Has Wimax had its day? Is Wimax a case of the Blight of Intel striking again? At the Avren Next Generation Networks conference in
"Wimax might have had its day", said Terry Mason from Analysys Mason, "it has not been able to leverage its opportunity because of lack of devices and lack of spectrum. If 2.8GHz had been available we might be seeing a different landscape."
As it is Mason sees the disadvantages of Wimax overcoming its advantages. A major disadvantage is the "huge installed base of UMTS with LTE being a natural evolution" from that.
Other reasons given by Mason for the likely relative insignificance of Wimax are the fact that, although positioned as a competitor to UMTS, it does not have voice capability, and because "unlicensed bands are inherently noisy".
"LTE offers an almost identical capability", said mason, "HSPA+ is also a threat in providing mobile broadband and the convergence of LTE and 802.16 may overwhelm Wimax".
Mason reckons that 90% of the 100 million Wimax customers in 2015 will be in developing regions where ADSL coverage at broadband speeds is poor.
In January this year Intel, a big proponent of Wimax, wrote $950 million off its $1.6 billion investment in US Wimax operator Clearwire, reducing the book value of that investment from $1.6 billion to $650 million.
Intel's efforts to get into wireless, including a $10 billion splurge buying start-ups in the 1990s, a failed attempt to make ARM chips dubbed X-Scale, and now what seems like a bad bet on Wimax suggest that its efforts in the sector are blighted.
Not surprising really. What if Ericsson suddenly said: 'We think we can create a jolly good business in x86 processors?'
'Why?' You ask.
'Because we're so damn clever we can succeed at anything', comes back the answer.
Quite.
I wouldn't disagree with some of his conclusions, but just note the comment:
"Mason reckons that 90% of the 100 million Wimax customers in 2015 will be in developing regions where ADSL coverage at broadband speeds is poor."
It's quite possible that LTE will win in the developed world (because it can be added on to existing networks) and WiMAX will win in the developing world (because it can be rolled out much more cheaply from scratch).
But there are probably more people (=potential customers) in the developing world (with no cellular coverage) than the developed one.
So it's a somewhat Euro-centric (to be more precise, developed-country-centric) view to say that WiMAX is doomed to failure -- it could turn out to have a bigger market than LTE, just not in the same places.
Ian
Ian, spot on
The other interesting question is how fast LTE will ramp up compared to WiMAX, especially bearing in mind that it's starting a year or two behind.
You could say that LTE is just a higher-speed data add-on to existing networks, and it's difficult to persuade people to spend more on their cellular bills just for this -- and if people don't want to pay then the networks will be reluctant to spend the cash to roll it out, especially in the current economic climate.
On the other hand WiMAX in the developing world should be able to offer voice and data communication to people who haven't got either right now -- this could be much easier to get funding for since people are generally more willing to pay for something new than an upgrade.
Assuming they have any money after the worldwide credit crunch, of course... :-)
Ian
Well Ian, as I understand it, and my understanding may not be up to much, both LTE and Wimax require new hardware installations which is not something the telcos like. Telcos like software enhancements - HSPA, HSPA+, EVDO, Evolved Edge etc, so in these cash-strapped times I expect that's what we'll see. But, as you say, if funding is available from somewhere, e.g. a government - like Pres. Obama who has set aside $7.2 billion of the US $787 billion stimulus package, to encourage broadband deployment, and the China government is spending massively as well, then this can skew the basic cash-conscious mind-set of telcos and encourasge them to go for more expensive hardware-type deployments.
Wholly agree with Ian's remarks.
For the vast majority of the world "phone call" means "wireless" (mostly GSM) because there is no copper phone network. (And if there were, some enterprising person muight just dig it up!)
That section of the world will not get ADSL or DOCSIS because there is no copper: so "broadband" will inevitably be wireless. That could be LTE or HSPA -- but a lot of it is looking to be WiMAX.
A market of 100million people in six years is not too bad. Especially (as Ian says) this is not 'incrementally more' (HSPA to LTE) but radically different (no internet at all to full broadband).
If this does come to pass, then there are two conclusions.
First, that if those connected homes all decide to buy a new PC to benefit from that bandwidth, then Intel might actually benefit...
Secondly, even if they do not sell more processors, then just maybe they have made the world a bit of a better place...
Rupert, if Intel is trying to make the world a better place that's a wonderful new aspiration for them. Trouble is it's a major diversification from core strategy and Intel's record on diversification is lousy.
I don't think they were trying to do it: more a fortunate unintended consequence :)
That said, there is logic. In the 90s Intel very deliberately promoted ADSL: they saw that getting people to upgrade to new PCs relied on new applications, and those needed broadband. QED, accelerate ADSL deployment and accelerate new Penium sales.
That wasn't the original motive for WiMAX, but it may yet turn out to be a business benefit.
The business model for WiMAX deployment in places like Africa is completely different to the Western telco model for LTE deployment -- have a look at what companies like Smile are doing.
And a lot of this market is not even initially targeted at data-driven (internet) applications but at low-cost VOIP phones, either shared or mobile/kiosk based. This model will only work with a low-cost infrastructure which doesn't have the traditional telco "baggage" to carry.
Rolling out a WiMAX network from scratch is a lot cheaper than rolling out an LTE network in places where there isn't an existing 3G network, because fewer basestations are needed to provide a given per-sector capacity over a given area -- especially in rural regions -- and the backhaul costs are also lower.
So in contrast to LTE, WiMAX is more likely to succeed not in advanced countries where existing telcos have a stranglehold, but where there are new entrants into the market (like Smile) in regions not well served at the moment (like Africa) -- or leastways, not served at a cost that is acceptable to a huge segment of the potential market in these regions.
Ian
Ian, thanks, but I understood the drawback with Wimax as a developing countries' technology is that Wimax doesn't have voice capability. If I'm right about that, surely that would be a disavantage in a developing region.
Rupert - point taken - though there was a notable example of Intel's altruism with WiFi. Intel was the lead proponent of the technology promoting it to towns and hotels etc and was very much the cheer-leader in getting WiFi established - then Intel very generously handed over market leadersip in \Wifi infrastructure chips to Broadcom.
WiMAX does have voice capability but as VOIP (like Skype) not as a packet-switched voice network (like cellular) -- if it didn't have then it would be a non-starter for the kind of applications planned in Africa.
Thanks Ian. As it operates in unlicensed bands which can be noisy, is Wimax OK for Skype-type calls?
I believe that spectrum licenses have been granted in Africa, though I'm not certain about this. Even in unlicensed bands there would be a lot less noise than in developed countries, many of the electronic noise polluters just don't exist there -- or at least, nowhere near where the phones (and basestations) will be.
I very much doubt that this is really a problem, several large players (like Smile) are targeting this kind of business model and they wouldn't be investing in this if it won't work.
I wouldn't be surprised if a lot of these comments are the usual FUD put forward by vested interests who don't want a new competitive business model to take the market away from them in these regions ;-)
Ian, I'm sure you're right. The proof of the pudding will be in the deployment.