Last throw of the dice for WiMAX

Like it or not, this is the year that will prove whether there is a business case for mobile WiMAX. If it doesn’t take off in a substantial way in 2008, I think you can safely proclaim it another broadband wireless niche platform that has come and gone, similar to the likes of LMDS, MMDS and some of the proprietary stuff that came before it. It will live on for providing fixed “DSL-equivalent” broadband in remote areas and emerging markets, but it will have missed its chance of becoming a ubiquitous broadband technology for the roaming masses.

If it hasn’t solidified its base by the end of the year, then it will be because carriers have chosen to stick with HSPA and wait for LTE, which will by then be just around the corner. And that will mean that WiMAX has been pushed down to become yet another footnote in wireless broadband history at the expense of the GSM juggernaut. (And the same goes for the other proposed 4G standard, Qualcomm’s UBM, by the way.)

Of course, it could be that WiMAX really does prove itself in 2008 and there are already some encouraging signs. In Japan late last year the government awarded two licences in the 2.5GHz band to consortia headed by KDDI and another to Willcom, with equipment vendors already lining up to provide gear. One thing to bear in mind, however, is that in the case of KDDI, trials are only expected to kick off in February 2009.

Similarly, 2009 is expected to be the year that another potential WiMAX market, Taiwan, really gets underway. Taiwan also sees itself as a major supplier of WiMAX equipment to the world, and it is interesting that there are already grumblings over there about the cost of WiMAX compliance testing. According to Digitimes sources, it will cost about US$25,000-31,250 for the makers to complete the certification testing of a single fixed WiMAX item. In addition, the WiMAX Forum is charging US$10,000 per mobile WiMAX product to use the WiMAX Forum certified mark compared to US$5,500 per fixed WiMAX model. The news report also noted that a fee of up to US$200,000 is being estimated for the testing of some items.

The WiMAX camp also got a generally favourable report from Juniper Research last week suggesting that the mobile WiMAX 802.16e market will grow to $23 billion by 2013, with half of that total coming from Asia. However, that will still only represent “a single digit proportion of the Asian mobile broadband base by 2013,” according to the report.

The Juniper report also warns that both the availability of suitable devices and the awarding of licences will be important factors in determining the success of Mobile WiMAX 802.16e, both in Asia and globally. Interestingly, it also tips licences in India and Thailand as being crucial to the WiMAX camp. Warning bells should ring right there, given the two countries’ notoriously slow licensing regimes. In the case of Thailand, you can almost guarantee that it won’t be issuing licences for WiMAX this year, given the political environment and the need to create a new regulatory body.

When it comes to devices, one of the WiMAX camp’s trump cards is the backing of Intel, which will see it become standard in every new notebook computer, much the same as Wi-Fi is today. The only problem with this is that if there is no network to connect to, it doesn’t really matter if the notebook is WiMAX-enabled or not.

In contrast, if the push to include HSPA in new devices takes off, the HUGE advantage they have is that the networks and service are widespread already. And the momentum to include HSPA chips in notebooks is likely to happen this year. Throw in all the HSPA-capable mobile phones, and the economies of scale certainly don’t favour WiMAX and won’t any time soon.

Despite some vendor claims to the contrary, WiMAX needs the Sprint rollout in the US to succeed, and it will need to succeed wildly in 2008 if it is to give any vote of confidence to carriers in the rest of the world wanting to roll it out. If it doesn’t, then the GSM/HSPA/LTE camp will have won the battle for mobile wireless broadband supremacy for the foreseeable future. – Geoff Long

Search site for breaking news

I came across a great new search site by the makers of Fon -- they're the guys that are bringing the social networking concept to Wi-Fi, where users share their access points. It's called Unfolding News and as the name suggests it's for keeping track of breaking news stories. It's still in beta but from the few times I tried it seems stable and quite useful.

Interestingly, Fon founder Martin Vasavsky said he came on the idea for the service because the likes of Google and Technorati weren't good enough for his "vanity searches". Apparently he likes to keep track of stories that mention him. Well, if you happen to read this one Martin, perhaps you can add me to your blog roll ;-) And it will also mean your search service is working!

That's also him on the cover of CNBC magazine above.

WiMax on the ropes?

Here's a commentary piece I wrote for CommsDay Asean last week, shortly after Sprint Nextel CEO Gary Forsee resigned. Over the past 12 months I've heard so many WiMax vendors suggest the fact that Sprint is rolling out a massive 802.16e network meant that the economies of scale for the technology were guaranteed. But what if Sprint changes its plans?
The usual reminder: You can sign up for a free trial subscription to Commsday at www.commsday.com


When Sprint Nextel CEO Gary Forsee abruptly resigned earlier this week, he probably expected the speculation on his future and the future of the company that he had helmed for the past four years. It's unknown, however, if he expected the questions regarding the very future of the WiMax technology he has helped hype for the past 12 months.

Yet that is the biggest story to arise since Forsee left the office on Monday afternoon: whether there is any future in WiMax without a tier one operator to champion it. Not that Sprint has necessarily dumped WiMax, but most commentators and analysts are now seriously questioning whether the wireless operator will proceed down the WiMax route.

At best, most expect Sprint to slowdown its WiMax activity, which could equally be detrimental to the future of the technology, as Bear Stearns equity research analyst Philip Cusick pointed out in a note to investors. "We believe that Sprint is likely to de-emphasise the WiMax business, which could result in a slower rollout for WiMax in the U.S., lower economies of scale for Clearwire and shrink the ecosystem necessary to attract consumer electronics companies to WiMax," Cusick wrote.

That's quite a damning summation, but it's not the only negative sentiment nor the worst. Patrick Comack, a senior equity analyst with Zachary Investment Research, was quoted by the Washington Post as suggesting the company was negligent in going with WiMax in the first place. "The fact that they bought a $5 billion network without testing it was a violation of fiduciary duty. It's like buying a $5 billion car without test-driving it first," he said.

A similar sentiment was expressed to CommsDay this week by Gartner VP of technology and service provider research Martin Gutberlet, who pointed out that the WiMax technology that Sprint is deploying, 802.16e, commonly known as mobile WiMax, had not even started compliance testing yet. And it is widely known that the network had many technical setbacks.

Aside from a few niche fixed WiMax deployments in emerging markets, Gutberlet all but wrote off WiMax's chances against 3G and 4G technologies such as HSPA and LTE. He said that a new version of WiMax, 802.16m, had more potential but only if it wasn't hobbled by being made backwards-compatible. As this was unlikely to occur, he suggested that WiMax will never make it as a mass market technology.

Even the fact that the likes of Intel was pouring money into WiMax and supposedly making it standard in every new notebook in 2008 did not convince him that WiMax would become mainstream. As Gutberlet noted, Intel has got it wrong before. And it could also be that Sprint has got it wrong, too.

Given that the WiMax camp has put so much emphasis on Sprint rolling out the technology, it's fair to say that if they do indeed scale back their WiMax plans, the technology's future doesn't look anywhere near as bright as it did in the Gary Forsee era. -- Geoff Long

Muni meltdown: the lessons for Asia

Here's my latest column from BroadBand Communities newsletter. Go to www.commsday.com if you want to sign up for free . . .


Here in Asia the term “muni network” is not common, although I’m guessing most people that follow the telecom sector will know that it refers to the municipal networks, usually wireless, that are being championed by local governments. In the U.S., however, muni networks are mainstream news. They’ve either been built or are under consideration in 455 U.S. cities, while they’re popularity has created a cottage industry of conferences, consultants, lobbyists and publishing ventures.

However, the whole concept of muni networks and the industry that has sprung up around it could be in danger of unravelling – something governments in this region should watch closely. As our US correspondent Patrick Neighly reports this week, Chicago is one of the high-profile cities that has recently had a re-think of its city-wide Wi-Fi plans, while at the same time Earthlink, a major investor in muni wireless infrastructure, has also done its sums and concluded that it’s perhaps not such a good way to spend its money after all.

It’s not alone, however, with skepticism about the whole concept of municipal Wi-Fi being the main theme of media coverage in the past few weeks. According to an article in this week’s The Economist, most of the networks that have been put in place today suffer from a wide but consistent range of problems: poor indoor coverage, underestimating the number of transmitters needed for city-wide service, a lack of demand for the service from the general public and no real demand from the city governments themselves.

Somehow, you would have thought that someone would have pointed to such potential problems before the estimated 175 municipal networks now in service were rolled out. It’s not like the coverage problems weren’t known, and stuff like estimating demand and the number of transmitters needed would seem to be fairly basic steps before rolling out any wireless service.

As for the governments themselves, The Economist quoted networking consultant Craig Settles as saying they simply weren’t ready with basic things such as their back office systems to provide government services over the networks. Settles has also done a recent report on the benefits of muni wireless and he concludes that one of the biggest tasks is to manage expectations. “Poorly managing expectations is a killer. Muni wireless is taking some undeserved lumps because so many public statements in 2006 promised what the technology can’t deliver and supported business models difficult to sustain,” he wrote in the report.

In other words, many networks are being judged on criteria that they themselves had not set. He claimed that some of the success stories are not getting the publicity that the tales of muni doom and gloom are. For example, one of the first muni networks, in Philadelphia, was set up with the goal of fostering economic development in huge areas of urban decay within the city – something it was successful in doing. However, Settles claims that it is now being judged on other goals.

“Articles now say that unless we see hordes of young professionals and tourists roaming the streets of Philadelphia with Wi-Fi gadgets blazing, the network will be a failure. What total and complete crap,” he suggested.

On the plus side, all of this activity, both positive and negative, can provide useful lessons for similar networks going up in Asia. In places like Hong Kong, Taiwan, Singapore and Sydney there are plans underway for massive Wi-Fi networks, often with the most publicised feature being that they’ll offer free access. Yet already there are signs that they could face similar problems to those currently being experienced in the U.S.

For example in Taiwan the demand has been nowhere near what was expected – according to The Economist it was claimed to need 250,000 regular subscribers by the end of 2006 in order to break even, but had attracted only 30,000 by April this year. And we’ve already reported here in Broadband Communities of complaints regarding coverage and quality in Singapore.

In the case of Chicago’s decision to drop its Wi-Fi plans, one of the cited reason was that Sprint was going to make the city one of its pilot WiMax sites, which would offer better coverage. Yet look at cities like Sydney and Hong Kong, both of which have a wealth of wireless offerings in place already. Who is going to switch to a government backed Wi-Fi service? I know in my case, I’d pick reliable over free any day.

Which is not to deny that there is a place for municipal wireless, either in the U.S. or here in this region. But governments rolling it out should first ensure some basic steps. Firstly, clearly articulate what the goals of the network are. Secondly, ensure that proper planning and forecasting is done – don’t underestimate the number of transmitters needed or overestimate the number of potential users. If one of the goals is to use the network for government services, make sure the relevant public agencies are actually ready in terms of their back-end services.

And finally, do everything possible to manage expectations. If public access is not an important goal, or if the aim is to spur development in terms of business or public services, make sure that the public and media know that’s the case. Otherwise you could have the situation that is arising in America, where muni wireless is starting to be written off as a failure before it’s had a chance to succeed.

How WiMAX can disrupt the cellco cartel

I'm now working on our Broadband Communities newsletter, which has lots of stuff on WiMax and muni wi-fi this week. Go to www.commsday.com if you're not a subscriber (it's free).
In the meantime, I thought I'd resurrect this column on how WiMax can make its mark.

How WiMAX can disrupt the cellco cartel
The time to prove the demand for WiMAX among users is at hand. While the hype machine has been active for some years, it’s only now in 2007 that we’re really going to see any activity in terms of commercial networks, particularly of the mobile WiMAX variety.

And they’ve got a lot of catching up to do with HSDPA, which has enjoyed a steady stream of rollouts around the world. The question is, how many users of a HSDPA network, or a handset that’s capable of using it, are actually making use of mobile Internet capabilities? I suspect not too many.

In fact, in a presentation at the WiMAX Strategies Asia forum recently, Motorola head of technology for South and East Asia, Dr Ray Owen, noted that last year worldwide ARPU for mobile cellular data actually dropped, and is tipped to rise only slightly this year. That would suggest that other than SMS messages and ringtones – the bread and butter of data ARPUs – subscribers aren’t buying this mobile Internet thing.

And with good reason: it’s overpriced and often hobbled.

Everyone has known for years that roaming fees for mobile voice are excessive. Roaming fees for mobile data are nothing short of extortion. Even among business people who travel regularly, many are forgoing the mobile data features of their phones because of high data roaming charges. For independents (ie, those of us who pay our own bills), the shock of the bill on your return is not worth the pain.

And the latest news is that operators such as Vodafone and Orange in the UK have been disabling the Skype and other built-in VoIP capabilities in the new Nokia N95 phones. That way they can lock users into their higher prices when making international calls or when roaming abroad.

Skype has also made a submission to the US Federal Communications Commission (FCC) on the same issue. In its “wireless net neutrality” proposal it called for users to be able to use Internet communications software and attach their own devices to any wireless network. Many commentators have pointed out similarities to the 1968 “Carterphone” decision, where AT&T was forced to allow users to connect third-party devices to their fixed line. (The decision was named after Tom Carter, who had a device for patching phone calls into two-way radio gear)

The mobile phone operators also want to lock you into their own walled garden of content as well. Last year Google hit out at such practices, accusing them of blocking access to Internet content and services including Google. “They’re inserting themselves in between you and an application that you want. I think that has scary, scary implications,” Chris Sacca, a Google senior exec, was quoted as saying.

So how does all of this help the WiMAX camp? It allows them to pitch their services as a “pure IP” play from day one. No walled gardens of content, no hobbled applications or disabled features, just pure and unadulterated access to “the” Internet. Wanna make voice calls, either international or local – go ahead, it’s just another application available on the Internet. Given that there’s already a WiMAX roaming forum being set up, it could seriously eat into cellco roaming fees the way Wi-Fi already is today.

One WiMAX operator at the WiMAX Strategies Asia forum is doing just that, even while offering its own VoIP services. “I don’t have a problem if my subscribers don’t use my voice but use Skype,” said Peter Ziegelwanger, managing director of Austria’s WiMAX Telecom. “What I can do is promise quality with my VoIP service,” he added.

Of course the mobile operators could also hit back with similar deals themselves. In a small way, this has already started to happen. Hutchison has launched its “X-series” of services that includes mobile Skype and other popular Internet services for its 3 mobile brand around the world, including in Hong Kong and more recently Australia. And users also get a flat monthly fee for mobile Internet as well.

Speaking to BroadBand Communities’ sister publication Communications Day, Hutchison Whampoa Group finance director Frank Sixt claimed that 3 was the first mobile operator in the world to tear down the walled garden. “Up until now network operators have treated network capacity as their most expensive asset. Historically it was and they rationed it and sold it at the highest possible price,” he said. “3 is the first mobile operator in the world to change the mobile media business model.”

To date, the rest of the mobile operator community has not followed suit. Which leaves a clear opening for WiMAX operators to offer – and more importantly market – what could be an important differentiator. That is, a “pure IP” service that is not hobbled or outrageously expensive, either at home or when on the road. – Geoff Long

The iPhone's early legacy

One thing that Apple has managed to do with the iPhone, apart from giving marketing departments the world over an inferiority complex, is to focus attention on the closed nature of wireless networks. One of the biggest complaints is that the iPhone is locked to the AT&T network in the US and can’t be used on other mobile networks, while at the same time the phone has to be activated by AT&T to use many of its features. It also doesn’t allow you to download and use third-party applications.

In other words, it’s a classic “walled garden”. And the idea of locking the phone itself to the network is nothing new either, although it seems to be more prevalent over in the US than it is in Asia now. It used to be more prevalent in parts of Asia too. For example, Thailand used to be notorious for using IMEI locks, giving the boys down at one well-known retail outlet a regular source of revenue by unlocking the codes so that they could be used on any network.

Thankfully, that seems to be a thing of the past now and in Asia you can generally buy any phone (iPhones excepted) from any shop and use it on any network. As it should be. In fact, it looked for a while there that wireless operators were moving away from the closed network trend, with carriers like Hutchison earlier this year announcing that it was “tearing down the walled garden”. That followed its “X-series” of services that includes mobile Skype and other popular Internet services for its 3 mobile brand around the world, including in Hong Kong and Australia.

The US is well behind the rest of the world in this regard, however, with most consumers buying subsidised handsets that lock them into an exclusive contract. Now the iPhone seems to have taken the “open” cause back a few steps further, although I doubt the trend will take off in this part of the world.

One influential voice pushing for open networks is Bob Frankston, who is probably best known for co-developing the first spreadsheet, VisiCalc. Now among other things he is a popular commentator and advocate for the user’s right to access any service they want, with the network limited to providing the channel to get to such services.

As he writes in a post on his web site (www.frankston.com/public/?name=OurInternet) , the current telecom model gives control to the carrier at the expense of our own communications need (ie, the ability to use the applications and services of our own choosing). “We must not tolerate being forced to buy services from providers that have a stranglehold on our wires – whether they are physical wires or radios. Today our ability to communicate is limited by the unenlightened business needs of the carriers. This is intolerable and inexcusable,” he writes.

According to Frankston, the biggest impetus for change will come from investors who realise they have far more to gain if the carriers were not in the position to limit opportunity. The other argument is that applications like Skype that run on top of the service provider’s network are fine, but who pays for the investment in future infrastructure? It was brought up in an interview I had last week with Keith White, Alcatel-Lucent APAC security services director, who suggested that such services were threatening the business model of the carriers, which then wouldn’t be able to fund network expansion.

It’s probably the most pressing argument in the telecom world today and runs into the whole network neutrality debate (whether carriers should be able to favour certain applications or services over others). And of course there are no easy answers. Telecom providers are seeing their revenues eroded by new services such as VoIP, but many are adapting and there are no shortages of new entrants willing to give the user what they want. New business models will appear and some players may well go out of business.

In the end, it all boils down to competition. Apple has plenty of competition among device vendors, which is why I don’t think it will be able to keep it’s closed model of doing business with the iPhone, particularly when it comes to Asia. It would be great if we had the same level of competition among networks, particularly if the newcomers decided to embrace an open model. Perhaps then we’d have no need of net neutrality legislation.