Subject: [NEXTEL-1] The "Why" of WiMAX

From: [email-masked]
Date: Thu, 13 May 2004 12:27:00 -0400

The “Why” of WiMAX

By Peter Jarich, Senior Analyst, Wireless Services, Current Analysis,
Inc.

On the universal hype scale, WiMAX is quickly rising. It’s not like the
industry needs another buzzword, but there’s no denying the fact that
vendors and operators alike are talking it up. However, until both
products and business models emerge, it’s unclear how justified this
hype is.

Hot on the heels of Wi-Fi’s stellar success, the industry now has a new
wireless standard to latch on to. While 802.11 focuses on high-speed
local wireless connectivity at 2.4 GHz and 5 GHz, 802.16 tackles wide
area wireless with data rates beyond the 54 Mbps of 802.11g and with
spectrum up to 66 GHz. Yet, like 802.11, the completion of 802.16
standards was followed by its own marketing and
interoperability/certification group —

WiMAX. And, based on the success of Wi-Fi, the momentum and hype around
WiMAX has been steadily growing: Alcatel and Siemens have announced a
commitment to WiMAX products, competing wireless infrastructure vendors
continually speak of its importance and new research reports surface on
a weekly basis predicting the success of 802.16.

But, vendor interest and research reports are not new to the broadband
wireless space. Only five years ago, companies like Alcatel, Lucent and
Nokia were would-be LMDS and MMDS players while some analysts
(mistakenly) predicted that these markets would be worth billions of
dollars well before 2004. So, the question of whether or not WiMAX
really deserves the attention and high hopes surrounding it is important
to operators and vendors alike.

Like the last time vendors rallied around broadband wireless, the
interest, today, seems a little rushed. True, to be successful in any
new technology —to be a market leader — vendors typically need to get in
on the technology early. With no WiMAX products certified and few major
vendors tying WiMAX to specific business models, “early” is a good word
for it. Yet, even at this early stage, the promise of 802.16 is strong.
802.16a, in particular, plans to leverage lower frequencies (below 11
GHz) and OFDM to support non-line of sight (N-LOS) operations which
maximize an operator’s addressable market while minimizing the need for
installation costs. And, with a standard behind it, WiMAX stands to
benefit from scale efficiencies yielding equipment cost reductions. Some
researchers are even arguing that WiMAX could mimic the success of Wi-Fi
as the standard drives costs down.

Right now, this seems — at best — a dubious claim.

WiMAX shipments are unlikely to ever approach the scale of Wi-Fi. The
range and data rates of WiMAX mean that fewer 802.16 base stations will
be required. And, while Wi-Fi has made its way into everything from VCRs
to web cams, WiMAX is positioned as a wide area technology; the consumer
electronics applications that have driven 802.11’s scale are unlikely to
exist for 802.16. Intel may be planning to put WiMAX into laptops and
other devices. However, the flexibility of the standard alone (multiple
spectrum options, duplexing options, etc.) will only hurt scale
efficiencies compared to 802.11.

Larger than scale, however, is the question of WiMAX business models.
That is, “what are the business models and what specific market demands
will 802.16 products solve?” A number of potential uses have been
proposed: residential broadband, business broadband, Wi-Fi backhaul,
Wi-Fi replacement and cellular backhaul. Smaller vendors have been
selling into these markets with pre-standard products for years. As
established wireless infrastructure vendors step into the game, however,
no clear vision for the technology has emerged. In part, the flexibility
of the 802.16 standard is to blame. In part, operators are still trying
to “get their heads around” the potential of WiMAX and how it fits into
their own business plans and how alternatives to 802.16 — IE, Nextel’s
trial with Flarion — pan out.

But, until vendors start detailing their own product plans, operators
will have a very difficult time fleshing out their service plans. Until
operators have a strong indication of what new 802.16 products will look
like, they will have little success determining how these products fit
into their business plans.

To the defense of WiMAX, Wi-Fi has developed beyond its original
“mission” of enterprise wireless access. CDMA and GSM have, likewise,
moved beyond basic voice services. Both, however, began with a clear
vision of what they would be used for — applications which would build
initial sales and allow scale to kick in. And, if anyone would doubt the
importance of marketing and/or messaging, the development of specific
“emerging market” wireless solutions and 3G applications platforms makes
it clear that operators still welcome a little help as they plan their
services (even from major vendors which otherwise support a full
complement of products).

As WiMAX attempts to carve out its own success, it would be a shame to
ignore the lessons of the past. It would be an even bigger shame to
ignore the lessons of the recent present.

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