Opinion: Ericsson delivers blow to unified 4G dream
By Caroline Gabriel, Rethink Research | 7 Apr 2017 |
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Ericsson was never going to welcome WiMAX, given its potential cannibalization of the Swedish giant’s strongest market, UMTS/HSPA. It was mellowing towards the technology last year as it sought to diversify its customer base and become less dependent on cellcos, moving towards multi-network convergence and managed services for its growth. However, last month, it cancelled its WiMAX R&D projects, announcing that it will focus on bringing LTE to market as early as possible in order to satisfy operator calls for a more rapid agenda, and to ensure WiMAX cannot leap into a vacuum caused by a prolonged wait for 3.9G. Since LTE and WiMAX are similar in technology fundamentals, Ericsson could well afford to support R&D on both and create a converged, all-bases-covered approach like Motorola’s and Nortel’s. So Ericsson’s public rejection of 802.16 smacks of politics and spin, aiming to reduce operators’ confidence in WiMAX while raising their hopes of near term LTE, as well as wrong footing WiMAX enthusiasts like Motorola.
The pre-4G networks are evolving on such similar paths that they will be distinguished by brand and politics, rather than core technologies. But those differences may still be just as divisive and deeply ingrained as if the various factions - WiMAX, LTE and Qualcomm's Ultra Mobile Broadband (UMB) - had chosen entirely different physical designs. Against this backdrop, the WiMAX community is necessarily on the defensive because its technology lacks the advantage of an installed base heritage like UMTS or GSM. So Motorola and Nortel, the companies that failed to get rich on UMTS, are keen to stress the convergence potential between WiMAX and LTE - they say the R&D overlap could be over 85%. Conversely, those with most to lose by having a viable alternative to the HSPA/LTE route - Nokia and Ericsson - have been more inclined to stress the differences and the lack of backwards integration.
Nokia's decision to commit serious resources to WiMAX (at least on the handset side) was arguably the greatest credibility boost for 802.16: more important than the inevitable support from Intel. Therefore, Ericsson's decision to publicly reject WiMAX delivered a serious blow to the idea of a converged next generation roadmap leading naturally to 4G.
It is hardly surprising that the Swedish giant - dominant in UMTS and leading the market in commercializing the latest iterations of HSDPA - should seek to wipe any challenger off the wireless map. Last year, it seemed the company was mellowing towards WiMAX, acknowledging it could have a place in major integration and services projects in future. Now it is very blatantly voicing the view that WiMAX is irrelevant to large operators - a tool for a few challenging ISPs with limited spectrum and a possible DSL extension network for rural areas, (a market where Ericsson will continue to sell 802.16 systems, which it badges from Airspan).
Is Ericsson putting WiMAX firmly back in its place after the over-excitement generated by a few isolated carrier choices, those heavily Intel-driven? Or is it recklessly excluding itself from a pole position in the multi-network, converged 4G world that will inevitably evolve over the coming decade, with a blind attachment to its own technologies?
The answer will partly depend on whether other important vendors and operators take their cue from Ericsson. Despite its massive market share and its ability to set the agenda in its key markets, Ericsson is adjusting to a world of fixed/mobile convergence and all-IP, just like the other anti-WiMAX cheerleader, Qualcomm. In this scenario, it will have less logical leadership than in 3G, and will have to fight for its position - a battle for which it is assembling powerful weapons, such as building up its managed services business to acquiring technologies in fixed networks and IPTV. With all this activity and investment, it might have been expected for WiMAX to be another weapon in Ericsson’s arsenal, especially given that, according to Motorola and others, it is relatively trivial (in carrier-class R&D terms) to develop LTE and WiMAX in parallel. A WiMAX strategy would have allowed Ericsson to cover as many network bases as possible in its multi-technology world. Therefore, the exclusion of 802.16 looks like a calculated political gesture, designed to sway the climate of opinion against WiMAX and stack the odds in favor of a 4G where Ericsson's chosen systems are in the lead.
But in the vendor community, who will follow Ericsson's lead? It is diverging radically from its fellow Scandinavian GSM giant Nokia. Nokia is less interested in large carrier convergence and more focused on new markets driven by its key handset business – high-end multimedia applications and the enterprise. In this context, it is embracing all-IP and trying to extend its user base beyond its traditional cellular carriers, something Ericsson risks failing to do if it remains too LTE-centric. Nokia, keen to reduce its dependence on cellcos, is looking aggressively to new phone models that are based on technologies like Wi-Fi and WiMAX, and is well ahead of Ericsson's handset interest, Sony Ericsson, in dual-mode and multimode devices.
Among the other majors, Motorola and Nortel have to remain committed to WiMAX because they have sidelined or exited UMTS. In the medium term, they have the fallback plan - should WiMAX fail - of their aggressive LTE development plans, and claim the experience of creating 802.16e systems will give them a head-start in this technology and, implicitly, 4G. But to generate new customers and revenues now, they are highly dependent on WiMAX taking off, at least for one generation - even if that platform eventually becomes subsumed into a broader, and potentially LTE-driven, 4G system. If this scenario plays out, of course, Ericsson will have made a strong gamble, relying on UMTS for its short term revenue streams - a sector where it is already very strong - and then joining the pack at the LTE stage.
But the fact remains that, before LTE is here, there is a large community of service providers that cannot adopt HSPA because they have unsuitable or insufficient spectrum and no cellular heritage, increasing the appeal of a true IP network that is (almost) available now. Ericsson, despite its activities in wireline IP convergence, seems to be writing off the potential of the new breed of wireless quad play operators.
Alcatel-Lucent is clearly the biggest competitor to Ericsson now, and while it has a clear WiMAX and LTE strategy, it has less strategic commitment than Motorola and Nortel. Alcatel will not see its decisions swayed too strongly by Ericsson, and indeed may step up its activities in WiMAX to fill gaps that the Swedish giant might otherwise have targeted.
Ericsson acknowledges that the development of LTE needs to be speeded up. This is something that cellco chiefs have been calling for increasingly loudly – the most famous of which was Vodafone CEO Arun Sarin’s veiled threats at the 3GSM conference that, if LTE did not reach the market in good time, operators would have to consider alternatives. Currently, that alternative does not exist - pre-certified 802.16e systems will come to market this year but carriers need to see a choice of large vendors in the market before committing major dollars. The argument that WiMAX represents a leapfrog and a head start towards pre-4G is fundamental to 802.16 backers, but Ericsson's lack of conviction, for all its self-interest, will hit the argument hard and may undermine confidence among some interested operators. And of course, it will be operator confidence, and the investment decisions they make in 2007-2010 as they upgrade their cellular networks - or move into wireless for the first time - that will really decide the issue.
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