3G Rival WiMax Promises Much, But Will It Deliver?

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WiMax supporters say it will be cheaper and faster than rival 3G mobile networks, which explains why many operators are interested. But industry specialists warn the emerging wireless technology may not deliver all it promises.
A survey by market research group Pyramid Research showed that out of 100 cable TV and telecoms operators around the world, 75 said they were considering building a WiMax network.
WiMax allows super high-speed Internet access and file downloads from laptops, phones or other mobile devices over greater distances than previous technologies.
"In terms of broadband speed it has a two-year lead on the 3G competition," said U.S.-based analyst Ozgur Aytar.
That two-year lead is not a good enough reason for a cellular operator to rip out their mobile phone network -- which cost billions of dollars to build -- but it does create an opportunity for anyone else who wants a wireless broadband business to complement fixed-line or mobile voice networks.
"There is a compelling untapped market, including colleges, universities, and municipalities, for wireless broadband connectivity," said U.S.-based telecoms consultant Mike Thelander at Signals Research, pointing to operator Sprint Nextel, which will invest $3 billion in a WiMax network in 2007 and 2008.
Sprint Nextel's roll-out, helped by Intel, Motorola and Samsung, will make wireless broadband much cheaper to deliver -- up to 10 times cheaper than current third generation cellular telephony networks.
Even better, the radio spectrum for WiMax networks is rented out by regulators at more affordable prices, and WiMax equipment vendors claim the infrastructure and handheld devices will be cheaper than 3G mobile phone systems.
"We believe WiMax is going to be much cheaper. When Intel starts rolling out its Wi-Fi/WiMax chip, WiMax only adds $5 to the cost of Wi-Fi," Mohammad Shakouri, VP of marketing of the WiMax Forum said in an interview at the ITU Telecom World 2006 trade show in Hong Kong.
LOW ROYALTIES?
WiMax supporters hope that low cost will also stem from the fact it is a technology developed by more than 1,500 companies.
With so many companies contributing, the WiMax Forum is hopeful everyone will just chip in their patents and keep royalties at zero or an absolute minimum, which would give it another edge over 3G cellular technologies with royalties of between 5% and 10% of wholesale mobile device prices.
"The pricing of components will be reasonable. We'll try to push for very low cost devices," Shakouri said.
The WiMax Forum hopes wireless broadband will become so cheap it can be part and parcel of any electronic device -- enabling consumers, for example, to send pictures to friends straight from their digital camera.
But others doubt royalties will really be that low.
Ericsson Chief Executive Carl-Henric Svanberg, whose company is one of the top two WiMax patent holders, told Reuters it would be a "misperception" to expect WiMax to be any cheaper than cellular technologies.
"WiMax costs the same to develop as other wireless technologies," he said in an interview at ITU. "IPR [intellectual property rights] will hardly be lower than for any other technology."
Nokia, another major patent holder is equally sceptical.
"The IPR question is going to be fairly similar [to other future wireless technologies]," Tero Ojanpera, Nokia's chief technology officer, told Reuters at the ITU.
SLOW START
Even if royalties are modest, low prices will only come if WiMax chips are being produced in the hundreds of millions, and that may take a long time.
"We're not likely to see technologies like mobile WiMax really take off until the next decade," said Sara Harris, an analyst at Strategy Analytics, forecasting just 6% out of 500 million wireless broadband users on WiMax by 2010.
And carriers who have invested in expensive cellular radio spectrum and 3G networks will not sit quietly while WiMax players are getting favourable treatment.
"We have quite a lot of asymmetry between 3G licence holders and WiMax licence holders. We want a level playing field," said Matthew Willsher, chief operating officer of Hong Kong operator CSL.
There are even technology companies that claim WiMax is an inferior technology to possible alternatives.
Qualcomm Chief Executive Paul Jacobs used ITU to flag his company's upcoming rival, called Ultra Mobile Broadband, which is due to be unveiled early next year.
Operators are listening, and even though three out of four claim to be interested in WiMax that does not mean they are investing in WiMax networks.
"As an operator it's very difficult to make a selection of which technology we should use," said Hoon Han, strategy director at South Korean operator KTF "We're testing WiMax technologies, but we're very cautious before making an investment."
By: Lucas van Grinsven, European technology Correspondent
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