rural broadband transport in places like the Philippines and Indonesia. That's not a high-revenue segment, but certainly plays to its strengths.

The same cannot be said necessarily for WiMAX in urban America, where Clearwire operates and is burning cash fast. It raised $900 million from its backers last year and another $90 million from its IPO last month.

Yet the firm told the SEC it did 'not expect to satisfy' its long-term capital needs from the IPO. It lost $284 million last year and expects more losses in '07 and '08.

Chipped away

Darryl Worthington, director WiMAX Asia for Nortel, says with Wave 2 chips available in the second half of this year, next year will be ramp-up time for mobile WiMAX.

So by then we should have a good idea about just how well the market is going to accept Wave 2.

Ovum has predicted that, despite its near-guaranteed position inside all new laptops, WiMAX is a niche play for the next four years. That's probably a fair call, with one possible exception - more on that later.

Meanwhile, it's best to view WiMAX as one of a number of technologies with the capacity to disrupt mobile.

A useful comparison is with fixed-line telecom. A whole range of services have eaten away at the traditional fixed voice business: mobile, VoIP, SMS and IM, not to mention massive fiber deployments that have caused IDD rates to plummet.

Mobile revenues likewise will be chipped away by multiple factors. Free Internet calling, possibly low-price IM; certainly the huge buckets of voice minutes sold by desperate 3G operators.

Wi-Fi no doubt takes a small amount of data that would otherwise be carried by 3G networks. I expect WiMAX will go in the same category.

For all that, it seems to me that WiMAX has promise in three areas.

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