Can WiMAX keep its headstart despite UMTS challenge?
Published: Thursday 15 April, 2004
WiMAX has made a strong start in its quest to become the leading standard for broadband wireless communication in the coming years. However, a by-product of the high profile that 802.16 has recently achieved is an increasing awareness among operators of the potential of broadband wireless in general, something that is creating a spike in investment in fixed and mobile equipment – but not necessarily based on WiMAX.
While the boom is, in the short term, benefiting proprietary gear – remember, there are no fully certified 802.16 products on the market yet – the market will certainly shift to standards as they become available, based on economics and interoperability. But the question is, will that standard inevitably be WiMAX, or will it be sidelined by challengers such as UMTS TDD, Mobile-Fi or a de facto offering from one of the two great undecided players in this field, Cisco or Motorola? WiMAX vendors will need to ensure that their products come quickly to market, and with the right price/performance levels, to guarantee that they reap the rewards of their early lead. Otherwise, they could risk a rerun of the situation in 2000, when much-hyped broadband wireless access (BWA) technologies collapsed, leaving the entrenched cellular and wireline alternatives supreme again.
To win operator attention, any technology needs to offer the ability to deliver new, high margin services that are not practical over their existing networks; to do so at an attractive price point and with relatively low risk (hence the appeal of standards even in the fixed wireless sector, where interoperability is less of an issue than for mobile); and preferably to integrate with their other networks, especially cellular.
While WiMAX in its fixed (802.16a/d) and mobile (802.16e) forms has strong claims – in the absence of any fully certified products as yet – to fulfil these criteria, other technologies are making similar assertions. One is UMTS TDD (Time Division Duplexing), which is of particular appeal to European mobile carriers because they were allocated TDD spectrum along with their 3G licenses. So, while US cellcos and global fixed line carriers are most naturally drawn to Wi-Fi and WiMAX for broadband data and VoIP plans, TDD may gain more ground in wireless Europe.
In February, supporters of the platform – a lesser known broadband data variant of UMTS 3G using time division instead of frequency division – banded together to form the Global UMTS TDD Alliance, under the auspices of the GSM Alliance, to attempt a backlash against the growth of WiMAX. UMTS TDD was specifically conceived for high data rates and defines burst structures that support advanced signal processing and wide channels (5-10MHz) in order to boost performance. Shared channels are also supported, enabling on-demand assignment of resources.
It supports full mobility but, unlike its cousin, can work in unpaired 3G frequencies that have been licensed in many countries in Europe and Asia.
About 120 operators worldwide have such spectrum, and some UMTS TDD systems have also been rebanded to work in other bands usually occupied by fixed wireless, increasing its potential to be a last mile solution. Spectrum can be allocated efficiently because it supports ‘variable asymmetry’, meaning the operator can decide how much capacity goes to uplink versus downlink – valuable for fixed wireless applications where the balance is heavily weighted to the dowlink.
The appeal of TDD to UMTS spectrum holders is clear – it is available right now, supporting both fixed and mobile applications, and so has a two-year headstart on WiMAX; and it enables them to maximize usage of their dearly bought licenses and to launch new services without investing in new frequencies or vastly different equipment. WISP Clix, in Portugal, was the first to demonstrate this, launching a UMTS TDD service on the back of 3G licenses held by cellco Optimus.
TDD also helps operators to wage the war for broadband data in licensed spectrum rather than venturing out into the wild frontier of unlicensed bands, although the operators will need to be convinced that they can offer services using TDD that are superior to and differentiated from the inevitably cheaper ones of the unlicensed brigade – or be prepared to subsidize them to keep the alternative operators out, through service bundling and so on.
TDD has normally been used to date as a DSL alternative in the last mile, though it can support mobile data at 4Mbps – double the speed of its FDD cousin, but significantly slower than WiMAX or Wi-Fi. It could also be a hotspot backhaul solution at lower cost than T1 lines, an application for which a Scandinavian operator is reportedly testing a TDD-based solution from IPWireless.
Despite these advantages, UMTS TDD has still to sign up a tier one operator, perhaps because most of its suppliers are relatively small and it has not caught the eye of the big equipment makers as WiMAX has through Nokia, Siemens and Alcatel. The notable exception is Samsung, which is a founder member of the Alliance, but which tends to back all horses when it comes to standards. The potential of a dual network supporting both FDD and TDD will be greatly improved when dual-mode chipsets are developed early next year. Alcatel and Nortel are among the infrastructure vendors that will offer such dual-mode functions from 2004 in their UMTS equipment.
Apart from Samsung, the equipment makers to join the new Alliance are smaller fry, and include Andrew, IPWireless, Possio and UTStarcom. There are also 18 broadband wireless operators among the founders, of which NextWave Telecom of the US is probably the best known, but which also include Japan’s IPMobile, Germany’s Airdata, AtlasOne of Malaysia, IQ Networks of Australia and Softbank BB of Japan.
IPWireless has been one of the most active of these companies, rolling out fixed and mobile systems while steering clear of both IEEE broadband wireless standards and pushing its own proprietary, IP-based cellular technology built around UMTS TDD. Earlier this year, it released a version of its Mobile Broadband platform for the 3.4-3.6GHz spectrum bands, which are widely allocated for broadband wireless outside the US. It already ships the product in the 1.9-2GHz spectrum and in the 2.5GHz MMDS band and plans versions for the new US band, 700MHz, and for 2.3-2.4GHz, which is the TDD band in China and Korea and is set aside for MMDS in Australia.
Among its recent wins was a contract with Airdata to create a service, called PortableDSL, in Stuttgart, Germany, as a pilot for a broader offering. IPWireless particularly targets its products at operators wishing to set up hotzones, since it provides longer distance coverage and greater mobility than Wi-Fi, but its adband platform can also be used as a fully mobile network and for ‘portable hotspots’.
IPWireless also has deals in Malaysia and Japan, and one for a nationwide network in New Zealand run by Woosh Wireless (formerly Walker) with, significantly, marketing support from Vodafone. Vodafone is also looking at offering BWA options in its portfolio of wireless services in Australia and is clearly in favor of those that us its existing technologies – the operator has, to date, been one of the least enthusiastic about embracing Wi-Fi and WiMAX.
While the UMTS supporters rally their troops, the WiMAX market is waiting with bated breath for the first chips from Intel and Fujitsu and the mass market and economies those will bring. In the mean time, according to ABI Research, demand for proprietary systems is set to grow by 50% this year, compared to 2003, in unit terms. This is being driven by the lower risk offered by ‘WiMAX-ready’ products and the promise of migration to a standards base, and by falling costs of gear as proprietary vendors ready themselves for the onset of 802.16. "With equipment prices comparable or sometimes cheaper to those initially promised by WiMAX, the market for these technologies is growing at an incredibly fast clip," commented the researchers.
In the BWA world, WiMAX supporter Alvarion is the market leader with about 25% market share followed by SRTelecom with 12% and Proxim (also fervent about 802.16) with 9%; while ZTE is the market leader in the fast growing Chinese market with about 30% market share. Among plug and play, portable systems, IPWireless leads, followed by Navini, NextNet Wireless and SRTelecom.
The EMEA region represents 32% of the total but Asia will outpace it by 2005, according to Maravedis, which predicts that WiMAX will create a surge in sub-11GHz fixed wireless sales, taking revenues up from $430m in 2003 to $1.6bn in 2008. The largest opportunity lies in the 3.5Ghz band, the most allocated frequency for BWA, followed by the 5.2-5.8Ghz band, but Maravedis predicts that the 2.3 and 2.5-2.7Ghz market share will grow to 25% of the market by 2008.
Regardless of whether WiMAX achieves dominance, its existence, coming on the back of the success of Wi-Fi, has altered the face of broadband wireless entirely. The two IEEE technologies have made BWA ‘respectable’ – no longer a high risk market, confined to rural or developing areas with uncertain economic models, and led by small and sometimes flighty start-ups; but something that every PC user is demanding. Wi-Fi has effectively ended consumer resistance to fixed wireless technologies, and operators are further driven by increasing political commitment in many countries to the principle of universal broadband, which in some areas can only be economically implemented using wireless – especially in countries like Sweden, where government pressure to give everybody access to broadband is very strong, but terrain does not lend itself to universal DSL or cable.
On the back of such trends, regulators have been forced to take a more liberal view, which in turn is driving growth – especially since the World Administrative Radio Conference agreed last year to the global use of certain bands around 5GHz for BWA.
The main obstacle is investor uncertainty. While money flowed into Wi-Fi, where the hotspot model was (initially at least) seen as simple and where there was ease of entry to the market and low risk, the same has not been true of WiMAX or other BWA platforms. WiMAX is a far more complex standard than Wi-Fi and deployments will be more expensive and risky – though low cost compared to 3G or many proprietary solutions. There is still confusion over where it fits between Wi-Fi, 3G and the often entrenched and cheap DSL technologies and many investors want to see a more clearly defined market for WiMAX before they spend dollars. Other factors deterring them are that it is still an expensive and complicated process to acquire spectrum, despite the WARC agreement, and negotiations must be done on a country by country basis; and there are the painful memories of the widespread failure of BWA providers during the telecoms crash of 2000-2001, in which many current potential investors were badly burned.
Pioneers like Teligent, Nextlink and Winstar entered the market in the late 1990s with networks based on cost effective LMDS (Local Multipoint Distribution System), but they played safe and stayed in over-served metro areas of the US rather than remote regions, and having paid huge federal fees for their licenses, all three companies filed for bankruptcy. Carriers such as MCI and Sprint invested in an alternative, MMDS (Multi-channel Multipoint Distribution System) but failed to gain significant market momentum – although BellSouth, Sprint and Nextel now own this spectrum and are likely to use it for BWA services in the coming year.
The lack of investor confidence means that much of the impetus behind BWA will increasing shift to the big names with the big budgets, and these companies are growing impatient of slow standards processes. Proprietary solutions are benefiting from the growing pressure on operators to introduce fast data services, especially to keep enterprise customers happy. This means that cellcos like Nextel and Sprint are willing to go with a non-standard solution that is available now.
However, both have made it clear that they will only pick a platform that has a clear migration path to a standard, either WiMAX or Mobile-Fi.
Therefore, this two-phased approach might slow down WiMAX, but it will not seriously threaten it. ABI forecasts that WiMAX will be mainstream by the end of the decade and will eclipse other technologies in revenue with a turnover of $1bn by 2009 in the fixed wireless space. Pyramid believes that WiMAX will make up 60% of this fixed sector by 2008, accounting for about 2m wireless broadband lines and over $1bn in access revenues. The strongest areas will be Asia and central and eastern Europe.
Mobile-Fi will have a harder job gaining mass market because it lags behind its IEEE stablemate and has less powerful backing. One of its strongest supporters, Navini, this week announced that it has also joined the WiMAX Forum. The most vocal backer of Mobile-Fi, Flarion, has extended its highly publicized trial with Nextel, based on its own Flash-OFDM technology, this week, but Nextel is also testing CDMA, IPWireless and pre-WiMAX gear as part of its move to offer broadband data services (see separate story).
Increasingly, the non-cellular BWA solutions that are hitting the headlines are coming from the WiMAX camp. One of the most interesting is that from NextNet Wireless, a competitor to IPWireless in which legendary cellular investor Craig McCaw has a stake. The company’s OFDM-based Expedience technology is proprietary, but its provider is an enthusiastic member of the WiMAX Forum and expected to migrate its platform to 802.16 over time.
The company has enjoyed some major wins, including a large project with Neotec in Brazil; a venture with MVS – Mexico’s largest telco and owner of extensive MMDS spectrum – to bring broadband to most of the country’s cities; and this week, a joint initiative in Canada, initially targeting the Vancouver suburb of Richmond and a rural area round Ottawa but envisaging a national roll-out. This venture consists of wired telco Allstream, mobile operator Microcell and NR Communications, a telecoms investment firm headed up by Nick Kauser, another veteran of McCaw Cellular, which will finance the equipment. Allstream provides the backhaul through its wireline network while Microcell, through its subsidiary Inukshuk, brings the 2.5GHz spectrum and a national network of cellular towers.
This deal is indicative of how the BWA market could go, with cellcos using their existing infrastructure to launch additional services and with different parties providing the backhaul, licenses, branding, applications and so on, reducing the cost, risk and time to market for all involved. The joint venture company will wholesale capacity back to both Microcell and Allstream, which will function as WISPs, and can also target other retail WISPs.
The involvement of Kauser and McCaw, both highly respected in the cellular world, gives NextNet a strong boost in competing for such deals. The NextNet technology covers a radius of up to 20 miles per base station from a device the size of a book, and so can support portability as well as its primary target, fixed wireless for residents or branch offices.
Also interesting is the involvement of AOL Canada, which will offer services to areas where there is low installation of DSL or cable over the NextNet system. There are rumors that AOL USA is also looking for a partner with fixed wireless spectrum, most likely Nextel, which has bought up significant MMDS spectrum and is trialling WiMAX and 802.20 itself. MSN is also likely to seek a wireless tie-up, with Sprint, also an MMDS holder, whispered as a contender. The interest of these internet content giants, seeking to increase uptake in rural communities, could be a major spur to fixed wireless activity.
Although there has been considerable noise recently around the potential for technologies like NextNet’s to steal WiMAX’ thunder and achieve sufficient installed base to make an IEEE standard redundant, the prospects of that happening are slim. Nearly all the proprietary BWA vendors now have a migration plan to WiMAX – even if they are biding their time before deciding when to launch products – and the move is particularly simple for a technology like Emergence that is based on a similar implementation of OFDM to 802.16.
Companies that only a year ago were aggressive about their ability to plough their own furrow are now seeking sanctuary in alliances and standards, as IPWireless’ push behind the UMTS TDD Alliance illustrates.
Operators and investors will not feel safe without standards, and that brings the BWA battle back to the usual sides – UMTS and CDMA cellular technologies versus OFDM. Companies that have neither, the most important example being Nextel, need to adopt one or both rapidly and, in order to ensure they retain domination of their customer base, most cellcos will need a hybrid strategy. But many would dearly love to avoid OFDM and maximize their investment in 3G – at least until cognitive radios come along and enable them to support all the platforms in one base station. This is where the data-optimized cellular standards – CDMA EV-DO and UMTS TDD - could steal a march, with those established operators such as Vodafone that seek to keep out alternative technologies rather than partnering with them.
rethinkresearch.biz |
