LTE and Wimax: choose your business model

Tom Nolle, CIMI Corp.
12 Jun 2009

Anyone who attends a wireless/mobile trade show anywhere in the world knows that 4G is one of the truly hot topics. The question is whether interest in a concept will translate into investment in that concept -- and when. For 4G, the issue is complicated because not only is the technology an evolution from current wireless services in a technical sense, but the business models for 4G are far from harmonious.

For most service providers and consumer, 4G wireless is has the potential to deliver 40 Mbps or more of broadband connectivity per user. There are two technologies capable of supporting this requirement: Wimax from the IEEE and the 3GPP's LTE. Hundreds of comparisons have been made between the technologies with no clear winner, so the deciding factor may be the business model that drives deployment. The business model is also likely to set the pace of deployment, since most wireless operators are uninterested in the "build it and they will come" theory of service marketing in today's economy.

Looking back to move ahead
Historically, wireless has been divided into two segments, fixed and mobile. Fixed wireless has been used as an alternative to wireline service delivery, but except in emerging markets, this particular segment hasn't been generally attractive because broadband-over-copper (DSL, CATV) is available in most developed economies, even in rural areas. The cost pressure on fixed wireless in more rural areas is greater because of low customer density and low willingness to pay. And so, valuable spectrum space is probably better used in another model - the mobile one.

The challenge presented by 4G is that broadband delivery of tens of megabits to a mobile device represents a consumption model different from today's mobile voice services. There is no value to a 40 Mbps voice service. Only something highly visual has the potential to consume that much bandwidth.

Delivering video to a mobile device compromises the safety of the viewer, however, and risks a significant public policy backlash. Even in the youth market, where risk-taking is more likely, viewing mobile video while actually moving hasn't been very popular. This means that the current "mobile" business model doesn't naturally extend to 4G.


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