Beyond mobile broadband, WiMAX is about blowing up the wireless business model

On Wednesday in Baltimore at the official launch of America's first mobile WiMAX network, Sprint CTO Barry West said that if this was only about launching a new type of network with faster performance then it would be significant. However, it is abundantly clear that for West, Sprint, and their band of high-profile WiMAX partners, this is about a lot more than just a faster mobile network.

What is it about? What's the subtext? Here's my interpretation:

• It is about unleashing a new generation of applications and devices with broadband connectivity.
• It is about changing the balance of power in the cellular industry.
• It is about bringing wireless broadband to the masses by making it less expensive and more open.
• It is about turning the U.S. from a laggard into a leader in the mobile world.
• It is about a bunch of underdogs who are trying to leapfrog a set of powerful, entrenched leaders.

Sprint's Barry West celebrated the launch of WiMAX by ceremonially cutting Ethernet cables, even though it's the cellular companies Sprint is really going after with Xohm. Photo by Jason Hiner

Is this really the beginning of WiMAX?

I've seen a number of consumers in the U.S. respond to news of the official U.S WiMAX launch in Baltimore by saying. "This isn't new. My town has had WiMAX for a couple years." What's going on here is that several smaller cities in the U.S. already have a version of WiMAX called "Fixed WiMAX" based on the 802.16d protocol.

This is essentially the same as Cable or DSL where a consumer has an Internet modem in their home, only instead of a phone line or a coaxial cable running into that modem, the Fixed WiMAX customer has a modem with a long-distance radio antenna in it. This is the equivalent of an early beta version of WiMAX.

What Sprint has launched in Baltimore is the first U.S. deployment of Mobile WiMAX, based on the 802.16e protocol. This version of WiMAX can be used for stationary modems, but it can also provide roaming Internet access across large areas and at highway driving speeds. So if you have Xohm WiMAX as your Internet service in Baltimore, your connection is good not only in your office or your house but anywhere you go in the city and throughout most of the metro area. It's like combining your Cable Internet account with a 3G broadband account.

The limitation, of course, is that it is only in Baltimore for now. However, Sprint is preparing to launch its next two Xohm networks in Washington, D.C. and Chicago before the end of the year. Then it plans to light up Philadelphia, Dallas/Fort Worth, Boston, and Providence, Rhode Island. Meanwhile, Clearwire is prepping Mobile WiMAX networks in Portland, Atlanta, Las Vegas, and Grand Rapids, Michigan. The Sprint and Clearwire networks will interoperate.

In fact, Sprint is in the process of spinning off its Xohm business unit and merging it with Clearwire to create a new WiMAX company, with backing from Intel, Google, Comcast, and others. The new company will still need to raise about $3 billion of the $5 billion needed in order to compete a nationwide WiMAX network.

What does WiMAX really change?

Besides the obvious benefits of mobilizing high speed broadband, there are three significant developments that are part of WiMAX that could be game-changers in the technology industry.

1. Embeddable broadband

The cellular network was built to handle voice calls. It has been upgraded and re-engineered to handle data, but there are limitations to how much data it can handle and how much it can scale. The cellular network also has a business and usage model that strictly regulates end-point devices. That limits innovation from third-party developers on the network.

While the WiMAX network is very similar to the cellular network in its physical infrastructure, it was conceived from the ground up to be a pure IP network, built on open standards, and designed to be as open as the Internet itself. In that sense, WiMAX is simply a wireless on-ramp to the Internet.

With that in mind, Intel and several of the other founding  members of the WiMAX Forum set out to make WiMAX chips that would be mass-produced, inexpensive, and royalty-free. It has worked. Embedded WiMAX chips for laptops, for example, are already cheaper than their embedded 3G counterparts. For example, a WiMAX module will typically add about $60-$80 to the price of a laptop, while embedded 3G will add $150-$200.

But beyond that, these cheap WiMAX chips are poised to be embedded in all kinds of devices, including

• Parking meters
• Home energy meters
• Vending machines
• Toys
• Traffic lights
• Cars and other motor vehicles

"The defining difference between WiMax and any other technologies is in the embedded devices," said West. "There are more than 20 WiMAX chipset manufacturers... In CDMA, there's one and a half." West was referring to Qualcomm, which dominates the CDMA market and charges royalties on its chips.

2. Wireless Applications 

With broadband being embedded in so many more devices, that also opens the door for new applications for both businesses and consumers. Since virtually anything will be able to connect to the Internet, that will offer new opportunities for connectivity apps that can streamline business processes, provide new communications opportunities, and do greater levels of data collection, for example.

West said, "WiMax really is a platform for innovation... We are inundated with people that want to work with us to build new applications."

Sprint CEO Dan Hesse added, "There will be so many applications we haven't even thought of."

3. Replacing the cellular business model

Make no mistake, Sprint and Intel are not just in the mobile broadband business as an altruistic attempt to bring fast wireless Internet access to the masses. Sprint is a distant third behind AT&T and Verizon Wireless in the U.S. cellular business and needs a better way to compete. All of the carriers know that the future lies in their data networks -- even voice traffic will eventually run over the data network.

That's why Sprint took the gamble of investing heavily in WiMAX and is doing everything it can to bring it to market as a open standard that will foster great innovation from third party hardware and software vendors.

Intel sees the writing on the wall that a lot of the computing world is migrating beyond PCs to include wireless  and mobile devices, where Intel hasn't traditionally been one of the primary chipmakers. That's Qualcomm's territory. Intel wants a piece of the action, but instead of trying to compete in the current market, Intel is investing in the next generation with WiMAX. It's also a technology that helps Intel in its core PC business because more and better connectivity usually translates into more people buying computers.

Ultimately, both Sprint and Intel want to replace the current cellular model with a platform that is open to devices and applications and ties into all of the development that is already happening on the Internet.

Now, to start, Sprint's first Xohm network in Baltimore does not expressly try go after telephony.  That would be silly to do since the coverage is so limited at this point. However, I have seen prototype WiMAX phones from Motorola and others, and there are even reports that the Google G1 will eventually include a WiMAX chip or be released in a WiMAX version.

In a surprisingly frank admission at the Baltimore launch, West said, "We're not trying to go head-to-head with cellular services today. We will in the future."

Bottom line

WiMAX could be the beginning of the convergence between traditional ISPs and cellular carriers. Or WiMAX could fail to get the funding it needs and fail to win over enough users to reach critical mass before other cellular carriers come to market with their next generation cellular data technologies, such as LTE.

Which ever way it goes, it's very likely that WiMAX will drive down the cost of mobile broadband and force the other cellular carriers to become more open in their policies toward third-party devices and applications. We're already seeing Verizon Wireless take steps in this direction. This should eventually fuel a new wave of hardware and software innovation.