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Class conflict hounds mobile WiMAX

Posted: 02 Jul 2007 ?? ?Print Version ?Bookmark and Share

Keywords:mobile WiMAX in Asia? 802.16e product demand? Wi-Fi/WiMAX module?

Now that the ink is dry on the mobile version of WiMAX, Taiwan system vendors are descending on the market en masse. Most expect a spike in demand next year for 802.16e products as carriers in the United States, Europe and Asia throw the switch on broadband wireless networks and as Intel Corp. begins to ship its Wi-Fi/WiMAX module for PCs.

Yet, amid the flurry of design activity, some believe the industry is overly focused on developing equipment for the licensed bands of WiMAX, where telcos and most greenfield operators will launch services. That, they warn, could hinder application innovation by smaller groups of developers because equipment will be harder to come by and be more expensive.

"Try to find something in the unlicensed 5.8GHz band. Forget it. It's mostly just written about in the papers," said Michail Bletsas, chief connectivity officer at One Laptop per Child, a non-profit group that is trying to bring $100 laptops to underprivileged children around the world. "For innovation, we need a bottom-up approach, and WiMAX is moving in the opposite direction right now."

Developed vs. developing world
Bletsas' remarks underscore that WiMAX is trying to straddle the contrasting needs of the developed and the developing worlds. One is looking for cheap, basic connectivity; the other wants speed and mobility, and doesn't care as much about cost.

In these early days of deployment, it's pretty clear which one is winning out. "Our price in some regions is twice that of DSL, but people still use it because it is convenient," observed Nicolas Kauser, chief technology officer of Clearwire International, which, along with Sprint Nextel, is leading the U.S. market in rolling out broadband wireless services.

Bletsas made his comments on the sidelines of a regional WiMAX conference in Taiwan in May, where local system vendors showed off 802.16e prototypes ranging from base stations and indoor routers to PCMCIA/PCIe cards, and embedded platforms such as smart phones and GPS devices. Most of the equipment at the show focused on licensed bands, including 2.3-, 2.5/2.6-, 3.4/3.5- and 3.6GHz.

ASPs for WiMAX terminals are forecasted to reach $100.

Bletsas said he wished the industry would spend more time developing equipment for the unlicensed bands, a notion that was seconded by officials from some developing countries, such as Pakistan.

But system vendors are going where the money is. And many argue that the licensed bands are far more likely to lead to the large, commercial volumes they need to bring down prices. "That will drive down the price much faster than what will happen in the unlicensed spectrum," said Liu Wei-tu, a product manager at Tecom Co. Ltd.

Greenfield operator Clearwire concurred. "We think it has to be spectrum that is licensed so that we can control our future," said Kauser. "We also expect that our infrastructure costs will come down in the next year or two as WiMAX standardization drives down prices."

"The reality of Asia-Pacific is cost," noted X.J. Wang, VP for Asia-Pacific research at the Yankee Group. "If the customer premises equipment cost can come down significantly, we may see a good opportunity for WiMAX in emerging countries in Asia for basic connectivity."

All eyes on Asia
Analysts predict that Asia will be a leading user of WiMAX in the long run. The deployment of WiBroa WiMAX variant developed in South Koreahas already made Asia a leader. WiBro covers most of Seoul and is being slowly introduced in other big cities. Universal coverage is some distance away, but the service now covers about 25 percent of the population, said Hyun-myung Pyo, executive VP at Korea Telecom.

Another key driver for chip suppliers and system vendors will be Japan, which was expected to issue licenses in Q3. Taiwan is also expected to issue six licenses in July. Although Taiwan is a relatively small market, the government is heavily investing in public projects that use WiMAX as a way to provide an early market and moderate the risk for companies that develop the products.

Globally, spending on WiMAX equipment will total $5.7 billion between 2006 and 2008. The value of the entire industry, including software and services, will reach $29.4 billion by 2012, according to Taiwan's Market Intelligence Center.

Although the Taiwan government hopes to spur early development in chips as well as base stations, it appears that many vendors here are sticking to their comfort zones. In Wi-Fi, Taiwan dominates the design and manufacture of home gateways and add-in cards, but it was slow to embark on chip design. By now, though, a handful has taken the leap.

The same is happening in WiMAX. In May, system design shops like Accton Technology, Asus Computer, Cybertan, Gemtek Technology and Quanta Microsystems showed off mostly gateways, cards and a mobile phone or two. Most are now working with customers on design-ins. Some of those designs will roll into mass production as early as Q3, but the majority will hit the market in mid-2008, around the same time that Intel begins shipping its embedded Wi-Fi/WiMAX modules.

New territory
A smattering of companiessuch as Alpha Networks, Tecom Co. and Zyxel Communicationshave base stations that are based largely on chip vendors' reference designs. This is a new area for Taiwan companies, which did not design base stations from scratch for cellular networks. Their products are expected to hit the market 1H 2008.

Taiwan's chip vendors are falling behind, despite government cajoling and incentives. So far, MediaTek Inc. is the only fabless vendor developing a chip, but its device isn't expected to be ready until at least late 2008. "It's hard to invest in this area now for local chipmakers, but Taiwan should have a good chance to capture this opportunity over the long term as WiMAX grows," said Wufu Chen, co-founder of Taiwan venture capital outfit iD SoftCapital Group and a co-founder of Navini Networks.

Chen, a veteran investor in the communications business, said that two or three years ago, he questioned whether WiMAX would survive among the competing wireless technologies. Now that Intel has committed to ramping its modules next year and companies likes Sprint Nextel are investing heavily, "there is no doubt about whether it will be here. It's just a question of how it will be used," he said.

-Mike Clendenin
EE Times

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