Will WiMAX End Wi-Fi, Cellular Woes?

As clichés go, huge has become hugely overused in recent years. But as telecommunications markets go, they don’t get any more huge than the New York metropolitan area.
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As clichés go, huge has become hugely overused in recent years. But as telecommunications markets go, they don’t get any more huge than the New York metropolitan area.

Which is why, as wireless broadband technologies go, last month’s announcement from Sprint/Samsung that the two companies were rolling out WiMAX in New York City beginning in 2008 marks the coming of age of the latest wireless access wizardry.

Sprint awarded a contract to Samsung to manufacture and install WiMAX access equipment and devices for the region, which will include swaths of Long Island and northern New Jersey. This follows on the heels of Sprint’s similar partnership with Motorola targeting Chicago.

Overall, Sprint has proclaimed it will spend $5 billion on WiMAX deployment by 2010, and in July announced a union with the other U.S. WiMAX player, Clearwire, to employ their respective 2.5 GHz spectrum licenses and share branding and distribution.

And to top off the hugeness of Sprint’s WiMAX efforts, this summer Google announced it will partner to deliver applications over the Sprint/Clearwire network.

Sprint’s New York pledge follows a similar one by Alcatel-Lucent to construct what it says is the first commercial WiMAX service for Germany. China, meanwhile, has announced it will employ WiMAX for wireless communications at the 2008 Olympic Games in Beijing.

These are promising signs for WiMAX, long heralded as the successor to Wi-Fi.

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The Sprint/Clearwire/Google/Motorola/Samsung juggernaut (now there’s something huge) is also significant not only because it presents a real competitor to break the dominant cable/DSL duopoly, but also because it’s poised to offer a very big thing: mobility.

A massive 267-page report from research firm Boschulte Schnee Group, called “The WiMAX Explosion!”, notes that the technology is “post convergence” because it provides a platform on which both fixed and mobile devices will operate—at a much lower cost.

Customers paying for both broadband Internet access and voice mobility generate typical monthly ARPUs (average revenue per user) of more than $100. WiMAX can be profitable with ARPUs in the $60-$70 range, the report says.

WiMAX has been getting hype for some years now, including in this space, and some of it’s been deserved.

It would be cliché to dub the IEEE 802.16 standard, short for Worldwide Interoperability for Microwave Access, “Wi-Fi on steroids.”

But WiMAX’s capacity for longer-distance wireless connection (up to 30 miles at 70 Mbps under ideal circumstances, though not, it should be noted, simultaneously), lower costs and greater reliability make it superior to Wi-Fi, and a possible leap forward over imbroglios that are dimming Wi-Fi’s hopes as a low-cost or free municipal wireless solution.

As I noted in my last column, EarthLink, the biggest muni-wireless partner with 13 citywide Wi-Fi contracts, announced losses of nearly $30 million for the first quarter of 2007, on revenues of $324 million, and said it would scale back its current investments and limit further rollouts to major markets.

The problem is that while Wi-Fi works great at home or in a coffee shop, it’s been tough on operators because of steep network construction and operation costs, scant consumer revenues, and major interference issues—putting operator focus on paying customers.

Reliability and high costs were the two top reasons noted by small and medium U.S. businesses for their decision not to adopt Wi-Fi, with over half saying they had no Wi-Fi plans, according to a recent Forrester Research survey.

It’s precisely in reliability that WiMAX outshines Wi-Fi.

In achieving greater speed and distance, a WiMAX-enabled laptop, for example, could connect via its built-in antenna through non line-of-sight transmission to a nearby WiMAX tower, or, with significantly greater bandwidth, connect wirelessly to a nearby installed antenna with line of sight to that tower.

What bedevils Wi-Fi is it employs “contention access;” multiple devices compete for attention at the media access controller (MAC), drastically reducing speed and reliability, and making that even worse for more distant users while eliminating any potential for reliable VoIP.

WiMAX employs scheduling algorithms that allow for bandwidth efficiency and true quality of service, essentially guaranteeing users a specific slice and speed. Technology proponents also note that it’s scalable.

In addition to consumer WiMAX rollouts, telcos and ISPs are eyeing its potential for reducing “backhaul” costs of transporting traffic to an Internet backbone, a significant savings over wired T1 transport.

If WiMAX is so great, what’s to stop it from displacing Wi-Fi as the wireless watchword?

In short, marketing.

The Sprint consortium has a daunting task communicating all of the above to its customers, and making sure its partners stay on the same page. Consumers are already overwhelmed by technology hype and a dizzying array of devices.

Partnering with consumer electronics manufacturers is certainly bright, but will they put the emphasis on the service or the device? Is Google serious about WiMAX or is it just a “Plan B” to a primary effort to buy 700 MHz spectrum in the upcoming FCC auction and launch its own wireless service? Finally, will Sprint’s $5 billion be enough to both build out and market the service properly?

The answers could be…