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WiMAX
may pose fresh challenge to broadband
Other Topics:
Converging
Broadband Access, WiMAX Access on UK
Trains
March 1, 2005
Imagine a wireless hotspot the size of Philadelphia or a rural community
in the American heartland.
U.S. cities and companies are eyeing an emerging technology known as
WiMax as a way to make high-speed wireless Internet services available
in areas much larger that a typical Wi-Fi coffee bar or the local
McDonald's. But it may prove difficult to make such services
commercially viable, analysts say.
WiMax -- touted as a potential spoiler for cable modems and other
traditional Internet connections -- was developed to beam the Internet
across cities using radio networks with much wider ranges than Wi-Fi, a
system used on laptops in coffee shops. |
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Some broadband operators are considering
WiMAX as a way to expand their
networks, and city administrators are looking to offer broadband
services cheaply in public places such as parks or in low-income housing
areas.
Such networks could erode the market for services such as cable modem
and digital subscriber line (DSL) access over traditional phone lines.
But the scarcity of suitable airwaves and wide availability of DSL and
cable could stunt WiMax growth at least in the United States in the next
few years.
"The WiMax market in other geographies will dwarf that of North
America," said Forrester analyst Charles Golvin, who believes WiMax
makes more sense for some parts of Europe and developing countries where
broadband is not very common.
Companies including chip giant Intel Corp. and network gear makers such
as Alcatel, Lucent Technologies and Alvarion plan to sell WiMax
products. Early versions that deliver the Internet to fixed locations
such as homes are expected to go on sale next year.
But U.S. WiMax providers will be cautious about where and how they
operate because if WiMax is added to a crowded market. The fear is that
profit margins could suffer at both the WiMax operator and incumbent
broadband providers, analysts said.
"Increased broadband competition, price compression and high subscriber
acquisition costs threaten to drive margins ever lower," said In-Stat
analyst Keith Nissen who expects only 3 percent of broadband users
around the world will use WiMax services by 2009. It could cost about $3
billion to build a nationwide U.S. WiMax network, according to In-Stat
estimates.
Roughly 85 percent of U.S. households can now buy broadband services and
about 70 percent have a choice between cable and DSL, according to
Yankee Group analyst Patrick Mahoney.
This means that most commercial WiMax services are likely to be small in
scale as markets would be limited to hard-to-reach rural areas or city
neighbourhoods that are not already hooked up for broadband, Yankee's
Mahoney said.
Municipal administrators in as many as 100 cities or towns are looking
at building wireless networks, said Forrester's Golvin who noted that
these could projects range from coverage of entire cities or towns to
links between official buildings.
For example, the City of Philadelphia hopes to build a network to
interconnect Wi-Fi networks. It could potentially use WiMax in about 60
percent of the city, officials said.
Some regional operators are eyeing WiMax as a way to extend their
networks and to avoid the high costs of putting new wires in the ground.
But so far, none have made firm service plans and airwaves availability
could also be problem, Golvin said.
Local phone provider BellSouth Corp. is testing an early WiMax system.
It says it has suitable airwaves across its nine operating states and
hopes to have a service next year.
But first it needs to work out equipment costs and consumer demand
before committing to service plans. It is also working out how it can
avoid potential interference between its airwaves and satellite services
using similar bands.
"If it can save money and provide a high-speed broadband service and we
can make a profit on it, then we'll do it," said spokesman Jeff Batcher,
noting that WiMax should be cheaper to provide than services such as DSL
which BellSouth sells.
Qwest Communications International Inc., which provides local services
in 14 states, has also tested WiMax. It does not own airwave licenses
but says it would consider buying licenses or using unlicensed airwaves.
Golvin believes that using unlicensed spectrum would be too risky for
operators such as Qwest. Since anybody can use unlicensed spectrum it is
difficult to control service quality as other users of the same band
could cause interference.
Sprint, the No. 3 U.S. mobile provider, is likely to be the biggest U.S.
WiMax provider as it will own airwaves suitable for the technology in 80
of the top 100 U.S. markets after it buys Nextel Communications Inc.
this year.
It plans to test early versions of WiMax that transmit to fixed
locations but it will wait for a mobile version before launching
services around 2008. It says it needs mobility to compete better with
entrenched broadband providers.
Many analysts believe mobility could make WiMax a more viable competitor
to cable or DSL but caution that a technology standard has yet to be
agreed for mobile WiMax.
Seattle-based Clearwire, which is run by wireless pioneer Craig McCaw
and counts Intel among its investors, has also endorsed WiMax. It has
WiMax-like services in four U.S. markets and plans to add another 16
markets by year-end.
But Spokesman Todd Wolfenbarger said it was too early to predict how
successful these services would become.
"I think we're cautiously optimistic about it," he said.k.htm |
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