WiMAX Directions: WiMAX’ ratings surge, but beware of WiMAX2 confusion Feb 3, 2010 – By Rethink Research
However many times we see it happen, it seems the wireless industry cannot
wrench itself away from the hype curve. Every new technology is overloaded
with promises, and then it falls off its pedestal – it’s even
happened to the marketing supremos at Apple this time around. Those doldrums
are even worse for supporters of the technology if a shiny new one is hard on
its heels, riding up to the crest of the hype wave itself. In wireless
networks, that has been the pattern in each generation, and the financial
markets tend to go with the flow of industry sentiment, even when this is
irrational. Most recently, we have seen WiMAX ride the curve – first
positioned as the sole platform to deliver the brave new world of anywhere
broadband and the open web; then apparently consigned to oblivion as
LTE’s hype star rose. The only thing for a community to do during this
process is hold on tight and wait out the storm, and the opening weeks of
2010 have seen clear signs that the waters are calming for WiMAX, and its
real position in the world is being assessed, rather than one colored by
perceptions and prejudices, not facts. So is this really the right time to
start talking about yet another future technology, WiMAX2?
First, the reality check on WiMAX1. This really started a year ago, around
the time of the Mobile World Congress show in Barcelona in February. Deep in
the heartland event for the GSM world, WiMAX managed to shift the perception
that had dogged it in 2008, that it was just a staging post on the way to the
more widely supported LTE. In 2009, it became clearer, mainly because real
world deployments started to gain scale and we could monitor their
activities, that WiMAX had an identity of its own.
Not only was it tested and available, but it was frequently supporting
carriers with entirely new business models from those commonly supported by
3G. Just as ‘4G’ users’ behavior patterns, and data
volumes, are closer to those of wireline broadband than 3G, so the 4G
operators need a technology that mirrors DSL, and takes it mobile – the
highly distributed network for efficiency; the high bandwidth, flat rate or
flexible offerings; the multiple access providers riding on one network.
And it was poised to benefit from broadband stimulus plans round the world,
which required near term and cost efficient platforms, as well as new
spectrum auctions in India and elsewhere.
A year on, with MWC rolling round again, WiMAX can boast over 500
deployments, some of them in highly developed mobile markets and supporting
next generation applications and models (UQ in Japan is perhaps the most
sophisticated example; Yota in Russia the fastest growing; Clearwire the
flagship for the multi-MVNO, retail approach.) And there is a far greater
appreciation that the 4G deployment and usage patterns will be different from
those of cellular, and far closer to the broadband/PC/open web world. While
carriers just enhancing existing services will stick to HSPA+ for some while,
those embracing the new models will need a new approach if they are to be
commercially successful. And LTE is not ready yet. Indeed, it just about to
descend the hype curve, as inevitably happens with the first roll-outs.
TeliaSonera, the first to go commercial with LTE, has not delivered the
speeds promised (no surprise there, since the cellular industry continues to
advertise peak, rather than average, data rates). Soon there will be
complaints about the long wait for handsets (until 2012 at least), and the
disillusion will set in.
That is not necessarily a fair reflection of LTE’s progress, but it
will certainly benefit WiMAX, at least in perception and confidence terms.
And indeed, all this shift of opinion is starting to filter through to the
financial analysts, often the last to change their view. In the past weeks,
we have seen significant upgrades of several companies that are dedicated to
WiMAX, such as Clearwire and Alvarion, with the analyst reports confirming a
new confidence that WiMAX has a major role to play in ubiquitous broadband,
and in shaking up the telecoms landscape in order to support new usage
patterns and services.
The comments on both these companies are revealing about a new sentiment
around WiMAX in general. RBC Capital analyst Jonathan Atkin raised his rating
on Clearwire’s shares last week to ‘outperform’ from
‘sector perform’, and increased his price target from $8 to $10.
"Our upgrade primarily reflects our view that near term developments are
likely to be viewed favorably," he wrote, citing the all-important
aspect of Clearwire’s model, its multiple MVNO structure. This not only
spreads its cost and risk but also accelerates its market expansion with
limited customer acquisition cost – the essence of the wholesale
approach and a hallmark of ‘4G’. Atkin pointed out that Sprint,
Comcast and Time Warner Cable would be ramping up their distribution of the
Clearwire service in the coming months, and that new partners, including
possibly T-Mobile USA, could be added.
As for Alvarion, it also received an upgrade from RBC Capital, whose analyst
Daniel Meron is particularly impressed with the Israeli firm’s ability
to target the coming explosion of Indian WiMAX business, having secured some
of state telco BSNL’s business already. He raised the firm’s
rating to ‘outperform’, pointing to a rise in orders with new and
existing customers and "improved business tone”, as well as
growing opportunities for WiMAX projects as new licenses are allocated in a
wide variety of markets, such as Indonesia, Brazil and Australia.
Another analyst, Merriman’s Curhan Ford, initiated coverage of Alvarion
last month, with a ‘buy’ rating. While the RBC notes pointed to
the increase in opportunities and market scale for carriers and vendors, as
WiMAX gains acceptance, Merriman goes a step further, pointing out that WiMAX
has been “misconstrued” in the past. Its client note sums up the
perception problem that has dogged many areas of the WiMAX world and the
changing views. “WiMAX is a real and commercially ready broadband
wireless solution that supports speeds of up to 40Mbps (going to 300Mbps).
Despite the global credit freeze and ensuing recession, WiMAX has over 500
deployments in 147 countries. Alvarion is the leading independent supplier
(with 20% market share) of this largely rationalizing multibillion dollar
market opportunity.” It added: “We believe investors will revisit
the shares driven by 1) thawing of credit markets, 2) successful licensing in
key markets (ie India), 3) US broadband stimulus funds and 4) the emergence
of new verticals.”
That is as good a summary of the current state of play as any. But just as
consensus starts to be achieved around WiMAX’ place in the world
– different from 3G; ahead of LTE and targeting, in many cases,
different models – the cycle of expectation and disappointment could
start all over again with the start of the conversation about WiMAX2.
The new generation of the standard is important of course, for several
reasons. One, a platform has to evolve to support an ever more diverse set of
service provider models and a continuing explosion of wireless data usage.
Two, WiMAX has to maintain its headstart so it can remain the clear choice
for a carrier that wants to embrace a new approach at the earliest stage.
Three, it also needs to be ready to bid for its place in the official canon
of ITU fourth generation standards, which will be debated this year, and
where WiMAX2 and LTE-Advanced will be the main technologies seeking to
deliver ‘true 4G’, with features like 100Mbps data rates while
mobile. And four, more pragmatically, the second version will support
important enhancements in key areas of operator interest, such as spectral
efficiency and power.
The main focus of WiMAX2 (based on IEEE standard 802.16m), will be on
achieving ‘true 4G’ speeds while maintaining current range and
coverage. It will use channel bonding and 4x4 (or above) MIMO smart antenna
technology, in 20MHz channels where possible, to reach the 120Mbps
downlink/60Mbps uplink goal in an urban scenario, and eventually go beyond
that. The WiMAX Forum’s VP of marketing Mo Shakouri told NetworkWorld:
"Think of it like you're building a 20-lane highway. While it would be
complicated to build out 20 lanes on the same highway, you could instead use
two 10-lane highways or four five-lane highways. So this is how you can get
higher data rates by using a combination of multiple channels."
The timing is good to see what WiMAX will promise its supporters in the next
generation, and Yota expects to conduct some trials late this year, and
Clearwire early in 2011. It is just important that the conversation, and the
transition to the new standard, is managed well – as the transition
from the original, fixed platform, 802.16d, to Mobile WiMAX or 802.16e, was
not. There must be clear, achievable deadlines and realistic assessment of
what WiMAX2 will add to the current operator proposition. As
Clearwire’s own CEO Bill Morrow knows well, managing change is the
hardest task, even when change is in the right direction.
There will be significant advantages over the 16d/16e handover, namely that
WiMAX2 will be backwards compatible with Mobile WiMAX, so fewer dilemmas for
carriers, and no need to replace one system with another; and that the
interoperability testing and certification process will be better understood
and established. In many ways this is the keynote of WiMAX’
differentiation from LTE and its cellco heritage – the centralized IoT,
which removes burden from the carrier to reduce cost and time to market, and
also supports open access and the retail device model. But it has also been
the most complex aspect of the whole WiMAX process – recruiting and
setting up labs, creating testbeds and processes, and so on, is a massive
task that was widely underestimated a few years ago, even without allowing
for the need to test two standards in quick succession or in parallel.
This time around, the labs are working and proven, and are located in all the
key WiMAX spheres of influence, and the obstacles to a fully open IoT and
certification system should be far less high. But they should still not be
dismissed as trivial – and it would be good to see an emerging
standard, for once, resisting the pressure to squeeze the timescales in the
initial flush of optimism, and the bid for hearts and minds.
What is realistic? The Forum aims to have a certification profile for
developers running by the time the IEEE finalizes the base 16m standard in
September this year. That would suggest devices at the end of 2011, and
commercial release of certified gadgets the following year. Given that most
Mobile WiMAX networks will start to reach critical mass this year,
broad-based carrier upgrades to achieve greater capacity or speed should not
be necessary until 2012 at the earliest, unless there is a localized
marketing requirement to respond to an LTE launch with a blistering new
upgrade (that could affect Clearwire in a few places, but in most markets,
LTE itself will be only at the very early stages of commercial availability
in 2012, while LTE-Advanced is a technology for 2015 or beyond).
So there is no need for urgent haste, except to hit ITU deadlines, and the
importance of talking about WiMAX2 right now is to impress upon the market as
a whole that the technology has a clear roadmap, that this roadmap is in line
with the likely evolution of mobile broadband services, and that it will stay
a step ahead of LTE in timescales. This needs to be made very clear –
to avoid any doubts over the lifespan of current 16e systems and devices, and
to create medium term vision rather than short term confusion. Otherwise
WiMAX risks damaging the new positivity about its important role in the new
mobile world, and rushing once again onto that dreaded hype rollercoaster.
WiMAX Directions: WiMAX’ ratings surge, but beware of WiMAX2 confusion
