FEATURE WiMAX
of penetration and bandwidth. 4G WiMAX is
the most economical way of achieving this.”
This was followed up in November with the
news that seven additional firms had come
on board. Bluenowhere, imag!ne, Mott Mac-
Donald, National Grid Wireless, Quiconnect
and Red-M joined Macropolitan and Nortel.
The collaboration intends to commence a
number of showcases in the New Year to test
the mobile WiMAX user experience which,
if successful, will then help demonstrate
that mobile WiMAX services are ready to be
rolled-out in the UK.
Meanwhile, Senza Fili Consulting suggested
that early success of WiMAX in emerging
markets is crucial to ensuring the long term
prospects for the technology. “The mobile
market will take longer than the fixed one
to grow, because most mobile operators do
not yet need a data-only wireless network to
complement their 3G networks,” said Senza
Fili’s Monica Paolini.
Informa Telecoms & Media (ITM) reckons portability
will drive WiMAX revenues. Starting in
2009, growth in revenues from non-fixed WiMAX
services will outstrip growth in revenues from
fixed WiMAX services, said the analyst house.
As the first portable WiMAX devices arrive,
in the form of PC cards and notebook computers,
portable revenues will start to increase
strongly and will provide almost half of total
revenues by 2012, said ITM. Mobile devices
will follow with revenues from mobile users
growing even faster, albeit from a small
base, to reach 30 per cent of total revenues by
2012, showing the value that will be placed
on the ease of use and flexibility provided by
a variety of device form factors.
The largest element of WiMAX revenues
worldwide will be access charges, growing to
$17bn in 2012, stated ITM. Value-added services
for both the consumer and business sectors are
forecast to grow significantly faster, reaching
about 30 per cent of total revenues in 2012,
while advertising is expected to start later but
show the fastest growth of the three revenue
streams, reaching just under 13 per cent of the
total by the end of the forecast period.
Access charges include both regular contract
subscriptions and ad hoc or prepaid
charges, such as those incurred when a user
visits a WiMAX hotzone in an urban area. “The
assumption is that WiMAX operators will continue
to charge flat-rate fees, similar to wired
broadband fees, albeit with usage limits,” said
Mike Roberts, principal analyst at Informa.
“This is in contrast to the per-megabyte fees
charged by some mobile operators.”
The vital question in any discussion of
WiMAX, or indeed any other network technology,
is the cost. In April Ron Resnick, president
Things looked to be going
well for WiMAX in 2007.
However, mobile WiMAX’s
ambitions were about to
head south in the most
dramatic of fashions
and chairman of the WiMAX Forum spoke exclusively
to MCI: “There’s an inference that the
cost is higher. But it’s already there,” he said.
“The deployment cost is highly competitive
in the access network.” WiMAX is a native IP
or Ethernet system and so the core network
consists of widely used routers and servers
that are already being produced on a very
large scale for general purposes.
Devices, though, remain scarce, and it
amounts to an industry principle that without
good devices, one might as well give up.
“Subscriber stations, well, there’s tens of millions
of cellphones, but the initial deployments
are primarily customer premises equipment in
homes and enterprises, then notebook computers,
and ultra-mobile PCs,” said Resnick.
Resnick reckons the first PCs with integrated
WiMAX chipsets will ship next year.
“It will scale better than 3G,” he said. “If you
already have WLAN, the incremental cost is
very small, and the royalty rate significantly
less than for cellular. If you think a cellular
3G card is about $120,” he went on, “the first
[WiMAX card] should be $75-100, and will go
significantly lower in PCs.”
In July, Sprint and Clearwire announced a
partnership that would see them join forces to
build-out a nationwide WiMAX network. Sprint
would focus its efforts on building out WiMAX
coverage in geographic areas covering about
185 million people, including 75 per cent of
the people located in the 50 largest US markets.
While Clearwire would focus on areas covering
approximately 115 million people. The following
month Sprint announced that its soon to be
launched service would be known as Xohm.
In October, the International Telecommunication
Union finally announced that WiMAX
34 Mobile Communications International | First for news, best for business
had been approved as a 3G IMT-2000 standard.
Meaning WiMAX deployments to occupy globally
allocated frequency bands and complement
or compete with other 3G technologies.
Overall, things looked to be going well for
WiMAX in 2007. However, mobile WiMAX’s
ambitions were about to head south in the
most dramatic of fashions. In early November,
Sprint reported a year-on-year 77 per cent drop
in third quarter net income from $279m in 2006
to $64m in 2007.
Commentators, speaking with the benefit
of hindsight, were quick to point out that instead
of focusing so heavily on a commercially
unproven technology, perhaps Sprint CEO
Gary Forsee would have been better placed
concentrating on getting the best out of what
he had in place already. Ripples of shareholder
disquiet broke out. Many wondered whether
mobile WiMAX was Forsee’s folly. The chief
stepped down.
Worse was to come, a mere four months after
their fanfare marriage, Sprint and its WiMAX
build-out partner Clearwire announced their
separation. The US carrier maintains that it
will go ahead and roll out WiMAX, but the
plans are in disarray.
Clearwire’s results show that WiMAX build
out is an expensive business. Although revenues
jumped from $26.9m a year ago to $41.3m in the
third quarter, the company reported an adjusted
Ebitda loss of $84.1m, compared to $23.3m in
the third quarter of 2006. The expanding losses
were driven primarily by Clearwire’s ongoing
investment in the construction and deployment
of wireless networks, associated market launch
costs and increased total subscriber acquisition
costs, the company said.
Next year is crucial for mobile WiMAX.
“Most people will be wondering how the
company-wide issues at Sprint will impact
on the technology roll out. Our view is that
Sprint will launch services in selected markets
in 2008 as expected, partly because it has
come too far and invested too much to back
down now,” writes Informa’s Roberts, in the
firm’s annual Mobile Industry Outlook report.
“There is clearly a chance that the roll out will
be scaled back due to cost-cutting across the
company, but we don’t expect anything more
dramatic given that Sprint’s 2.5GHz spectrum
is a potential competitive advantage, and an
asset that is has to use by 2008-09 or risk
losing it due to FCC requirements.”
The WiMAX market is, of course, much
bigger than Sprint, and a lot of deployments
based mainly on WiMAX fixed equipment will
move ahead regardless of how well mobile
WiMAX is received. But then, many of these
deployments are small. Or as the GSMA’s
Ehrlich would say, “niche”. �
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