WiMax - don't believe the hype
The emerging WiMax mobile wireless standard is gaining support among telecom companies, but there is a risk of it becoming over-hyped say industry observers.
The fixed side of WiMax is well along the path to commercialization, but mobile WiMax will not be in wide use until after 2009, according to forthcoming research from Gartner Inc. "It's very easy, given the huge amount of WiMax hype at the moment, to see WiMax as the next big thing after 3G," said Gartner analyst Ian Keene. "But that's not the case - it's a fixed wireless solution, an alternative to DSL. Mobile WiMax is a new cellular technology, and it's got a heck of a long way to go."
WiMax, based on the IEEE 802.16 group of standards, is intended to replace two distinct types of wireless broadband technology: fixed wireless, which could compete with or supplement ADSL, cable and leased lines, and mobile wireless, which makes broadband speeds available anywhere in a coverage area, including moving vehicles or public places. Mobile WiMax could complement 3G and Wi-Fi hotspots.
The standard is designed to make equipment less expensive and more interoperable, which would improve the business case for building networks. Equipment using the fixed 802.16d standard will arrive this year, and be certified next year. A relatively easy upgrade will add on mobile 802.16e capabilities, the WiMax Forum promises, but 802.16e equipment will not be ready for another three years or so.
The WiMax Forum, the industry group promoting WiMax, got a boost on Monday when telcos BT Group PLC and France Telecom SA became members, along with Qwest Communications International Inc., Reliance Telecom and XO Communications Inc. The official support of BT and France Telecom will be valuable, since service providers are necessarily WiMax's target customers, but both operators see WiMax as a supplement to their existing wired networks, according to industry analysts.
Operators who want mobile broadband are more ambiguous in their attitudes to WiMax. Verizon Communications Inc., Sprint Corp. and Nextel Communications Inc., for example, have all said they are interested in mobile broadband but none are WiMax Forum members.
Since February, Nextel has been conducting trials of a proprietary technology from Flarion in the southeastern United States, and the company emphasized that mobility is key to its offering. "This is for customers who don't want to be tied to their desk or their office. You can go anywhere and use this service," said Nextel spokesman Chris Grandis. "It's beyond 3G."
Nextel also offers a wireless data card for laptops, operating at dial-up speeds, and plans to use Motorola Inc.'s WiDEN technology to quadruple bandwidth, in the second half of this year.
Sprint and Verizon are toying with high-speed cellular technologies such as EV-DO while waiting to see if anything promising emerges from WiMax efforts, but could just as easily use proprietary equipment if it is more cost effective, the companies have said. "We do keep an eye on WiMax as we do all new technologies," said Sprint spokesman Charles Fleckenstein. "If it makes business sense to move forward in this area, Sprint will do so."
In Europe, where 3G rollouts are already well advanced, wireless operators such as Vodafone Group PLC and T-Mobile International AG have even less incentive to jump on board a mobile technology that is years away, said IDC analyst Jan Hein Bakkers. "We don't think there will be any standardized [mobile WiMax] products before 2007," he said. "By that time there will be a lot of Wi-Fi hotspots out there already, and operators will have more UMTS [a 3G standard] networks. I don't see WiMax bringing that much additional value."
Others predicted more service providers will get on board the WiMax bandwagon, but agreed that it is still unclear what role WiMax will play. "It's a very new technology, and operators are not absolutely certain where it fits in with the other parts of the jigsaw puzzle, vis-a-vis 3G, Wi-Fi hotspots and so on," said Infonetics analyst Richard Webb.
Fixed WiMax has a more immediate potential for success, say analysts, because it will provide services similar to existing wireless broadband, while introducing lower costs and equipment interoperability.
Small wireless ISPs such as Irish Broadband in Dublin, NextWeb Inc. in California and TowerStream Corp. on the U.S.' East coast are offering wireless services that compete with existing wired offerings. A survey published this week by ABI Research Inc. found that more than half of small wireless ISPs planned to deploy WiMax equipment as soon as it is available, in order to lower equipment costs.
Larger Western European telcos primarily want WiMax to fill in the gaps in their wired networks, the companies say. BT recently said it would use a combination of ADSL and a WiMax-like system from Alvarion Ltd. to provide broadband across 100 percent of Northern Ireland. BT has said it is interested in migrating to WiMax-standard gear.
Some analysts see this as a shrinking niche. BT announced this week it will enable another 1,128 ADSL exchanges by mid-2005, which it claims will give broadband access to 99.6 percent of U.K. businesses and households. France Telecom's ADSL will reach 90 percent of businesses and households this year, according to IDC.
Across Western Europe, about 83 percent of consumers and businesses had access to broadband last year, and in the next two years or so that will rise to 90 to 95 percent, according to IDC's Bakkers. "In Western Europe, the role of WiMax will be limited," he said.
WiMax is expected to come fully into its own in areas where networks are not as fully built-out as in Western Europe and the U.S. -- areas as nearby as Eastern Europe. "Regardless of which vendor comes out on top, it is the millions of people in rural and developing markets who stand to gain the most from WiMax," said Pyramid Research Inc. analyst John Yunker in a recent report.