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Mobile WiMAX Approaches the Crossroads in 2008

Richard Webb, Infonetics Research

Mobile WiMAX has a good opportunity to become established as a long-term broadband technology, but faces some stiff market challenges if it is to fulfil its potential.

To date, progress with WiMAX has been quite slow and its journey to standardization – still in progress to some extent -- has seemed ponderous from the outside. Compared to the global success of cellular, there are still relatively few large players on-board the WiMAX train, and networks are mostly still on a small scale. However, in 2008, Infonetics Research expects that train to pick up steam.

There has been plenty for WiMAX supporters to cheer about in recent months:

WiMAX has been deployed in more than 80 countries worldwide and commercial networks will grow in size during the year

Over the course of 2008, (WiMAX-friendly) spectrum auctions are taking place in the US., and will take place in a number of countries both in Europe (Italy and the UK), as well as other regions

Samsung announced around the MWC show that it would produce four or five mobile WiMAX handsets during 2008; Nokia has also stated it will be launching WiMAX device products in the coming year. Furthermore, 15% of the WiMAX forum’s 500+ members are from the device community and this may indicate increasing confidence in the technology

Perhaps the biggest boost was the announcement by ITU last October that IEEE 802.16 (WiMAX) is now an official 3G standard and part of the IMT-2000 family; this opens the door for many more operators to use mobile WiMAX (802.16 e) within their IMT-2000 spectrum allocation, the most promising being the 2.5GHz to 2.69GHz band, (according to the WiMAX Forum)

On the heels of the ITU announcement, Cisco added its significant weight to the WiMAX cause through its US$330M cash acquisition of Navini Networks, which provides 802.16e kit; Cisco’s WiMAX focus, is on the business and consumer segments in emerging markets

The potential for WiMAX to become a fully mobile broadband system rests on the opening up of 2.5GHz spectrum. In the short term, the main frequency available outside North America is 3.5GHz, and licenses are being allocated, though often utilized for fixed WiMAX. Debate rages over how well 3.5GHz supports mobility in terms of range and efficiency, but for many operators it will be the only choice.

The restricted license situation in Europe – although loosening a little -- highlights that spectrum is the greatest uncertainty factor in the evolution of WiMAX for personal mobile broadband, and whether or not it offers an opportunity for alternative operators to enter this world with WiMAX rather than 3G.

The entry of Vodafone into the WiMAX Forum fold last August gave further fillip to the 802.16e camp, following as it did CEO Arun Sarin’s comments at the 3GSM show in Barcelona last year that he would look at mobile WiMAX as an alternative to LTE in some markets (sparked by frustration at the slow pace of 3.5G development). Vodafone is now actively utilizing mobile WiMAX, albeit in smaller, non-core markets, but this flexible technology approach may catch on with such a prominent figurehead pushing the agenda.

The notion of mobile WiMAX being a viable alternative to 3.5G is becoming a genuine possibility rather than just an interesting idea, and has been reinforced by the announcement of the largest mobile WiMAX deployment to date outside of the USA -- by Wateen Telecom, in Pakistan. Wateen is using a creative mixture of GSM and WiMAX to leapfrog the incumbent in bringing wireless broadband to a country that is underserved, but has high growth potential. With 1M subscribers targeted within three years, this is a carrier-scale plan, and early progress is positive.

Other areas in Asia Pacific also offer encouraging signs: South Korea now boosts a Wi-Bro subscriber base approaching 150,000 and Australia, New Zealand, Singapore and Taiwan are all sowing the seeds for a prospective WiMAX market. The broadband-hungry and mobility-orientated market of China, where WiMAX is not yet officially sanctioned by the regulatory authority, has seen WiMAX trial activity taking place. If the MII lifts its head from the mire of 3G licensing and allows for the possibility of mobile WiMAX, the touch-paper will be well and truly lit . . . stand well back!

However, whilst the business case looks relatively clear-cut in developing countries underserved by other broadband alternatives, in developed broadband markets where competition has already intensified, the business model is under much scrutiny. In regions where 3G rollout is progressing rapidly and wired broadband penetration is seeing continuous acceleration, there remains a lot of caution regarding mobile WiMAX.

Can it really be a contender in against DSL and/or HSPA, or is it destined to be a limited opportunity also-ran? Some certainly think it can go the distance: in Japan, arguably the most developed broadband market in the world, operator KDDi has announced a plan to offer mobile WiMAX services competing directly against NTT DoCoMo’s 3.5G services, as it aims to carve a leading position in the 4G personal broadband market of the near future (and Japan that is; not-so-near for the rest of us).

In Europe so far, the region lacks a mobile WiMAX poster-child of the scale of Wateen or Sprint. Spectrum issues are certainly a factor but these may overcome over time, and regulatory shifts can certainly help the WiMAX cause. For instance, last November, Ofcom, the UK telecom regulatory body, gave approval for holders of 3.5GHz spectrum (a standardized mobile WiMAX frequency range) to be used for mobility. UK Broadband (owned by Hong Kong-based PCCW) and Freedom4, which hold 3.5GHz spectrum in the UK, had previously been restricted to using 802.16e equipment for only fixed and nomadic applications. That license seems so much more valuable now. Add something spicy (like a WiMAX iPhone!) and you could have something genuinely disruptive.

But the ever-more aggressive delivery of HSDPA makes the mobile WiMAX timetable more critical than ever. If it is to have longevity in Europe it needs to be well-established as a viable mobile broadband solution in time to be utilized by operators as part of their future mobile broadband platform.

As we move beyond 3G, there will be operators with multiple wireless technologies, and with divergent business models for mobile broadband – a ‘patchwork quilt’ of wireless networks. Sprint for one, would seem to believe that mobile WiMAX can be part of a harmonious future for high-speed mobility services in tandem with 3.5G. But to have longevity, mobile WiMAX needs to be not just useful, but much better than and/or different to 3.5G, offering service opportunities not available via 3.5G. Mobile WiMAX needs to gets its capabilities and economics right, quickly to take advantage of its head-start on LTE. It is at a crossroads in 2008; the next steps need to be in the right direction.

Richard Webb is Directing Analyst for WiMAX, WiFi & Mobile Devices with Infonetics Research (www.infonetics.com). Infonetics Research tracks radio access network equipment, fixed and mobile WiMAX, femtocells and mobile device markets with quarterly and biannual market forecast and analysis, service provider reports and continuous research services.