Telcos’ WiMax delays may lead to technology delays

WiMax may hold out the promise of cheap wireless broadband available anywhere, but it will face an uphill battle against increasingly popular proprietary alternatives before it can become widespread, according to a study.

A report from ABI Research found that even as WiMax backers such as Siemens AG, Alcatel SA and Intel Corp. slog on through the standardization process, demand for proprietary wireless broadband systems is growing quickly, with unit shipments to grow 50 per cent from 2003 to 2004. Meanwhile, the first WiMax equipment will not make it through the certification process before the middle of next year.

“The market cannot ignore the momentum behind some of these proprietary technologies,” said ABI analyst Edward Rerisi in a statement. “With equipment prices comparable or sometimes cheaper to those initially promised by WiMax, the market for these technologies is growing at an incredibly fast clip.”

WiMax is seen as doing for broadband wireless what Wi-Fi did for the wireless LAN — making it cheap and ubiquitous. The technology promises an alternative to existing broadband in urban areas. In the enterprise, WiMax could allow companies to network widely separated facilities without the need to lay cable or rely on an outside service provider.

Alcatel announced its first products using Intel’s WiMax 802.16d chipset, which could be the first gear on the market when it arrives in the second half of this year. Testing and certification means it will not be available to the general public until a year later.

Unlike Wi-Fi, WiMax will need the backing of both large telcos and large equipment makers to succeed, according to ABI, and at the moment telcos are not rushing aboard the WiMax bandwagon. Nextel Communications Inc. and Sprint Corp., for example, two of the biggest wireless carriers in the U.S., are both licensing the spectrum needed to provide wireless broadband services, but have said they will not wait for WiMax-standard equipment if it takes too long.

“While many vendors have pledged support for WiMax, operators’ plans for the technology remains guarded (while) actual spending on proprietary technologies surges,” ABI noted in the report.

Operators are wary of any technology promising a wireless utopia, and are unlikely to take WiMax seriously until equipment prices have come down and the technology is proven, Pyramid Research LLC said in a recent report. “The fixed wireless industry is littered with broken promises,” noted Pyramid analyst John Yunker, author of the report.

This situation means WiMax will not become mainstream until the end of this decade, ABI projected, when WiMax spending will eclipse that of other technologies. The firm expects the WiMax industry to hit an annual turnover of US$1 billion by 2009.

Intel pointed out that the WiMax Forum, the body shaping the standard, has only been active for about 18 months, noting that it has taken 10 years for Wi-Fi to take off. “The lesson the industry learned from Wi-Fi is that to make a standard successful, you need to get broad industry support, and get standards ratified,” an Intel spokesperson said.

Pyramid forecasts that WiMax will make up 60 per cent of the wireless broadband market by 2008. In that year a total of two to four million broadband fixed wireless lines in operation, bringing in up to $2 billion in access revenues, with Asia and Central and Eastern Europe the two hottest markets, Pyramid said.

WiMax promises a theoretical maximum throughput of 70Mbps over 50 kilometres, and incorporates point-to-multipoint technology, meaning users don’t have to be in the line of sight of a tower. The high throughput means providers could use it to offer services such as video and voice as well as broadband. Nextel may use it to power a mobile phone that becomes a Wi-Fi cordless phone when the customer is at home or in the office.

Its most significant application could be in developing countries, where a wired infrastructure would become unnecessary for affordable broadband.

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