First Out of the Gate: WiMax Vs. LTE

There's a strong temptation to suggest that WiMAX has just sneaked out of the gate, before the winds of recession slam it shut. And that LTE is still cooped up, and will have to wait a bit longer for its chance to shine.

Certainly, there have been some fairly encouraging signs recently for the Mobile WiMAX camp - the Baltimore launch of Sprint's (S) Xohm seems to be being viewed fairly positively. There's a decent stream of devices - dongles, PCs, even a rumoured HTC smartphone. And although the focus is on the U.S., other markets like Russia, Taiwan, India and obviously Korea also seem to be pretty WiMAX-friendly at the moment.

And despite some rhetoric about "LTE in 2009," all the signs I'm seeing suggest that most operators other than DoCoMo (DCM) and Verizon (VZ) are pushing it out to the right. In much of Europe, some of the most likely chunks of spectrum for LTE are mired in legal disputes or at least delayed until 2009 /2010. Not many people expected to see much commercially-used LTE in Europe before 2012 - even before the current economic fears.

Yes, there's a mad scramble by some of the network vendors to get test and early commercial gear out. But there seems to be some skepticism about whether LTE will actually improve capacity that much over HSPA. Yes, theoretical peak speeds will rise, but unless it's deployed in 10MHz or 20MHz chunks, it's not clear that the aggregate total will rise much.

So does WiMAX have the race sewn up then? Actually in my view, it's still far from clear.

Firstly, the elephant in the room is HSPA - it works, it's deployed, it's useable, there are a lot of devices, and we're a long way down the pricing curve. Yes, there's a risk it will get congested in some locations if operators' capex doesn't extend to improved backhaul, but for now, it sets the bar. Sure, in some circumstances (e.g. Baltimore) WiMAX alternatives might be a little faster/cheaper right now, but given the current pricing trends for HSPA data, I don't think there's any significant gap in properly-competitive markets.

But the real issue to me is the economy, and its effect on companies - both on the infrastructure and operator sides. I haven't got a Bloomberg terminal to pull hard data from, but some of the key WiMAX advocates - Sprint, Motorola (MOT) and co. - must be viewed as financially weaker than LTE peers like Verizon Wireless or Ericsson (ERIC). As I wrote this, I heard reports that Thursday's stock market horror story concerns Korean banks - which have complex cross-holdings throughout its industrial & telecom sector. I don't know how the recession might hit the Russian, Indian or Taiwanese economies, but those will clearly be critical factors too. And as for the idea of new entrants borrowing large sums of money (or raising equity) to fund spectrum purchase and build out competing networks?

WiMAX is also still generally consigned to high frequency bands - 2.3GHz, 2.5GHz, 3.5GHz - which, even where they are available, require dense and expensive networks, consume lots of power on both network and device sides, and which have poor indoor penetration.

Bottom line? My take at the moment is:

• LTE gets delayed by recession. Come back in 2013 for massmarket volumes.
• WiMAX is up and running, but remains too patchy to get true scale globally.
• HSPA keeps growing but also faces slow-downs in terms of upgrades.

And all of this is overlaid on a set of macroeconomic and geopolitical unknowns, how will the cards fall when everything settles down? Maybe we'll be looking at Dubai and Qatar as guidelines to which future technlogy will win. Maybe all the weaker telcos will be owned by Chinese sovereign wealth funds & we'll be rolling out TD-SCDMA.

Maybe I'm just getting caught up in the frenzied speculation about the downturn. But I have to say, I'm not expecting to have any sort of 4G phone any time soon.

Comments

[wimaxed:]

The best would've been to have everybody supporting the same technology but I know companies like Verizon and others supporting LTE are concerned about the migration costs and LTE seems to provide a less radical way to go to 4G.

2008 Oct 16 10:22 AM

[Xorg:]

You have to consider how WiMAX will easily get in the hands of consumers. WiMAX will likely be standard in most laptops in a year or so. Many will be buying laptops that happen to have WiMAX and may not even know it. They see a hotspot, think it's WiFi and sign up. It will be a self-marketing network for Sprint and other WiMAX providers. When a self-marketing network can be demonstrated, it will be easier to find funding to rollout to other cities.

When WiMAX/WiFi combo chipsets cost the same as WiFi only (it's only about a $6-$10 difference today), existing WiFi product makers of all kinds of consumer electronics products will naturally drop in WiMAX, ideally not having to deal with carriers. Consumer electronics product makers are already tied into IEEE, which is WiFi/WiMAX. WiMAX will naturally end up in cameras, GPS devices, streaming MP3 players/iPOd, PSP/gameboy etc.

LTE is controlled by 3GGP, the telcom industry. For LTE to make it in a wide array of products, they'll have to pay device makers to put it in on a case-by-case basis. It will not occur broadly or naturally as WiMAX.

2008 Oct 16 11:02 AM

[Dean Bubley:]

I disagree. Fairly few products will get WiMAX pre-integrated - there's too much wishful thinking about this, which doesn't fit with commercial reality.

WiFi operates in unlicenced spectrum, and the testing/conformance burden for equipment manufacturers is *much* lower than for WiMAX. I can't see there being many cameras, game consoles etc that have WiMAX. The problem is one of scale - most countries will not have national WiMAX networks in the foreseeable, and those that do have them will mostly be in unfavourable frequency bands with poor indoor coverage.

I reckon about 1% of global laptop shipments in 2009 will have WiMAX, and I reckon the figure will struggle to get to 15% even in a few years time.

The main competition for WiMAX isn't really LTE, it's HSPA, which is already pretty widespread. This is the whole thrust of my post - LTE won't be mainstream until 2013 onwards.... but 3.5G cellular is already.

DeanB

2008 Oct 18 04:16 PM

[JMore:]

HSPA? What about EVDO? EVDO is deployed Nation wide in the US and provides DSL speeds. I love ATT new commercial where they just discovered the internet... and "up to" 3G speeds. Who wants "up to" when you can have 3G all the time on EVDO.

2008 Oct 21 07:46 AM

[Zhi Lin:]

Maybe all the weaker telcos will be owned by Chinese sovereign wealth funds & we'll be rolling out TD-SCDMA.

--Dean, I work in China Mobile who is the only operator has the TD-SCDMA license.

And there are 3 operators in China, the other two are China Telecom with CDMA license and China Unicom with WCDMA license.

It is true, all these three operators are state-owned.

The root reason of enforcement of TD-SCDMA is the eager expection for local experts and local scientists from the industry.

Another reason is the responsibility from the government to improve the economic structure.

So TD-SCDMA is a push from the government to the local industry to learn and to research.

It is a painful and sweet decision, it is self-respect.

But first of all, China Mobile is still open to the industry all around the world.

2008 Oct 23 05:31 AM