2008 - The Year of WiMAX?

2008 – The Year of WiMAX?
by Dr. Mehmet Unsoy

Happy New Year!

Some predict that this year will be the year of WiMAX.  Whether that will be true or not, we want to start the year examining the WiMAX implications, challenges and opportunities.

I  believe WiMAX is a potential game changer, in more ways than one. It introduces new technologies, changes economics, enables new business models and brings in new players. Similar to the situation when Wi-Fi first came onto the scene about 6-7 years ago, it will be controversial for WiMAX. Will it compete or complement existing mobile infrastructures? How does it differ or what new values does it bring, at what cost, and will it really take off, and if so when?

I believe that the media has paid too much attention to the recent Sprint – Clearwire marriage/divorce/re-marriage(?) to predict the future of WiMAX. There are a lot more important developments like Intel’s various initiatives, Cisco’s acquisition of Navini, manufacturers product roll-outs, and ITU approval of WiMAX as one of the 3G technologies thus enabling the use of 3G spectrum in various countries. In fact, the near-term future of WiMAX may depend more on the deployments and applications in the developing markets around the world, such as the Indian market.

Even for developed markets,  Italy is holding spectrum auctions this month for WiMAX, Japan has just completed a similar auction in December, with various incumbent and new players bidding. In the U.S., FCC will be starting the 700 MHz auctions on January 26th. Earlier this month, at the CES show in Las Vegas, Sprint confirmed launch of commercial service in three markets by the end of April this year! At the same show, Intel, Clearwire and Motorola demonstrated mobile WiMAX enabled concept car, driving 50 mph, with apps that have WiMAX and Wi-Fi in tandem.

The implications of the 700 MHz auction by FCC is much wider than the U.S. market. Recent international collaborations extend the availability of 700 MHz as broadband wireless spectrum for Canada, Mexico, several South American countries, as well as major Asian markets such as China, India, Korea and Japan. This will enable more cost effective devices and solutions for whatever technology is chosen to be used for such spectrum.

In order to position WiMAX in both developing and developed markets, we need to understand what it is good for. What apps or what solutions would be best served by WiMAX?  Because of its flat and all-IP networking infrastructure, WiMAX could be the answer for Triple and Quad-Play apps in the Fixed Mobile Convergence scenarios.  For example, entertainment apps such as TV could be delivered over such WiMAX infrastructures, provided that it is done efficiently and cost-effectively.

In the rest of this Newsletter,

I hope you find the articles insightful and useful. Please give us your feedback. Incidentally, we have received a lot of feedback on our previous issue “Google comes to Mobile – Nothing will be same again”. If you have not seen it, you can find it on our website www.cartagena-capital.com. The next issue will focus on our impressions from GSMA’s Mobile World Congress (aka 3GSM) in Barcelona. Incidentally, if you would like to arrange a meeting with us in Barcelona, please contact us urgently.

With warmest regards,

Dr. Mehmet Unsoy
Partner, Cartagena Capital
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www.cartagena-capital.com

WiMAX: What is it good for?
by Tom Nolle

Wireless is one of the hottest topics in all of networking, and WiMAX is perhaps the hottest topic in wireless.  A large part of this is the industry’s love for novelty and the buzz that builds around any emerging concept, but another large part is the fact that WiMAX will certainly be a game-changing technology for many in both emerging and developed markets.

Unlike typical wireless network standards that are aimed at creating mobile services with relatively small cell sizes, WiMAX is designed to support much larger cells and thus to offer wider coverage for a given antenna and a given spectrum license.  WiMAX also offers higher speeds than mobile wireless standards—up to about 50 Mbps.  This combination is what makes WiMAX important.

Before getting into what WiMAX is good for, it’s important to understand what it’s not likely to be good for.  WiMAX is not a substitute for wireline broadband services where the infrastructure to deliver those services is already available or can be deployed at a reasonable ROI.  Like all wireless technologies, WiMAX shares its capacity among the users in its cell or service area.  In a highly developed economy, the number of users likely to be inside a WiMAX cell could number in the millions, and none would receive a satisfactory experience with that level of sharing.  The number in the cell could be reduced by shortening the range, but even then it is not likely that WiMAX could be made to compete with traditional wireline delivery of broadband services.

While general wireline replacement isn’t always a good application for WiMAX, there are three WiMAX service models that are likely to be productive.  These all apply WiMAX in a way that maximizes its benefit of coverage and minimizes its risk of contention for capacity.

The first application, and the one that has been responsible for most of the WiMAX deployment to date, is in emerging economies.  Developing countries often have pockets of industrialization or tourism scattered in a wide area where there is little development and thus little infrastructure.  Creating wireline services in these markets is difficult because the cost of deployment is extraordinary high and the dollar opportunity that each mile of wireline infrastructure passes is very low.

WiMAX, because it doesn’t require any copper or fiber deployment except to the feed point, is often the only practical way to quickly and inexpensively serve a developing country with broadband communications.  With a WiMAX network, developing businesses and tourism can be encouraged through effective and competitive communications, and this may be essential in continuing to fuel the development of the economy.  In many cases, such as with tourism and the financial industry, communications is a prerequisite for any effective growth.

The second application where WiMAX may shine is as a “wireline supplement”, especially for supporting portable devices ranging from game consoles and PDAs to ultra-small laptops.  Specialized devices with small screens do not require large video streams, so even streaming video applications are not likely to saturate a WiMAX network.  This is the application that Clearwire is said to favor, and it is the most likely WiMAX consumer application to deploy in markets where wireline broadband is readily available.

The third WiMAX application is the “special device or access” application, where the network operator can limit the way that WiMAX is used, usually by controlling the devices that can connect or by controlling the applications available.  This type of application has wide-ranging examples, from public sector broadband in metro areas to specialized portable and mobile applications.  The major difference between this and the former application is that here it is likely that the network operator has specific regulatory dispensation not to open the network to general use, and thus can be sure that capacity will not be reduced to problematic levels.

In practice, many WiMAX installations will likely leverage two or even all of these three application types.  The priority assigned to each will in most cases be set by the organization that deploys the network and/or the regulators in the area where deployment is taking place.

Because WiMAX offers unparalleled capability to cover a wide geography with high-speed services, it will be a key factor in making broadband available in the broadest possible market, and it fits well between wireline and traditional mobile broadband as a tool for empowering users worldwide.

Tom Nolle
CEO, CIMI Corp.
Executive Advisor, Cartagena Capital
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www.cimicorp.com

Will the Real Mobile Internet Please Stand Up?
by Jane Zweig

On October 19 last year, mobile WiMAX (802.16e) was approved as a 3G standard by the International Telecommunications Union (ITU).  This impacts the spectral bands 2.5-2.6 GHz.  According to a press release from the WiMAX Forum, “this will deliver mobile Internet to satisfy both rural and urban market demand – a potential to reach 2.7 billion people.  [The] announcement expands the reach to a significantly larger global population.”

So mobile WiMAX now joins the IMT 2000 standards community along with W-CDMA, CDMA2000 and TD-SCDMA (the Chinese developed 3G technology).  There are many implications of this announcement – some having to do with technology,  others having to do with politics. Ron Resnick, president of The WiMAX Forum is quoted as saying , “with WiMAX technology now included, it places us on equal footing with the legacy-based technologies ITU already endorses.”   But is it really an equal footing?

The Shosteck Group’s strategic partner, The Mobile World, forecasts at the end of 2007 there were 3.3 billion mobile subscribers around the world.  Nearly 2.6 billion were on GSM/GPRS/EDGE networks, 190 million on W-CDMA networks and 422 million on CDMA2000 with the remaining on technologies such as iDEN. One billion mobile devices were sold in 2007 at an average selling price of  less than US$100.   In 2013,  there will be 6 billion mobile subscribers globally – 90 percent of the world will have “mobile” connectivity.  

This more than suggests a heavily penetrated subscriber base. It also gives a scale advantage that will be very difficult to offset.  It points to a world where mobile is already entrenched with existing technologies and operators who have invested billions of dollars in networks to support their mobile customers.

So the mobile WiMAX world faces an uphill battle competing with legacy networks. It doesn’t mean that they can’t.  In fact, on the positive side, this announcement validates 802.16e WiMAX as a standardized technology.  This will help ensure that an ecosystem will more easily support the standard in that there is a potential for scale.  Scale is key for vendors.  Without scale, equipment prices are too high.

But as with all new technologies, there is a “pain period”. And WiMAX is no different.  Ubiquitous networks must be built.  Price competitive performance and competitive handsets must be available.  There must be a reason for consumers to sign up to the new service – which looks and sounds just like the others in marketing messages. 

Sprint, the Wi-MAX “poster child” is the first major operator to announce it will deploy mobile WiMAX.  It’s “marriage” to Clearwire, another WiMAX operator, has ended in “divorce” as the two couldn’t come to terms regarding business models and how networks should be built.

WiMAX handsets will slowly come to the market in 2008 but competition from AT&T and Verizon in the U.S. will be fierce.  Additionally Sprint will be competing against itself for similar “mobile Internet” experiences. 

To further complicate the WiMAX story, the other standards or technology groups or vendors are not standing still. The UMTS Forum is pushing for Long Term Evolution (LTE) as an extension of W-CDMA on the same 2.5-2.6 GHz frequency band.  Similarly, CDMA2000 is promoting its Ultra Mobile Broadband (UMB) solution though with Verizon’s announcement that it will deploy LTE, UMB will have a difficult, if not impossible road ahead. 

Ericsson is pushing HSPA on the 2.5-2.6 GHz frequency band as a way for W-CDMA operators to extend their HSPA offerings until LTE is ready for prime-time – in approximately 3-4 years.  Ericsson is very astute in this regard – ensuring that its current customers can evolve to 2.5-2.6 GHz with existing technology, keep customers happy for a few years with minimal investment and then deploy LTE when the “pain phase” is over. Nokia is doing similarly with its HSPA solution.

So what might this competing technology world look like? let’s step back to the days of the original technology wars – GSM vs. TDMA vs. CDMA. Companies were touting their “best technology” – forgetting that the technology was somewhat irrelevant. 

More important were consumers – what devices were available, how much did those devices cost, what capabilities were there, what were the services, what would the pricing be, and how good were the networks.

The same issues apply today with W-CDMA and CDMA2000.  Consumers want a variety of devices, at the right price point, with a good network that works wherever they are.  Unlike the early days of cellular, consumer expectations are high – not only competing with expectations of mobile networks but with expectations of DSL or cable equivalents. This is the operator and vendor promise.

W-CDMA on 2.1 MHz and CDMA2000 are backwards compatible with 850, 1800, 1900 and soon to be 900 MHz frequency bands.  With 2.5 GHz added in the future, backwards compatibility with existing networks will also be added.  This will ensure coverage wherever people go.

European, Latin American, and the majority of Asian operators and other non-CDMA2000 operators will lean toward HSPA or LTE for interoperability and compatibility issues.

WiMAX will not have the same advantage as there are no legacy networks to fall back on.  This means that operators will have huge capital expenditures to build a dense network to support high-capacity, bandwidth intensive content.

WiMAX may serve a niche market – perhaps as cheaper backhaul.  But as a massive “mobile broadband” solution, it will take years if ever.  Vendors will follow (or lead) where the money and consumers go.  At this point and for the foreseeable future that means sticking with what works now and seeing a return on investment.

Jane Zweig, CEO, The Shosteck Group
Executive Advisor , Cartagena Capital
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www.shosteck.com

WiMAX at 700 MHz: Will this dog hunt?
by John Holmblad

The US FCC, in its rulemaking for the upcoming 700 MHz auction in January 2008 had studiously avoided picking technological winners and losers. Not surprisingly, the FCC has continued its tradition of letting the market decide which specific radio and network technology or technologies will “win the day” in the utilization of this spectrum.  With respect to the network layer and above, it is very likely that “all IP all the time” (aka Internet) mobile networks will be deployed by some if not all of the winners of the 700 MHz spectrum. What is less clear is what radio technology or technologies will be deployed.

In fact, there are three likely candidate technologies that must be considered for the radio layer at 700 MHz:

UMTS has already been deployed in most parts of the world, including the U.S. and Qualcomm among others have incorporated support for UMTS at 700 MHz into their product roadmap. However,   UMTS is a hybridization of non-packet (i.e. GSM) and packet (e.g. HSPA) technologies, and, consequently, it does not represent an “all IP all the time” radio and network framework. Among the 700 MHz spectrum auction winners, the most likely operators to select UMTS will be those who are already using it in their existing mobile networks.

LTE, on the other hand, is being forcefully promulgated and promoted by the established leaders in mobile wireless infrastructure as the 4G technology. LTE represents the “natural” succession/evolution of the 3G technologies developed and defined by ITU under the framework of the IMT2000 standards family.  Although LTE is still in the development/test stage, it is possible that a few of the 700 MHz auction winners may select LTE as their radio/network technology of choice, subject to successful testing of LTE in 2008 on other mobile networks.

In October 2007, however that IMT2000 family of standards was enlarged by the ITU to also contain within its “envelope of acceptability” the standards developed by the IEEE 802.16 committee and known more generally as WiMAX. This puts WiMAX on a theoretically equal footing with LTE for the 3G to 4G evolution.

While the radio technology underlying LTE (~100 mbps) offers higher theoretical bandwidth than WiMAX (~50 mbps), WiMAX has several practical advantages  over LTE:

WIMAX however is not without its disadvantages with respect to 700 MHz.  It so happens that this 700 MHz spectrum, is configured by the FCC, for the most part, as paired spectrum, i.e. an upper and a lower band.  Thus, this band is better suited for Frequency Division Duplex (FDD) rather than for Time Division Duplex (TDD) radio technology. As a consequence, WIMAX, in the context of the 700 MHz auction has two disadvantages, that is:

Having said that, the IEEE and the WiMAX forum have both planned on an FDD version of WiMAX and Intel has itself stated its intention to develop FDD versions of its WiMAX chipset technology.

Sprint’s WiMAX service, marketed under the XOHM brand name will, “go live” in three U.S. markets, Baltimore, Washington DC and Chicago, starting end of April, and it will represent a very good test case for the suitability of WiMAX for mobile broadband telecommunications.  Nokia, who are competing for Sprint’s WiMAX infrastructure business along with Samsung and Motorola, have also stated their intention to develop and market early in 2008, a WiMAX version of its successful Internet Tablet Product,  the N800/N810 series for use on the Sprint XOHM network. This product version will represent the first true 4G mobile device.

The aforementioned market tests, if successful, will give WiMAX additional “street cred” among customers who care much about features, price, coverage, quality of support, etc. and little to none about the underlying technologies used to deliver the service experience. And that “cred”, aided by Intel Capital’s large investment in WiMAX operators and Intel’s own investment in WiMAX chipset technology, will give the WiMAX “dog” the opportunity to “hunt” for success among the lucrative field of 700 MHz spectrum auction winners.

John Holmblad
Guest Author
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WiMAX TV
by David Richardson

Digital video is the fastest-growing data application today. And while much hype and attention is devoted to user-generated content, video “mushing” etc it is often overlooked that the major business of video remains broadcast television. The revenues generated by broadcast TV, irrespective of whether this is through ad-supported “free-to-air” broadcasting, pay television, pay-per-view etc dwarf those generated by the other emerging forms of entertainment by orders of magnitude. Broadcast TV, unlike or perhaps because of, the lessons learned from the music industry, has embraced digital distribution and is at the forefront of much of the emerging new business models enabled by new digital technology. In addition, new service providers such as telcos and other broadband providers who are based on IP networks all recognize the necessity and huge appeal TV has in winning and maintaining audience share and driving average revenue per user (ARPU). These are the so-called “triple” and “quadruple” plays which are driving consolidations, acquisitions and partnerships between former competitors such as satellite operators and broadband providers etc.

Mobile networks are also morphing. As the growth rates from pure voice traffic flatten they are introducing data applications and not least among these is video. Mobile TV has already proved to be an attractive application for cellular operators with several million Mobile TV subscribers worldwide. In addition to differentiating their service and retaining their customers, mobile TV distribution promises new business opportunities such as increased ARPU from subscription, as well as targeted advertising models. New and incumbent operators are investing in infrastructure to meet the consumer expectations for “content anywhere, anytime on any device”.

WiMAX is one of the most promising emerging wireless networking technologies designed to meet the exploding demand for data anywhere anytime and video is likely to be a major component of the applications expected. However, video is a bandwidth hog. As an IP-based network it faces the inherent scalability problems of such networks.  Each new customer requires more bandwidth, connectivity sessions grow longer and applications such as video require ever more capacity. Serving thousands of such individual “unicast” streams becomes expensive with the inevitable decline in quality of service at periods of peak demand.

This is where a hybrid broadcast/multicast architecture becomes a powerful way to meet consumer and operator interests.

TV viewing, whether fixed, mobile, time/place-shifted or otherwise remains an inherently “peaky” experience. Viewers aggregate around “peak viewing times”, dictated by lifestyle and anticipated by the industry. The fact is that despite the huge explosion in the amount of content now available on many networks and the inevitable fragmentation of audiences the bulk of TV audiences are largely served by 5-10 major channels or networks in most markets. This is true of fixed TV viewing and mobile is likely to be the same with the channels meeting the demand for appropriately produced programming directed to commuting times and other times in the day or week when mobile viewing is likely to be popular.

A WiMAX TV Broadcast / multicast solution enables user demand for the most popular programming on mobile video to be channelized towards a service that can guarantee quality reception over predictable bandwidth and without any risk of congestion or contention.

In addition to nationwide or regional TV broadcasting, WiMAX TV enables local content insertion and “micro-broadcasting” – the efficient delivery of content within restricted areas during popular sports events or concerts, or within airports, campuses or hospitals.  

However, as a modern hybrid service Mobile TV has to also meet the demand for individual streams and the “niche” or “long-tail” content. This requires using a mix of broadcast, multicast and unicast technologies. Typically, the most popular TV channels will be broadcast on bandwidth that is set aside and efficiently managed through dynamic multiplexing as it is in other TV broadcast systems.  Other TV channels will be multicast based on the demand in each particular cell. Interactive services and niche content will be serviced over unicast links.  How these various services are packaged and sold to the viewers will evolve over time as the market emerges.

The value of broadcast / multicast solutions for Mobile TV in general is well recognized. However, since WiMAX is entering an established market, WiMAX TV application with broadcast / multicast solutions could well be a major differentiator!

David Richardson
Guest Author
VP, Business Development, UDcast
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www.udcast.com