Radioactive: Which way for wireless broadband?
WiMax, HSDPA or Flash-OFDM?
Does Intel's cash injection into the US' Clearwire mean WiMax will win out as the technology for wireless broadband? Not so fast, says Futurity Media's Anthony Plewes.
Intel has been a vocal backer of WiMax since the wireless technology's inception and the company's recent investment of $600m in US broadband service provider Clearwire proves it is quite ready to back up its words with cold hard cash.
Clearwire is an important player in the nascent WiMax market, owning a significant portion of the US' 2.5GHz spectrum set aside for WiMax. It has deployed pre-standardised WiMax networks in 200 US cities and outside of the US in Belgium, Denmark, Ireland and Mexico.
According to its IPO filing in March 2006, Clearwire had 88,000 subscribers in the US and 11,500 in Belgium and Ireland. Last year, it made a loss of $140m on revenues of $33m and still looks to be a long way from turning a profit. Building any nationwide network, even a wireless network, is a cash-hungry activity and analyst InStat has estimated a US-wide WiMax network rollout will cost Clearwire $3bn.
Investors are essential to fund this capex and in Intel, Clearwire has found a willing benefactor. This $600m injection is not the first Intel has administered to Clearwire. In 2004, Clearwire and Intel formed a partnership to accelerate the development and deployment of 802.16 WiMax networks.
But the relationship is not exclusive - the financial injection does not even guarantee Clearwire will use Intel's modems. That's a job for NextNet Wireless, Clearwire's tech subsidiary which has supplied its parent with WiMax equipment and which was sold to Motorola for $300m. This gives Clearwire a $900m cash reserve and so Clearwire has cancelled its IPO, which was expected to raise $400m.
Like Intel, Motorola is an early supporter of WiMax and has been extolling the virtues of mobile WiMax in particular. By acquiring NextNet, Motorola has become Clearwire's main equipment supplier. There is no such immediate payoff for Intel with the $600m gift but the support for Clearwire is essential for its long-term plan to build a market and credibility for WiMax.
Intel is already developing dual-mode wi-fi/WiMax chips and will incorporate WiMax into its Centrino platform. For these to be of any use it needs service providers offering wireless broadband on WiMax.
The Motorola investment in NextNet Wireless can also be viewed in the context of a local issue. In the US, Sprint Nextel has a swathe of 2.5GHz spectrum that it must use by 2009 and WiMax is one of the technologies it is evaluating. With commercially deployed equipment, Motorola will be favourites to win business from Sprint. Choosing Motorola could also open up the possibility of roaming between Clearwire and Sprint even with this pre-standard equipment. These two companies together own the bulk of the 2.5GHz licences in the US.
Away from the US, the picture is less clear-cut. In the UK for example, few service providers are actively looking to offer WiMax services. PCCW and Pipex hold the two nationwide WiMax licences using the 3.4GHz and 3.5GHz bands respectively. They have launched limited services but given that they have little wireless infrastructure in the UK, they are unlikely to roll out a nationwide network.
Clearwire has launched services in parts of Europe - Belgium, Denmark and Ireland - but the lack of uniform WiMax spectrum across Europe makes the market much more bitty.
There are significant challengers to WiMax for mobile or nomadic broadband. Across Europe, mobile operators are moving ahead with the HSDPA rollouts and planning the subsequent HSUPA upgrade, which will improve upload rates.
Another alternative is the Flash-OFDM technology offered by Flarion. This approach was also given a boost by an acquisition, when Qualcomm acquired Flarion at the turn of the year for $600m. In the US, Nextel has successfully run a Flarion trial and Sprint is considering it for its nationwide network. The first nationwide Flarion Flash-OFDM network was deployed by T-Mobile in Slovakia and the Finnish government also has plans for a nationwide network.
While the final outcome of these technology battles is still unclear, mobile operators are still in the driving seat. While challengers such as Clearwire offer an alternative to both fixed broadband and mobile broadband, they are faced with the cost of building out the total network infrastructure. This has meant they have focused on serving rural communities which are unable to get DSL and want high speed fixed access.
Mobile operators already have a great deal of the necessary infrastructure in place to serve these areas such as the core network, regional backhaul, wireless towers and authentication and billing systems. Whichever mobile or nomadic access technology they deploy, whether it be HSDPA, Flash-OFDM or WiMax, is simply an evolution of their 3G networks.
The eventual choice mobile operators make with regards to wireless broadband will be governed by which spectrum they own, and given the fragmented nature of spectrum ownership worldwide, it is quite possible that no clear winner will emerge and multiple technologies will continue to coexist.