WiMAX wireless: A tale of two markets

Strauss: The industry hype surrounding WiMAX wireless has led many to believe that notebook computers capable of 70Mbps access to the Internet over 30-mile distances are going to be available soon.

The industry hype surrounding WiMAX wireless has led many to believe that notebook computers capable of 70Mbps access to the Internet over 30-mile distances are going to be available soon.

This in turn has led to unrealistic expectations concerning not only WiMAX capabilities, but also the nature of the market now and in the future. The current WiMAX market is based on orthogonal frequency division multiplexing wireless technology codified in the IEEE 802.16-2004 standard (also called 802.16d) for point-to-multipoint network coverage over a distance of up to 30 miles at speeds of up to 70Mbps.

Similar broadband wireless access (BWA) networking has been around for several years through proprietary products offered by companies like Alvarion and Airspan Networks. These companies specialize in providing turnkey networks for broadband wireless ISPs, citywide governmental and school system complexes, and even networked video security systems for harbor facilities.

Under the new 802.16d standard, however, such networks do not enable mobility in the same sense that cellphones do. For broadband mobility, a new IEEE standard, 802.16e, is being cobbled together, but we don't expect it to be approved before early 2006. Moreover, that future "mobility" WiMAX standard will necessarily have a smaller coverage area and lower speeds, since portable devices like notebook computers generally cannot afford the battery budget for high-power transmitter output.

Realistically, with 802.16e, we can expect only about 15Mbps maximum data speeds within about a 3-mile radius from a base station. But the mobility WiMAX market will be an order of magnitude larger in both units and revenue.

Consequently, we see a looming bifurcation in the BWA market, with the existing (802.16d) WiMAX market continuing to serve the same types of customers that it now serves, but with a largely different crop of companies jumping into the future 802.16e market.

Operators of mobility WiMAX services are likely to be wireline telephone companies seeking to expand into the wireless business. Or, they may be the current cellular operators, who will likely use it as a cheap-bandwidth, high-speed overlay to their present expensive voice-centric wireless networks for broadband data delivery.

Either type of operator will initially address whichever enterprise market can better afford it?and later serve consumers as their costs decline.

Forward Concepts believes that mobility WiMAX will be cheaper per bit for high-speed data delivery than will data over cellular. This new market is likely to see base-station systems from traditional cellular suppliers such as Ericsson and Nortel, as opposed to the present BWA suppliers.

A few companies, however, like Airspan Networks, already provide equipment for both BWA and cellular base stations. On the client side, it's clear that notebook computers will be the biggest market.

It is no surprise then that Intel Corp., as the principal chip supplier to that market, sees mobility WiMAX as another way to sell a lot more Pentiums and is beating the drum the loudest.

- Will Strauss
President and principal analyst
Forward Concepts