As WiMAX service edges closer to rollout here, the technology is advancing on a number of fronts, both in overseas trials and deployments as well as interest from venture-capital companies.
Dr. Mohammad Shakouri, board member and vice president of marketing for the WiMAX Forum, noted that progress is being made in both allocation of spectrum as well as certification of products, with the forum working on a mobile WiMAX standard as well. He noted that countries are taking different approaches to deployments depending on whether they need to expand broadband access or are relying on the technology to open up new revenue streams.
“WiMAX is technology that is trying to serve the richest of the rich and the poorest of the poor,” Shakouri said.
Sprint Nextel Corp. expects to begin turning on WiMAX service in trial markets by late this year. Multiple vendors are building out initial trial markets that are expected to launch by the end of this year. Of the markets identified to date, Motorola Inc. is building out six, Samsung Corp. is handling five and Nokia Corp. has been awarded eight.
According to recent research by In-Stat Research, small players that jumped into WiMAX quickly will be able to reap benefits without being gobbled up by larger but less nimble suppliers interested in the space.
“While the early pioneers of WiMAX should lose their market-share dominance over the next couple of years, they should continue to grow their revenues, benefiting from the overall growth of the market. These vendors continue to win larger contracts with higher-profile service providers,” said Daryl Schoolar, an In-Stat analyst, in a recent research note.
Venture capital, perhaps sensing that opportunity, has also recently been putting money into WiMAX-related companies, particularly mobile WiMAX chipmakers such as Beceem Communications Inc. and Altair Semiconductor.
Although WiMAX is often spoken of as a technology that could improve wireless connectivity in rural markets because of its ability to cover large areas with few towers, that phenomenon doesn’t appear likely to take hold in the United States; WiMAX spectrum here is concentrated in the hands of Sprint Nextel Corp. and Clearwire Corp., both of which have focused on planned deployments in large urban markets in much the same way that other networks have been launched.
Overseas action
Although some trials focus on metropolitan areas, the Australian government announced late last month that it chose WiMAX in order to extend wireless broadband coverage to rural areas of the country, with a network to cover nearly 250,000 square miles to be built by mid-2009. Meanwhile, operator Wateen Telecom in Pakistan, which has about 8 million GSM customers, chose WiMAX technology for a 17-city wireless fixed broadband services network. Moto was the chosen vendor for that deployment (and also financed part of the cost), as well as for a two-city, year-long WiMAX trial in Vietnam with Vietnam Datacommunications Co., which is slated to begin this October. The tiny island country of Taiwan has ambitious plans to be the world’s foremost testing facility for WiMAX.
Operator Nextwave Wireless Inc. also recently closed on the purchase of a 65% stake in Switzerland-based WiMAX Telecom AG, which has major spectrum holdings in Austria, Slovakia and Croatia and already provides wireless broadband to 8,500 customers.
Shakouri said that two basic approaches are being used to bring WiMAX to market: a gadgetbased approach based on integrated WiMAX capabilities into consumer devices, and a wireless broadband strategy similar to that of Clearwire Corp.
Wiggle room
Sprint Nextel has talked up the gadget tack, but also hinted at the possibility of selling wholesale access to its WiMAX network and is leaving itself plenty of room to change its mind on how WiMAX will be used.
“From an investor perspective, they haven’t made the business case clear,” said managing director and senior analyst Tom Watts of Cowen & Co. He said one reason Sprint Nextel has been cagey could be the fact that the company could be keeping the possibility of a WiMAX as a “third path to the home” as a fallback technology in case its cable partners either don’t make a big push to sell services from their joint venture-or if cable ultimately decides that it wants to go out on its own to provide its customers’ wireless experience.
Under pressure from investors who are nervous about the amount of capital to be poured into WiMAX, Sprint Nextel chairman and CEO Gary Forsee recently said that the company might consider lining up partners such as vendors, potential wholesalers of WiMAX and others with a “self interest in seeing WiMAX deployed” in order to make sure that the technology achieves ubiquitous deployment. The Wall Street Journal also reported that Sprint Nextel was in talks with Clearwire about some type of WiMAX partnership.
Asked recently whether Motorola would be interested in extending its investment in partnership with Sprint Nextel, Motorola CTO Padmasree Warrior said it would be premature to comment on the situation but added that the company “will support its partners doing creative things with their business models.”
Watts said that Forsee’s comments were probably defensive due to the shareholder pressure.
