Can WiMAX Triumph Over Its Competitors?

Now that Sprint's (S) long-awaited Xohm service has launched in Baltimore to mostly positive reviews, researchers, bloggers, and journalists are beginning to place their bets on the upcoming battle between WiMAX and long term evolution (LTE), its toughest challenger.

Researchers at In-Stat have struck the first blow for WiMAX, concluding in a new report that WiMAX is likely to "outpace" LTE over the next few years, though both technologies are still years away from full implementation. In-Stat argues that because LTE will not be ready for at least another year or two, the timing of network roll-outs favors WiMAX technology.

But CNET's Marguerite Reardon is skeptical, as she draws a comparison between Sprint's Xohm roll-out and the recent failed efforts by EarthLink (ELNK) to develop municipal Wi-Fi networks. She argues that Sprint's business model may be doomed to fail because it pits WiMAX against existing 3G data services and cheaper, more consistent broadband options such as Verizon (VZ) DSL. In the absence of financial incentives and a greater variety of WiMAX-ready devices, Reardon predicts that Xohm will face a tough battle for consumers – not necessarily against LTE, but against HSPA products offered by competitors.

However, while Sprint's WiMAX network in Baltimore may not be as consistent as existing broadband services -- for now, at least -- it still offers stronger, faster, and more consistent connections than EarthLink's Wi-Fi project, which depended on countless access points, each with a limited reach. WiMAX offers the freedom of municipal Wi-Fi, but with far less hassle -- so the real goal for Sprint is to convince consumers that its service will make their lives easier, liberate them from coffee shops, and save them the trouble of dealing with routers and modems. Their inability to pull this off is by no means a foregone conclusion. Municipal Wi-Fi, after all, is still an attractive concept in theory, if not in practice. And while it's true that WiMAX-ready mobile devices and laptops are currently few in number, we can doubtlessly expect to see more of these devices entering the market if the launch of Xohm proves to be successful in the long run.

Reardon doesn't mention LTE directly, but she does inject a bit of unpleasant reality into the WiMAX vs. LTE debate by pointing out the gloomy state of the economy, and in doing so, she raises an important question: what if delays in WiMAX roll-outs give LTE technology time to catch up? Phil Skeffington, an associate with UK-based consultancy Mott MacDonald Schema, doesn't see a problem.

In fact, if Skeffington is right, the battle between WiMAX and LTE may even result in a draw. Skeffington believes that WiMAX and LTE are "complementary technologies," with LTE poised to become the preferred technology for mobile handsets, and WiMAX set to corner the market of "nomadic" laptop users because of its superior bandwidth capabilities. Because demand from laptop users is higher right now, WiMAX is still likely to hold on to its early lead. Its ability to emerge from the fight unscathed depends on Sprint's ability to attract consumers, to create demand for devices, and to convince manufacturers and investors to meet that demand.

Fortunately for backers of WiMAX, there is plenty of cause for optimism.

Disclosure: Author holds a long position in S

Comments

[Nextel Acce...:]

WiMax is light years ahead of LTE, there will be no debate on this subject in 12 months.

2008 Oct 26 11:23 AM

[Stone Fox C...:]

And your just talking about Wimax in the US. Wimax will be dominate player in the emerging world. ALVR is the play. Trading near cash now with high growth. Will be incredibly cheap at these levels if Wimax makes inroads in the US.

2008 Oct 26 11:38 AM

[Geddy:]

Keep dreaming....

2008 Oct 26 12:28 PM

[Jackson Cash:]

If this becomes a "battle of the networks" for internet privatization of the internet (or some derivative thereof) then they will all lose.

If this becomes a 3G vs. CDMA the consumer loses (think iphone and the greatest telecom blunder of all time with Verizon).

I'm on the sidelines, as this has a lot of potential, but as always, they are testing it in metro areas, and they should be starting in rural, where people need it the most.

-- Gotta hand it to "ma'bell" and continuing incompetence.

2008 Oct 26 03:28 PM

[wimaxed:]

Don't forget that in the Sprint/Clearwire deal is also Google money too. With the increased Google interest in the mobile world I could see this new wireless technology as a winner.

www.WiMAXED.com

2008 Oct 26 10:44 PM

[Geddy:]

Are you referring to VZW not taking the iPhone when offered (they were offered it first from Apple but turned it down, bringing in AT&T as a 2nd choice) as a "blunder?" I would keep an eye on the Blackberry Storm coming out next month & then we can revisit the reason why...that & the sheer number of consumers having issues with the supposed high speed network AT&T offers.

2008 Oct 27 11:38 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 27 12:50 PM

[Xorg:]

There will be winner or loser, they'll both co-exist. This isn't like the Bluray/HDDVD fight. It's more like cable vs. dsl, satellite tv vs cable tv. There was no 'winner' in the latter two as the playing field is defined by what resources are available to the provider.

WiMAX will be pushed by IEEE and the consumer electronics industry. LTE will be pushed by the telcom industry. Both will exist long term.

One advantage for WiMAX in the states is that Sprint/Clearwire have over 100mhz of spectrum per market dedicated to WiMAX. ATT/Verizon have only about 25mhz or so for LTE. This mean far more WiMAX bandwidth can be distributed to end users in the States.

2008 Oct 27 01:55 PM

[Geddy:]

LTE is a new 4G technology & will not be controlled by the old 3GGP. It will, just like WiMax, be offered as an option as a built in accessory to computers. While Sprextel/Clearwire do have a ton of 2.5GHz spectrum, one forgets that once LTE launches on the newly acquired 700MHz, the carriers will be moving everyone over to LTE, which frees up their 850MHz & 1.9GHZ spectrum to be used as well. This will more than compensate for the 2.5 that the "new" Clearwire will have. The 700 & 850MHz spectrum in my humble opinion is more valuable for its penetration value than 2.5GHz is as well.

2008 Oct 27 03:41 PM