Clock Ticking For Wimax

The WiMAX time-to-market advantage over LTE looks less important in the economic downturn.

This year is going to be a tough one for the WiMAX community. Hardly surprising given that most telecom sectors will find the going much more difficult in credit crunch 2009. Alcatel-Lucent, which has an extensive portfolio of infrastructure products and services, anticipates that its overall sales will drop between eight and 12 per cent this year. Handset suppliers are also on the back foot, with a number of the leading vendors recently announcing sharp declines in handset unit sales during 4Q 2008.

But if many telecom sectors are on course to be hit by the economic downturn, WiMAX looks set to suffer more than most. After all, WiMAX supporters typically claim that one of the technology’s key attractions is its time-to-market advantage over rival LTE-if operators have the appropriate spectrum and want to offer a ‘4G’ mobile service, they say, it has to be WiMAX because LTE is ‘at least two to three years away’.

This line of argument is becoming less convincing as time goes on. Although WiMAX still has a technological lead over LTE, most deployments so far have been for fixed applications rather than true mobility. And from the time when Arun Sarin, as Vodafone CEO, warned the LTE community at the 2007 Mobile World Congress that they might find themselves playing catch up to WiMAX, considerable LTE progress has been made.

The 3GPP (3G Partnership Project) says Release 8 (which defines the LTE air interface) is nearing completion and should be ratified by March 2009. And last month TeliaSonera announced it would be launching commercial LTE services as early as next year based on equipment supplied by Ericsson and Huawei.

Even allowing for some bullishness within these LTE announcements, it looks more and more as if the 3GPP camp is starting to ringfence ‘4G territory’. A string of tier one mobile operators, including Vodafone, Verizon and China Mobile, have already said that LTE is their preferred 4G option.

And while LTE appears to be making progress, WiMAX has been hit by a couple of body blows in recent weeks. The first was the announcement by Alcatel-Lucent in December 2008 that it was trimming down its WiMAX investment and focusing on LTE for 4G mobility.

“Alcatel-Lucent’s plans to reduce spending on WiMAX is bad news for the technology and the vendor’s WiMAX customers,” said Mike Roberts, a principal analyst with Informa Telecoms & Media. “For the technology it means Nortel’s recent WiMAX cutbacks [in June 2008] are no longer an isolated case-and Alcatel-Lucent’s move will have more impact because it was one of the leading WiMAX vendors based on number of contracts. Alcatel-Lucent’s WiMAX cuts also mean that its WiMAX customers will naturally have questions about long-term product support and development.”

Nokia’s decision in January 2009 to stop production of its only WiMAX device, the N810 Internet Tablet, dealt the second major blow. The N810 was proudly referred to by Sprint Nextel in the run-up to the Xohm launch as something that would significantly drive service take-up. But Nokia, apparently, did not anticipate sufficient volumes to justify continued commitment to the WiMAX-enabled N810.

The economic downturn couldn’t have come at a much worse time for WiMAX, not least because it was starting to make some solid headway last year. According to the Dell’Oro Group, mobile WiMAX infrastructure revenues worldwide nearly quadrupled in 3Q 2008 compared with the same quarter the year previously. “Mobile WiMAX revenues were very strong in the third quarter of last year, and we anticipate revenue for the fourth quarter to set another [record],” said Scott Siegler, senior analyst of mobile infrastructure research at Dell’Oro Group. But Siegler expects the WiMAX market to be “hit hard” by the economic downturn in 2009, through a combination of scarce capital and lower consumer spending,

Richard Webb, a wireless analyst for Infonetics Research, concurred. “With less cash available for network rollout-and possibly less spectrum being auctioned until the current financial crisis passes- WiMAX deployment will be inhibited for the next 12 months,” he said.

But it is not necessarily all doom and gloom for WiMAX. It is already making an impact in some emerging markets where there is a lack of fixed-line infrastructure. And if Clearwire can make solid strides in the US market, it will go a long way to proving that mobile WiMAX can also be successful in developed economies where 3G/3.5G mobile penetration is already high.

In the two US markets where the ‘Clear’ mobile WiMAX service has been rolled out-Portland (Oregon) and Baltimore-it is reportedly delivering a much better performance than the most advanced cellular networks. Moreover, Clearwire’s data packages are cheaper and much more flexible than those of the mobile operators: day passes are available and there are no compulsory long-term contracts.

And in India and Brazil, WiMAX still has enormous potential-provided the regulatory obstacles are cleared. At the time of going to press, BWA licences (read WiMAX) had still to be awarded in India, and Anatel, Brazil’s regulator, had still to lift its ban on mobile WiMAX equipment.

But if mobile WiMAX is forced to wait on the sidelines, either for economic or regulatory reasons-and LTE starts to make commercial rollout progress as early as next year-the WIMAX PR machine’s foregrounding of the ‘time-to-market advantage’ may well come back to haunt it. It is an argument that already looks to be running out of steam.