Is the bloom off the cellco WiFi hedge?

Is the bloom off the cellco WiFi hedge?

Summary: From Interop in Las Vegas last week, I wrote about how Intel went to the trouble of blanketing all of greater Las Vegas with a WiMax wireless network and how a local infrastucture provider (MPower Communications) picked up the tab so that the network would stay in place indefinitely.

TOPICS: Networking

From Interop in Las Vegas last week, I wrote about how Intel went to the trouble of blanketing all of greater Las Vegas with a WiMax wireless network and how a local infrastucture provider (MPower Communications) picked up the tab so that the network would stay in place indefinitely.  The big deal about WiMax, as evidenced by Intel's benchmark of the Vegas installation, is that with the equivalent of four access points pointed outward to cover a 360 degree circle, an entire city was illuminated with a minimum of 7 mbps of wireless bandwidth. It came closer to 16 mpbs on average according to the people in charge of the demo.  In comparison to WiFi where connectivity is lost once your in the limbozone between hotspots (with automatic roaming and reauthentication to the network being quite challenging in a public environment and to apps like VoIP), having one giant city-sized hotspot has its advantages.  So, now, although WiMax is still a bit rough on the edges, it should come as no surprise that the cellcos are taking interest. 

Prior to WiFi's astronomical ramp-up, the cellcos were in the midst of their own high speed wireless build outs.  Not only were they updating their voice networks, but they were also updating their data networks.  With those 3G networks (giant hotspots but not nearly as fast as WiFi) under tremendous financial and competitive pressure, most cellcos ended up partnering with WiFi providers to make WiFi services available to their customers.  In the past, I've characterized this partnering as a hedge while the 3G build-outs were completed.  As long as outfit like AT&T Wireless couldn't average more than about 40 kbps on their old and tired GPRS networks, most wireless data buffs wouldn't waste anytime in seeking out 11 mbps of 802.11b bandwidth at the local Starbucks.  The cellcos needed to do something (like partner with WISPs) to keep subscribers in the fold. 

But once the EDGE and CDMA EV-DO networks are in place (and they are now, in many cities), realistically offering 300-500 kbps of bandwidth, WiFi with its tiny hotspots (by comparison) loses its appeal.   As it turns out, most applications are pretty snappy with just 100 kbps of bandwidth.  So, at 300-500 kbps, the 3G networks with their gargantuan hotspots start to look pretty good.  Even so, 3G detractors -- particularly ones in the WiFi camp that think 3G is overhyped -- say "Just wait until you see what happens when those cells start to load up with users."  The implication is that the network will collapse under the weight of the demand (let me know if you know of any horror stories coming out of South Korea where, with millions of data-crazy people running around the countryside,  this scenario is getting a serious workout).   Perhaps that will be the state-of-the-state in which case, the 3G build-outs may hit saturation points that leave customers and stockholders of 3G providers underserved. 

But now, along comes WiMax.  And, instead of partnering with WiMax Service Providers (WMSPs), the cellcos appear to once again be in build-out mode (one reason is how VoIP over WiMax could kill their businesses).  For example, last week, Intel and Sprint jointly announced that they'd be working together to further develop WiMax technology (as I said earlier, it's still rough on the edges). Citing the cost of dragging physical infrastructure to the curb, AT&T (ok, SBC) is also investing its own resources into WiMax and has trials in the works.   And, Pyramid research is estimating that between 2009 and 2012, the number of WiMax customers will grow at a compounded rate of 64 percent.  

So, as it turns out, the WiFi hedge on behalf of cellcos (and some telcos) may be paying off.  If WiMax ends up trumping WiFi, the carriers will have the metropolitan peformance top-end being covered by WiMax with the gaps being filled in by 3G  (which isn't to shabby either).  In a world like that, the only remaining question is if those carriers build-out their WiMax networks, whether or not they ditch the partners that held them over in the wireless game?

Topic: Networking

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