Why WiMax?

First of all, let's be clear about one thing: This will not be the year of WiMax.The broadband wireless standard has not yet seen wide-scale commercial deployment. 'And it doesn't look like it will happen in 2007,' said Stephen Mailey, engineering manager for wireless services at General Dynamics Corp. of Falls Church, Va.But that does not mean nothing is happening. Sprint Nextel Corp. of Reston, Va., has announced plans to deploy the world's most ambitious WiMax mobile network, with service expected to be available in the initial markets late this year. WiMax carrier Clearwire Corp. of Kirkland, Wash., founded by cellular mogul Craig McCaw, launched its initial public offering last month. The company offers portable WiMax service in a select number of U.S. cities.On the technology side, chip sets are being readied to enable mobile WiMax in end-user devices, and the first certified interoperable WiMax products for the new mobile standard are expected out this year. Vendors, carriers and investors are making strategic decisions and partnering to acquire spectrum.'I think 2006 was the year it went from being a technology with no distinguishing features to something that will enable you to build an entire network rather than a niche network,' Mailey said.The killer app for WiMax, in North America, at least, could be mobile wireless.'Everyone still is trying to find a way to make the mobile experience the same as when you're sitting at home on a DSL network,' said Mailey.Even though WiMax might not take off in a big way this year or next, the 2005 ratification that unchained WiMax and moved it from a fixed to a mobile broadband technology could change the way we use the Internet, said Berge Ayvazian, chief strategy officer for the Yankee Group.'We're moving into a new age of mobile broadband that will enable access to the Internet from anywhere,' Ayvazian said.The goal of mobile WiMax is to free the Internet from the household and let it follow the user, much as cellular technology did for telephone service. Multimegabit speeds would switch the model for cellular service from circuit-switched voice to Internet access.So far, government users have taken a wait-and-see attitude toward WiMax. Peter Howard, senior director of engineering for General Dynamics' wireless-services team, said government's use of it has been limited.'It's on their technology road maps, but in very limited applications,' he said.But General Dynamics is investing a lot in research and RF modeling tools in its wireless-technology lab, Howard said, and both General Dynamics and Sprint see the government as a major market for the new technology. Washington, along with Chicago, will be one of the first two markets where Sprint will test its fourth-generation mobile WiMax service late this year. Washington was chosen as an initial market partly because of its proximity to Sprint's Northern Virginia headquarters, but also because the market is seen as ready to adopt the technology.The closest competing wireless systems, the 802.11 WiFi standard networks, already are established in government. Mailey said he did not see WiMax pushing out WiFi.'WiMax shouldn't be thought of as competition,' he said. 'They will complement each other and evolve together. How they evolve is a crystal-gazing exercise, but the two will be side by side.'WiMax is based on the evolving 802.16 standards from the Institute of Electrical and Electronics Engineers for delivering high-bandwidth data over long distances. Initial iterations of the standard addressed fixed wireless access in spectrum bands from 2 GHz to 11 GHz. The 802.16e standard, approved in December 2005, enables mobile applications.Up to now, the limited use of WiMax in this country has been primarily as a last-mile fill-in for areas where traditional DSL and cable service are not practical. This is a useful but economically marginal niche. Analysts and industry experts agree that the sweet spot for wireless is personal mobile broadband.According to the latest report on high-speed Internet access from the Federal Communications Commission, cable and phone companies dominate broadband Internet service in this country. Of the 64.6 million high-speed lines reported by service providers, slightly more than 44 percent were cable modem, and a little more than 36 percent were DSL. Wireless, including mobile wireless, is lumped into the 18.4 percent 'other' category.Texas and California report the highest number of wireless users, with 51,814 and 39,329 fixed-service lines respectively, but neither reports an appreciable number of mobile users.Major cellular providers so far have invested heavily in third-generation cellular networks for delivering high-speed data as well as voice.'When they invested in 3G, they thought that would be as close as they would get to a true wireless-broadband experience,' said Caroline Gabriel, research director for Rethink Research.3G has not fully delivered on its promise. Now, mobile WiMax offers an opportunity for cellular companies to really challenge their wired competition, she said.WiFi, based on the IEEE 802.11 standards, has become popular for local network access, but its short range makes it a fragmented service, relatively complex and expensive to build out for areawide Internet access.So why has WiMax been so slow to take off?'The biggest factor is spectrum availability and regulation,' said Mohammed Shakouri, marketing director for the WiMax Forum.Annual WiMax equipment sales now are as much as $800 million globally, but in the last two years most activity has been in the 3.5-GHz band.'There is no spectrum in the U.S. for 3.5 GHz,' Shakouri said. Available spectrum in this country is in the 2.5- and 2.3-GHz bands, and manufacturers have not been making equipment in those bands because there has not been any demand.Sprint, which has plenty of 2.5-GHz spectrum, aims to change that by making WiMax-enabled devices cheap and plentiful in this country. When the company announced plans last year to build out a WiMax network, it also reported it was partnering with chip maker Intel Corp. and equipment manufacturers Motorola Inc. and Samsung Electronics Co. to produce the necessary consumer electronic devices.Peter Cannistra, director of partner management for Sprint's 4G Mobile Broadband business unit, said he does not know what the killer app for the new service will be, but he believes there will be plenty of apps.'We see a huge array of devices,' Cannistra said. 'We think the chip sets will be very inexpensive.'Sprint's 2.5-GHz footprint is the largest in the nation and covers 85 percent of the households in the top 100 markets. Its planned 4G network is the result of its 2005 merger with Nextel and of an FCC ruling to 'use it or lose it' with regard to its spectrum holdings.Those holdings date back to 1999, when Sprint bought a number of wireless cable TV companies. The 2.5-GHz band originally was allocated for wireless cable and distance learning to provide service in rural areas. With cheaper cable and Internet connections, this became less attractive, and Sprint and the former WorldCom bought up the companies for the spectrum, which they planned to use for pre-WiMax DSL line replacement.That never really took off, however. 'The technology was not as advanced as it should have been,' Cannistra said.WorldCom sold off its spectrum to Nextel, which merged with Sprint, giving the new company a huge footprint. FCC said it could keep its 2.5-GHz licenses as long as it did not sit on them. The company could enhance its existing 3G service, which already was struggling against competitors such as AT&T Mobility LLC of Atlanta and the Verizon Wireless partnership between Verizon Communications Inc. of New York and the Vodafone Group of Newbury, U.K. Or Sprint Nextel could leapfrog to a new technology with little or no competition.'We put a very rigorous set of business criteria in place,' Cannistra said. These included affordable chip sets, high bandwidth and a global market. 'WiMax was the best choice for Sprint. It fulfilled the business case criteria very well.'Sprint is planning to spend up to $3 billion in building a WiMax network this year and next. The company said it is on track to begin trials in the Washington-Baltimore and Chicago areas in the fourth quarter of this year and roll the service out to as many as 100 million people in 2008.The network is expected to provide download speeds of from 1.5 Mpbs to 3 Mbps, with the ability to burst higher. The Motorola and Samsung devices also will support Sprint's current Code Division Multiple Access/Evolution-Data Optimized (CMDA_EV-DO) 3G network, and the 4G service will default to the 3G network outside a WiMax service area.The 4G network will mean not only a new technology, but a new business model for Sprint. Current cellular services make their money from monthly subscription fees, with little or no income to the carrier from advertising or content.'With 4G, we see the ability to turn that on its head,' Cannistra said. Equipment and service subscriptions will be cheap, and Sprint will be in the business of providing content and applications. Prices have not yet been established.The Yankee Group predicts steady growth in WiMax spending over the next four years, from an estimated $600 million in 2006 to $4 billion and 20 million mobile subscribers in 2010.Sprint's plans are seen as providing much of the momentum for that development.'It's had a big impact, not only in North America, but worldwide,' said General Dynamics' Mailey.'We will get a lot of scrutiny,' Cannistra said. If the company's plans work, they will spur demand for WiMax equipment and service. And Sprint's dominating 2.5-GHz footprint and its decision to leapfrog to a new technology will give it a two- or three-year lead over competitors. 'No one will be able to match it.'One carrier, AT&T, will not be going head-to-head with Sprint in WiMax, at least in the 2.5-MHz band. As a condition of its merger with BellSouth, it is selling off its 50 2.5-GHz licenses. They are being bought up by Clearwire, a fixed wireless-broadband provider that is snapping up all the 2.5-GHz spectrum it can get.Clearwire now is the second-largest license holder in that band, behind Sprint, and is widely seen as eager to begin offering mobile WiMax services as the equipment becomes available. Thanks to Sprint, that could be as early as this year.