Intel speeds up WiMAX; 2004 will be the make or break year
Published: Thursday 18 December, 2003
Intel is likely to accelerate its WiMAX roll-out schedule in order to ensure that it remains in the driving seat for the standard, which is gaining serious traction far earlier than many had expected.
Taiwanese chipmakers say that Intel will ship its 802.16a silicon early in the second quarter of 2004, and sources within the giant’s wireless unit confirmed this, though the official schedule remains the second half of the year. Given Intel’s antipathy to missing deadlines, and the subsequent embarrassment when it delayed some Centrino variants, this party line seems to be based on caution. Intel plans to roll out the first Wimax chip in the second quarter next year. Taiwanese equipment suppliers Zyxel, Ambit Microsystems and Askey all say they plan to build low cost WiMAX gear and expect to receive first silicon early in Q2.
Intel said it will definitely be the first company to ship fully standards-based WiMAX silicon, ahead of its major rival Fujitsu. Some WiMAX specialists such as Redline have already rolled out chips and devices, but these are not yet fully interoperable. The third chipset maker currently engaged in developing 802.16a standard silicon is Wavesat of Canada, which is already supplying its WiMAX-based DM110 OFDM silicon to broadband wireless carriers, notably the US’ ioWave.
Speedy shipment of silicon indicates how Intel wants to remain the most powerful driving force behind WiMAX as it gains ground. This is not just about a new revenue stream for the chip giant but about creating and controlling markets in order to ensure growth and market influence even as its traditional PC stronghold starts to lose its importance as the decade goes on. Intel needs to lead not follow, to convince the market that it can deliver its grand wireless vision and to become synonymous with mobile communications just as it did with PCs when they were the most exciting new way to work.
WiMAX gains ground:
When Intel threw its weight behind the hitherto obscure 802.16x standard in March, joining forces with Nokia – the heavyweight that was the first to spot the potential of the wireless metro area network technology – it was largely ignored. It has been almost single handedly responsible for the rising awareness of WiMAX, but the world remains inclined to underestimate the long distance technology as rashly as it overestimated the importance of Wi-Fi.
This is largely because there is currently no consumer hype to be had around WiMAX – not until it is embedded in laptops and handsets when the mobile version, 802.16e, rolls out in 2005-6. The attraction of 802.16a is for service providers, giving them the potential, at relatively low cost, to provide superior data services to 3G, penetrate rural areas, backhaul Wi-Fi hotspots and compete with cable/DSL networks.
Intel’s support and the hope of some successful early operator trials mean that WiMAX could achieve a mass market more rapidly than Wi-Fi did. In the late 1990s, most mainstream chip suppliers ignored the emerging 802.11b technology, because of a potential market size that was perceived to be niche, and it only really took off in 2002.
WiMAX is likely to have a steeper ramp-up. It does not need to prove its concept to nearly the same extent that Wi-Fi did – there is widespread acceptance that fast mobile data, voice over WLan and broadband multimedia services are the way of the future. Indeed, many of the promises that Wi-Fi made and cannot keep can be fulfilled by WiMAX. It is the class act of the wireless world, filling in most of Wi-Fi’s still yawning gaps. Not just because it is optimized for broadband operation in the metropolitan area, but also because it features quality of service support for voice and video, enterprise class security and incorporation of mesh and smart antenna.
Carriers’ plans:
This means WiMAX has a clear appeal to non-cellular service providers, as Wi-Fi did not - and arguably still doesn’t beyond the non-lucrative but suddenly de rigeur provision of hotspots.
The dilemma for the carriers is whether to regard WiMAX as a threat or a savior from death at the hands of cellular. Like cellular, WiMAX can offer both fixed, home-based communications and mobile functions – unlike Wi-Fi, which is fixed, or Mobile-Fi, which is mobile only - and so it does give wired-only carriers the opportunity to build a mobile business of their own at less cost than going into cellular. If the population is moving inexorably towards unwired communications, this is their only sensible move. Price cuts and added value services may preserve their wired services for a while, but to rely on fighting off wireless long term would be a strategy of Canute-like blindness.
So we see many of the world’s large carriers at least trialling systems based on BWA technologies. The question is whether they can make sufficient revenue and profit from such networks to compensate for the decline of their wired networks and, especially for those in the US and Europe that are particularly laden with debt, to retain the confidence of their investors.
Their obvious route will be to provide WiMAX-based options as premium services, bundling various added value incentives, in order to set the market expectation of pricing far above what it needs to be in terms of the actual cost of deploying a WiMAX network. This, of course, only works if the independents can be kept out of the market. With the cost of entry to BWA-based services so low compared to any preceding wired or wireless technology, relatively small companies have the chance to enter the sector, plus they will be able to price aggressively because they do not have to support legacy systems and the debt associated with those.
This will be critical in new markets, whether rural regions or developing economies. Nokia is determined to increase the penetration of its handsets and base stations in developing regions by offering low cost GSM equipment and also, in the future, by using WiMAX. With the mobile version of WiMAX, 802.16e, in the works, the day cannot be far away when these two systems are integrated to bring a very low cost mobile option to rural areas, and one where Nokia can still retain its control over the operators.
Bundling and coverage have been the main weapons used successfully so far in the Wi-Fi market, where wired and wireless carriers have largely taken control of the hotspot and home Wi-Fi sectors from the independent WISPs. The same pattern may apply in WiMAX, though there is one key difference. Carriers have embraced Wi-Fi to offer a value add to their existing services, often bundling it as an incentive to users to subscribe to DSL or other offerings. With BWA of course, the other offerings would gradually be replaced altogether and so the business model needs to be far more convincing. But with alternative operators already setting up networks based on pre-WiMAX technologies, not just in remote areas but in US cities, they may be faced with a stark choice – strike the WiMAX blow to their wired networks themselves, or wait for somebody else to do it for them.
Intel’s role:
The importance of WiMAX, and Intel’s pivotal role in its success or failure, is demonstrated by the seriousness with which the chip giant is approaching the technology. It has teams set up specifically to lobby governments, telecoms authorities and regulators on behalf of its chosen technology and is putting financial and technical weight behind projects that will, it hopes, prove the concept, such as the Huston Country trial in Georgia (see below).
Intel is particularly gunning for regulators, claiming that countries that reallocate spectrum for broadband wireless will gain an economic advantage over those that stick to traditional patterns and that carriers’ best chance of growth comes from rich data services lower down the spectrum – something that almost certainly requires a measure of reallocation, particularly in the US.
Sean Maloney, general manager of Intel’s Communications Group, claims too much prime spectrum is given up to broadcasting, “a 50-year old technology that tells many what a few think” and that countries that free up spectrum at under 1GHz for data will gain a significant economic advantage.
The focus on broadcasting shows the issue that is currently leading broadband wireless thinking – the prospect of delivering not just data but the triple play of voice, television/video and data over 802.16a fixed wireless links rather than DSL and cable.
The reason for the preoccupation with sub-1GHz technologies is that at the low end – ideally around 400MHz – wireless signals can easily penetrate walls and are less subject to weather conditions outdoors. But most western governments are looking to allocate 3.5GHz for data, while unlicensed networks work in 2.4GHz. In these bands, the signal has to be constantly retransmitted once inside the building. The situation means that most innovation is going on in unlicensed spectrum, but far more dramatic effects on consumer services and carrier revenues could be achieved below 1GHz.
Intel is also active in putting pressure on governments of developing countries to adopt WiMAX in their communications manifestoes. It has had some measure of success in China but was rebuffed in South Korea, which has its own broadband wireless standard (see Wireless Watch issue 41).
Adoption will always be piecemeal of course, and subject to the vagaries of national, carrier and regulator politics. Predictions vary wildly - Visant Strategies believes 802.16a will break the $1bn revenue barrier by 2008, with the major growth spurt from 2006, while ABI predicts that WiMAX will generate a total of $2bn between now and 2008 with the largest revenue coming from the residential last mile base, followed by the small/medium enterprise sector offering wireless access within the office and on the move; and then by large enterprise, hotspot backhaul and nomadic sectors. Meanwhile, Datacomm Research says that wirelesse metro area networks will be driven by hotspot backhaul and interconnection of enterprise’s buildings and will generate revenue of $5bn by 2007 with the dominant technology being WiMAX.
2004 will not be ‘the year of WiMAX’. That will be 2005-6. But it will be the year when the concept must be soundly proved, when early trials will start to turn into commercial roll-outs and products will become affordable and varied. By the end of 2004, WiMAX must be as much part of the communications vocabulary as Wi-Fi now is, otherwise it will have emerging technologies such as Mobile-Fi, CDMA EV-DO and W-CDMA nipping at its heels. Intel will be a major force in ensuring that WiMAX does not miss its market opportunity.
Key WiMAX milestones 2003:
China:
China Unicom, the country’s second largest mobile carrier, is to implement broadband wireless services in seven cities using Alvarion WiMAX-ready equipment. China Unicom says its WiMAX system will be one of the largest in the world as it extends it throughout its territories rapidly, installing BWA base stations in its existing cell towers. Intel is lobbying Chinese authorities intensively to make 802.16a an approved national standard for BWA and Nokia plans to sell WiMAX base stations in the country.
The Chinese authorities and carriers woke up to the potential of WiMAX long before the rest of the world, holding conferences on the subject two years ago. The large cellular carriers are generally keen on WiMAX as they can implement it within their cell towers and provide fixed wireless alongside 2G and 3G, as well as extending their coverage more rapidly and cheaply than they can with cellular.
WiMAX supporter Wi-Lan is working with China Communciations, which has won 25 licenses so far in its country’s 3.5GHz auction, making it the biggest fixed wireless operator. It is also partnering with China Sat, which has three licenses.
WiMAX ‘hotspots’:
Alvarion announces the first hotspot platform for carriers using WiMAX as backhaul. The next generation of its BreezeAccess GO hotspot, co-developed with Pronto, will use WiMAX as backhaul and will be available early next year. Although WiMAX base stations have the potential, especially once commodity silicon brings the prices down to under $15,000, to act as super-hotspots in their own right, initially they are expected to provide a low cost alternative to T1 or DSL for backhauling Wi-Fi – in the same way as some proprietary fixed wireless solutions are now.
Alvarion is the biggest player in this proprietary sector, and has been very swift to outline its migration strategy to standards and the lower deployment costs they will bring. It was Intel’s first equipment partner when the chip giant announced its WiMAX silicon roadmap earlier this year.
Latin America:
Aperto, Intel’s second equipment partner, is working with service provider MVS Comunicaciones to bring BWA to three Mexican cities – Mexico City, Guadalajara and Monterrey. MVS holds MMDS licenses for the 2.5-2.686GHz bands and will use Aperto’s PacketWave to deliver wireless access to businesses. Latin America is likely to be a key market for WiMAX and several other operator trials are in the works.
Urban environments:
Orthogon Systems, which specializes in BWA services that cope with massive obstructions, is working with TowerStream, a local carrier which was the first operator to join the WiMAX Forum, to demonstrate a point-to-point service that leaps tall buildings in New York City, using Orthogon’s OS-Gemini wireless Ethernet bridge in unlicensed 5.8GHz band. This uses Multibeam Space Time Coding (STC) technology to transmit multiple signals around obstacles to reconnect at the receiving end, linking WiMAX or other BWA towers and expanding the reach of the metro area network. The technology is also being used in Chicago and is expected to be incorporated into WiMAX shortly.
Paris:
Wi-Lan, one of the contributors to the WiMAX standard, is to deploy its Libra 3000 fixed wireless broadband technology in Paris in a precursor to offering an 802.16a network in the city. The company is working with Altitude Telecom to roll out a network in the Paris region and also in Normandy, based on its patented W-OFDM technology, which is WiMAX-ready.
Cometa hotspot backhaul:
Cometa becomes the first major hotspot operator with firm plans to use the emerging technology to backhaul its Wi-Fi services. The company, which aims to build a pan-American network of hotspots and is backed by IBM, Intel and AT&T, is to trial the use of a WiMAX backbone from early next year.
Its president Gary Weis said that Cometa would test WiMAX backhaul in its home market of Seattle early next year in a bid to “lessen our reliability on terrestrial networks”. Cometa is unlikely to try to buy its own licensed spectrum, and Weis hinted at a more probable way forward – partnering with the owner of some underused MMDS spectrum and licenses, on which WiMAX can ride. He believes that MMDS holders, most of which drastically underuse their bandwidth, can seek a new source of revenue in WiMAX partnerships.
Russia:
Intel and Nokia are both eyeing Russia, India and Latin American fixed wireless operators as key initial targets for WiMAX. They are particularly interested in Russia because the country deregulates its telecoms infrastructure from 1 January 2004. Steve Chase, president of Intel Russia, sees this as a golden opportunity to drive the creation of a modern wireless infrastructure, since penetration of telephones – wired or wireless – is only 20%, and only 50% even in Moscow.
"We can connect Russia to the world like Peter the Great only wished he could," said Chase. Intel has aided local WISP ComSet in setting up the first Russian hotspot services in Moscow and St Petersburg. ComSet plans to use WiMAX to open broadband access to Russia over the coming two years. "WiMax is expected to open broadband penetration in Russia from the current less than 1% to 10, 20 and even 30% very fast if all the stars line up in Russia," said ComSet.
Nextel:
Nextel is poised to be the first major mobile operator to deploy WiMAX as the US carriers race to enhance their data networks, pointing as they do so to many of the global trends emerging in fast mobile systems. Nextel sources confirmed to our analysts that they were “very interested” in the 802.16a broadband wireless standard and “far down the track” with trials, which if successful could lead to deployment as early as 2005.
The Nextel sources pointed to two potential uses for WiMAX – as a parallel data network for certain regions, to supplement its existing iDEN system and reach remote areas; and as an enterprise solution, whereby the operator could offer integrated Wi-Fi, cellular and WiMAX systems as part of its bid to become a direct supplier of networking solutions to the large company.
Unlike some of its competitors, Nextel does have new spectrum and so the flexibility to introduce new services. In July it paid $144m for broadband spectrum in 100 markets that had belonged to the bankrupt WorldCom. Its main motivation for buying the spectrum, in the 2.1GHz and 2.5-2.7GHz bands, seemed to be to boost its enterprise ambitions by developing a high rate data service at a premium for business users.
The frequencies that Nextel acquired fall within the MMDS spectrum allocated by the Federal Communications Commission – initially to support one-way broadband applications such as pay TV, but then extended to two-way use. MMDS did not take off as rapidly as expected because early equipment was expensive and complex and the other main spectrum holder, Sprint, has put its roll-out on hold. However, MMDS spectrum has huge potential for WiMAX services – a factor that could lure Sprint into the game at an early stage too, especially as its current high speed data strategy is more focused on Wi-Fi hotspots than 3G.
Nextel and Sprint own two-thirds of the 2.5-2.6GHz MMDS spectrum. There are also 100MHz from 5.725-5.825GHz that are available for WiMAX in the US, but MMDS licenses may be pivotal to the standard’s fortunes in the country.
Mobile WiMAX:
Nomad Digital Rail (NDR) is testing on-train Wi-Fi and 802.16e systems on UK trains and plans to use the mobile version of WiMAX in future deployments to deliver the same applications at higher speed than Wi-Fi, although it will roll out 802.11 until the ‘e’ variant is standardized. The ideal will be integration of station-based Wi-Fi hotspots with 802.16e in the train itself
First ‘WiMAX county’:
Across the pond, Houston County, Georgia, is poised to be the first county in the US to have blanket wireless coverage using WiMAX technology. Intel is backing the project and, if it comes to fruition, will use Houston as a proof of concept for the WiMAX technology it is promoting so assiduously. Terry Smithson, education marketing manager at Intel, said a successful roll-out in Houston could lead to WiMAX-based services being extended to large areas of Georgia. "I would like to highlight Georgia nationally as a state that other states should look to to move into a wireless model," he said.
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