The Future of WiMAX

With all the attention surrounding WiMAX, industry observers struggle to separate hype from reality. Explaining the market is a feat for anyone considering complexities such as fixed versus mobile WiMAX, product availability and timing, spectrum challenges, and the largely global nature of WiMAX.

I often start by explaining that WiMAX is actually not only a technology, but also an organization comprising more than 170 vendors, service providers, system integrators and chip manufacturers. The WiMAX Forum has aligned an excellent breed of large and small companies. This will be a critical factor in the technology's enduring success.

There are two different types of WiMAX, easily referred to as first and second generation WiMAX. The first generation of certified products will hit the market towards the end of 2005. Carriers, WISPs, municipalities and other entities will use these products to fill in cable and DSL gaps, serve the small and medium-sized business sector with T-1 and higher services, and for wireless backhaul. Filling in cable and DSL gaps represents a limited market opportunity in developed countries, but it will be critical in emerging regions such as Latin America, Eastern Europe and parts of Asia where telecommunications infrastructure is limited or outdated. Existing deployments of proprietary broadband wireless access solutions demonstrate the inherent need for another broadband option.

But the real excitement around WiMAX has absolutely nothing to do with the fixed version of the technology. Large-scale equipment and silicon makers are banking on mobile WiMAX to make their money.

There are a number of hurdles that must be overcome for mobile WiMAX to take off, including global spectrum availability and harmony, the development and adoption of mobile broadband applications, and a definition of the major differentiators of WiMAX products as compared to existing broadband and mobile technologies.

The broadband and mobile markets are moving targets, each shifting from the support of basic service sets to enhanced multimedia applications. Timing, pricing, and scale will be critical to WiMAX success, and vendors must prove that WiMAX can deliver much more than basic broadband.

Despite these obstacles, there are some interesting dynamics that could play out to make service providers invest in mobile WiMAX. As the war heats up between telcos and cable companies, triple and quadruple play service bundles are becoming critical. Many of these companies are now trying to figure out whether wireless data services will also become table stakes.

Let me throw out one interesting scenario for the U.S.: Cable companies currently lack a definitive wireless strategy, but a few are assessing MVNO deals with Sprint, the only wireless carrier not tied to a telco. Sprint also happens to be the largest holder of 2.5 GHz spectrum, which is fit for mobile WiMAX applications. Cable companies could represent a good partner for Sprint, using a hot zone or market strategy to compliment existing bundled offerings in markets where telco pressure was imminent. If not the cable companies, this could present an interesting play as a partnership opportunity for the satellite companies, who are struggling to meet their competition with a triple play service offering.

In regions such as Europe, telcos seem like a more likely investor in WiMAX. Providers such as British Telecom and France Telecom already participate in the WiMAX Forum. And Asia will be largely stemmed by the South Korean Wi-Bro initiative, which is now following the WiMAX technology trajectory.

Although there are misperceptions and legitimate impediments surrounding it, WiMAX will play a critical role in making broadband a more globally ubiquitous service. Wireless/wireline convergence will become a reality, and multiple broadband and mobile technologies, including WiMAX, will be needed for service providers to address different segments of the market.

Lindsay Schroth is broadband access technologies senior analyst at Yankee Group.