WiMax must target GSM

The Sprint Nextel contract with leading vendors to provide it with a US WiMax network could hold the key to the technology taking off over here.

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By  Caroline Gabriel Published  October 22, 2006

|~|84-WIFIviewbody.jpg|~|WiMax technology needs to attract a large number of providers to achieve an international presence and achieve the volume pricing it originally promised.|~|The Sprint Nextel contract for Motorola, Samsung, and Intel to provide it with a nationwide US WiMax network is the technology’s most significant boost so far, but the technology still needs to attract a large number of providers of various kinds to achieve the international presence and the volume pricing it has promised. A group of operators that could be very significant to this attempt will be the GSM carriers, especially those with no 3G license or which will gain 3G spectrum that is technology neutral. Adopting WiMax as their next- generation system would give the 802.16 vendors a valuable volume hike, especially benefiting those that have not fared well in the universal mobile telecommunications system (UMTS) market, such as Nortel and Motorola. It will be essential for WiMax to offer such carriers lower cost per Mbps than UMTS, dual-mode handsets and full multimedia support, all of these on the horizon for 2007-8 according to supporters. If they deliver these benefits they will offer GSM carriers a chance to leapfrog UMTS with better price/performance — an argument that Motorola is also using in the 3G world, claiming WiMax will pre-empt long term evolution (LTE), the next-generation of the 3GPP platform, in adopting many key technologies. Since LTE and WiMax will be so similar, vendors that succeed in the latter will be in a strong position to take advantage of LTE too, even if they have not been strong players in UMTS. These related trends, offering new options for GSM and UMTS cellcos, could fragment the mobile market again — with code division multiple access (CDMA) evolution data only/evolution data optimised (EV-DO) still keeping its end up — but this will become increasingly unimportant with the evolution of common components, dual-mode devices and software base stations. While GSM/UMTS vendors may suffer lower than hoped-for volumes because of this split, operators should benefit from the greater competition, which will drive down prices and accelerate research and development (R&D) cycles. The Sprint Nextel decision to use 802.16e in its large swathe of 2.5GHz spectrum is undoubtedly the most important milestone for WiMax so far. Other large carriers have made a commitment to the technology, but none — apart from those in Korea, where the technology was government backed — with a definite roll-out plan to match that of Sprint. WiMax critics may claim the technology got lucky — because it beat the other majors into time division duplex (TDD) spectrum, or because Intel offered such good financial incentives — but the fact is, even with those advantages, Sprint has to select a technology that it believes will work. Its broadband mobile/wireless quad-play strategy is risky enough without trusting to a network that may not deliver. However, one carrier, even of Sprint’s calibre, does not make a standard. WiMax looks likely to attract a good handful of large operators — established or new — which are focused on advanced multimedia services. But those pre-4G services will be slow to gain mass, if 3G is anything to go by, and 802.16 also needs real volume. For that, one of its prime targets must be the GSM community, where in some markets it can offer an alternative future to UMTS. Winning a large GSM operator would be “even more profound” for WiMax than the Sprint deal, as Dan Coombes, CTO, Motorola Networks, one of the key architects of that deal, puts it. Uptake of WiMax by a reasonable number of GSM players — which still control the largest portion of the service revenues of the mobile world —would not only give it the early volume necessary to deliver its pricing promises, but could also hurt the volume projections for UMTS in some markets. WiMax has been viewed with hostility by the GSM/UMTS vendors because it could support new competition to their client operators, in the shape of wireline or media companies that had previously been excluded from the cellular game. But it could be disruptive on two fronts with some key GSM successes — undermining UMTS as the default upgrade path for this sector as well as accelerating the shift of the more advanced markets from 3G towards a quad play world in which many new providers can participate. We have seen rising interest in WiMax among GSM operators. By 2009, cellcos will account for 22% of WiMax operators and 17% of capex investment in the technology, up from 9% and 4% respectively this year. Of those investing by 2009, over half are GSM operators, which plan to adopt dual-mode WiMax/ GSM services, with or without a UMTS deployment. Africa will be particularly important in this trend. Most are in markets where 3G licenses have not yet been allocated, and so they see 802.16 as a potential opportunity to achieve lower build-out costs, and/or to leapfrog UMTS in terms of capability, inching closer to ‘4G’ at an early stage. The Brazilian cellcos are a good example, showing strong interest in using WiMax instead of, or alongside, UMTS, when their 3G licenses are auctioned. Unlike in Europe, most regulators are likely to follow the US Federal Communications Commission (FCC) and make new allocations of mobile spectrum technology-neutral. Some more unexpected interest comes from GSM providers in markets where 3G is already underway, but which failed to gain a 3G license of their own. It is hardly a coincidence, then, that the UMTS community has accelerated its efforts to make products that run in the GSM bands, and to lobby regulators to permit these. Ericsson recently demonstrated UMTS running in all nine of its 3GPP-approved bands — the technology has largely been deployed just in 2.1GHz to date. With France likely to be the first European country to allow UMTS to be run in GSM spectrum, the 3G players are clearly seeking to pre-empt a move by WiMax into those frequencies, as operators face the need to go beyond GSM and move to a next-generation service. ||**||WiMax and LTE|~|84-WIFIview2body.jpg|~|GSM operators are investing in WiMax and plan to use adopt dual-mode technologies, leapfrogging UMTS deployment. |~|Coombes argues that a GSM operator that moves to WiMax instead of UMTS in 2007-9 will gain a head start in terms of next-generation services. Since the 802.16e system will be close in its characteristics to LTE, the pre-4G generation of UMTS, which will lag at least two years behind in terms of market availability. Coombes believes that Motorola — which missed the UMTS boat and has placed its activities in this market into a joint-venture with Huawei — will, conversely, be strongly positioned in LTE because of the experience it will have gained in 802.16e. The same argument is being made by Nortel, which looks set to divest GSM and UMTS businesses but re-enter the fray at the pre-4G phase, supporting both WiMax and LTE, as well as CDMA EV-DO Rev C. “LTE is very WiMax-like,” Coombes told Wireless Watch. “I can program my hardware to do LTE, they’re that similar. This means we can put LTE features into WiMax early, and also be in a strong position for LTE in future.” And he indicates that Motorola and others would create an FDD version of 802.16e if required by the market (LTE will be both TDD and feature driven development (FDD), while UMTS is mainly FDD, apart from the IPWireless TD-CDMA implementation). However, despite much industry talk of the two standards eventually converging, he believes “there will always be two standards because the Europeans won’t throw in the towel, but the technologies will be so close”, reducing the risk for both vendors and operators since many R&D activities and expertise will be reusable across different platforms. This could weaken the assumption that LTE must be the upgrade path of choice for a UMTS operator. Like UMTS itself for a GSM player, LTE will require a completely new build-out. Where regulators give providers a free choice of network (unlike the EU policy that ensured UMTS would dominate in Western Europe), WiMax could be an equally valid option. With multimode handsets and software programmable base stations making it easier for operators to support, or interoperate with, different networks, the requirement for uniformity that drove the EU’s policy on GSM / UMTS fades, and far more genuine competition between technologies can be supported. But of course, the real competition is for the end-users, and the proof of the technology choice will be what the operator chooses to do with it. Sprint, by doing what it most likes and seeking to gain competitive edge from early adoption of a new technology, is also taking on a high risk — notably that it will roll out a network and service that nobody yet needs or wants. Two factors will be key in mitigating this risk and preventing Sprint suffering the disappointments of the European 3G operators, which are widely admitting that their assumptions about market uptake of multimedia and data-heavy services at premium rates were way ahead of the market and ahead of users’ willingness to spend on mobility. One is the handset. Expensive, unattractive handsets were an important barrier to uptake of early European 3G, and both Motorola and Samsung are determined to ensure that a wide range of devices — many low cost, and many non-handsets — are created for Sprint Nextel to tempt its subscribers. The other is the partnership with the cablecos, which will bring Sprint what its European counterparts sadly lacked — experience in sourcing content and working within a content- value chain. Varied fixed and mobile devices and attractive, well priced, content and services will be critical to success for Sprint — if it launches an offering that is largely laptop-based and looks like a souped-up WiFi, it will provide nothing not already supported by the 3G networks of Verizon Wireless and Cingular Wireless, or even T-Mobile’s hotspots. Even gaming, media sharing, television and so on are likely to be quite advanced on the 3G systems — including Sprint’s own EV-DO Rev A/B roll-out — by the time its WiMax offering hits volume. Convergence, then, will be vital, with services delivered uniformly to handsets, MP3 players, PCs and set-top boxes (an aspect in which Motorola, of course, has a particular interest, given its business in supplying boxes to cablecos). And the support of the consumer electronics industry will also be important to drive new access mechanisms. Of course, in terms of commercial justification Sprint needs to concentrate on cost per Mbps to deliver — a metric it can predict and control far more effectively than average revenue per user (ARPU), as the Europeans have found to their cost. In a world where users increasingly demand more bandwidth for lower rates, if Sprint achieves its aim and delivers broadband services for at least 50% less cost than on EV-DO, it will give an even greater endorsement to WiMax than it did just by selecting it for 2.5GHz. And any such cost efficiency proof would be significant in winning that most coveted of user base — the GSM operators. ||**||

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