Strategy Analytics WiMAX Operator Assessment

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The Strategy Analytics Broadband Network Strategies analysis of WiMAX providers Clearwire and Towerstream suggests that their recent public offerings—rare among US wireless broadband service providers—are a necessary, but insufficient, step toward market success. The report, “WiMAX Service Providers Go Public: Ready for Prime Time or Looking for a Greater Fool?” notes that both the $600 million Clearwire IPO, and the much smaller $15 million, Towerstream offering, provide much needed expansion capital, yet both companies face extremely challenging business environments.

“The 1990’s proved that going public doesn’t necessarily mean you have a great business plan,” notes Tom Elliott, Vice President of Applied Analytics and author of the report. “It just means you’ve got someone else’s money to back it.” He continues, “Clearwire, which primarily serves residential customers, and Towerstream, which focuses on small and medium enterprises, are in very different businesses, but each faces stiff competition both from established access providers and from potential new offerings, such as Sprint Nextel’s WiMAX network.”

Clearwire has recently expanded into major US markets, after starting out in smaller cities. “The home broadband competition in major metropolitan areas between cable operators and telcos is fierce,” says David Mercer, Vice President of the Digital Consumer practice. “Clearwire is going to have to fight to grow its customer base.” Towerstream has announced a plan to add two cities a year to its current base of eight, which the report cautions may present a difficult management challenge for a small firm.

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Alvarion Partners With NDS And MobiTV To Demo Mobile Wimax TV

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Alvarion announced that it is showcasing 4MotionTM mobile WiMAX high resolution TV in cooperation with NDS, the leading provider of technology solutions for digital pay-TV, and MobiTV, the leader of mobile and broadband television and music services. By deploying this type of OPENTM WiMAX solution, mobile WiMAX operators can generate additional revenues and profits under a variety of business models.

4Motion is designed to fully integrate NDS’s digital rights management (DRM) and conditional access (CA) solutions, with MobiTV’s end-to-end mobile WiMAX television services, to enable broadcast of live channels video on demand (VoD), interactive TV, and other value added video applications.

“Our companies are cooperating in order to demonstrate mobile TV over WiMAX anytime, anywhere and on any device,” said Joseph Deutsch, VP Product Marketing, NDS. “Alvarion’s 4Motion solution, together with our core VideoGuard CA and DRM solution, supports the full range of video services, giving carriers the assurance that only paying subscribers gain access to content while offering various business models to consumers and increasing average revenues per user (ARPU).”

“Combining Alvarion’s 4Motion solution with MobiTV’s mobile WiMAX client and content delivery system means that high quality video services can be made available to users at all times,” said Kay Johansson, CTO of MobiTV.

Leveraging BreezeMAXTM, 4Motion is designed to enable service providers to offer Personal Broadband or fixed, portable, and mobile WiMAX services anytime, anywhere. Designed to be compliant with 802.16e-2005 and WiMAX Forum Network Working Group specifications, 4Motion is the basis of Alvarion’s OPEN WiMAX ecosystem with its best of breed network optimization and smooth and simple integration of third party applications and services. 4Motion is expected to be commercially released later in 2007.

The three companies are showcasing their joint mobile WiMAX TV solution at the CTIA show, booth #4969, being held this week.

Study: Differentiation Key To Mobile WiMAX Success

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Mobile WiMAX carriers will have to differentiate their services from cellular services if they are to survive, and even then, they will face many technical, cost, and competitive challenges in the United States, a study by In-Stat concludes.

However successful Mobile WiMAX (Worldwide interoperability for Microwave Access) carriers turn out to be, they will create downward price pressure on incumbent cellular carriers, In-State noted.

“When WiMAX competes with cellular, cellular operators will be forced to decrease their prices for wireless data services over cellular,” said In-Stat’s study. “Even if WiMAX fails after that point, it is unlikely that cellular carriers will ever again be able to charge the amount they currently do for wireless data services.”

Mobile WiMAX , based on the Internet Protocol, promises to accelerate wireless-data speeds well beyond what’s offered by current 3G cellular networks and deliver basic voice service. Voice service will be based on the technology’s Voice-over-Mobile WiMAX spec, a VoIP technology that In-Stat says isn’t likely to be used much before 2009 in the United States.

Because WiMAX carriers will offer voice and data services like cellular carriers, they’ll have to “differentiate WiMAX from cellular data and offer each for a different purpose,” the study said. One way would be to promote WiMAX for wireless internet access from laptop PCs and PDAs, while cellular data will be used for cellular handsets.

However they position their service, startup Mobile WiMAX providers “will need to undercut a cellular service provider’s price for service if they are to have any chance of succeeding,” the study said. Such price cuts, however, “will make it more difficult for that WiMAX provider to pay back his network,” In-Stat noted. “In addition, if the cellular operators in the area start to see significant movement to WiMAX, they will reduce their service prices to compete.”

Cellular carriers that build Mobile WiMAX networks, such as Sprint, will likely succeed by using the cellular network for data and voice and WiMAX for data-only service targeted to PDA and laptop users. In fact, it is Intel’s intent to incorporate WiMAX in laptop chips, In-Stat said. The differentiated dual-network strategy “gives the [cellular] company more flexibility because it can deploy WiMAX when it likes, and it can shift its wireless data load between
WiMAX and cellular however it pleases.”

Mobile WiMAX faces many other challenges, including competition by well-established cellular carriers whose networks will likely be more reliable than startup Mobile WiMAX networks. Other challenges include the lack of a
single worldwide WiMAX standard or frequency band that would drive down end-user device costs through economies of scale, said analyst Allen Nogee. The WiMAX standard, he explained, is an umbrella that covers several “profiles,” each of which has a unique channel width, frequency band, and sometimes different duplexing forms to fit into various countries’ existing spectrum allocations, In-Stat explained.

Current 3G cellular devices cost under $250, and some are starting to drop below $100, In-State noted. At these levels, “WiMAX devices will have a difficult time competing on price, and it’s unlikely that the number of WiMAX devices produced will reach just this year’s cellular 3G numbers for many years to come,” Nogee said.

As for infrastructure, when backup power and similar additions such as backhaul are taken into account, WiMAX base stations are roughly equal in price to smaller cellular base stations, he said.

WiMAX’s key advantage over cellular is 20 percent to 30 percent greater spectrum-efficiency than current cellular technologies. Down the road, however, CDMA2000 1X EV-DO Rev. C technology will greatly accelerate cellular data speeds “and allow cellular to directly compete with WiMAX.”

Nortel Achieves Industry’s First Multi-Vendor Live WiMAX Call

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Kyocera Wireless and Runcom have achieved what is believed to be the industry’s first multi-vendor, live MIMO call using innovative WiMAX antenna technology. This technology is expected to deliver mobile services three to five times faster and at a much lower cost than today’s 3G networks. The groundbreaking call, which included both voice and streaming video, demonstrated the commercial viability of MIMO-powered WiMAX for networks and end-user devices.

MIMO-powered WiMAX will allow service providers to meet the high bandwidth demands of today’s mobile society without being prohibited by huge costs. This advancement has the potential to offer consumers fully mobile access to entertainment and communication tools that traditionally have been restricted to the home or office. For example, true mobility could be extended to workers for secure access and unprecedented bandwidth wherever they go; video gamers could enjoy their favorite interactive games in real-time; and children could pass the time on long drives watching their favorite shows via streaming video.

“This solidifies Nortel’s position as a leader in OFDM-MIMO which is the underlying technology of WiMAX and the basis for all 4G solutions” said Peter MacKinnon, GM of WiMAX, Nortel. “To ensure an ecosystem of MIMO-powered WiMAX, Nortel has brought together its leadership in 4G Mobile Broadband technologies with Kyocera Wireless’ expertise in consumer devices and Runcom’s pioneering developments in chipset technologies.”

“In order to be successful in the market, mobile video must be affordable for consumers,” said Monica Paolini, Senza Fili Consulting. “WiMAX, with its infrastructure, high capacity, and the proven ability to support mobility, is an excellent technology choice for operators looking to drive the costs out of mobile services while still offering the most competitive broadband speed performance.”

“As the world’s first handset manufacturer to demonstrate a MIMO-powered WiMAX device, Kyocera Wireless is in a leadership position to enable future products with the bandwidth-intensive features – like television and broadband Internet – that many consumers will demand,” said Dave Carey, vice president of strategic planning, Kyocera Wireless Corp. “Kyocera Wireless has a long track record of innovation in the wireless industry and we’re gratified to be working with Nortel and Runcom on yet another step forward in wireless technology.”

“Leading edge WiMAX technology will allow mobile customers to enjoy enhanced communication services without sacrificing the flexibility and dependability that they have come to expect from their devices and networks,” said Dr Zion Hadad, CEO, Runcom. “We expect this collaboration will provide the end to end MIMO solutions that can transform the wireless industry.”
The call took place at Nortel’s Advanced Technology Lab in Ottawa over live air using 2.5 Ghz commercial spectrums. The technology used was a prototype PCMCIA card from Kyocera Wireless powered by Runcom’s MIMO chipset, and Nortel’s WiMAX Base Station 5020. This is believed to be the industry’s first multi-vendor, end-to-end WiMAX MIMO wireless broadband solution where all components are MIMO based. Nortel signed a working agreement with Kyocera Wireless in December to bring to market MIMO-based PCMCIA cards and other devices. Based on market demand, commercial products could be available later this year. In addition, Nortel will demonstrate the MIMO-powered WiMAX solution at its booth (#145 in Hall 8) at 3GSM World Congress taking place Feb. 12-15 in Barcelona.

Nortel’s Mobile WiMAX solution is built on a foundation of MIMO, a combination of innovative transmission and antenna technologies that maximizes spectrum to deliver the lightning-fast speeds and high bandwidth essential to high-quality mobile video and TV. The power and performance of Nortel’s solution provides substantial savings to operators because WiMAX delivers high-speed, broadband fixed and mobile services wirelessly to large areas with minimal infrastructure.

Study: Differentiation Key To Mobile WiMAX Success

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Mobile WiMAX carriers will have to differentiate their services from cellular services if they are to survive, and even then, they will face many technical, cost, and competitive challenges in the United States, a study by In-Stat concludes.

However successful Mobile WiMAX (Worldwide interoperability for Microwave Access) carriers turn out to be, they will create downward price pressure on incumbent cellular carriers, In-State noted.

“When WiMAX competes with cellular, cellular operators will be forced to decrease their prices for wireless data services over cellular,” said In-Stat’s study. “Even if WiMAX fails after that point, it is unlikely that cellular carriers will ever again be able to charge the amount they currently do for wireless data services.”

Mobile WiMAX , based on the Internet Protocol, promises to accelerate wireless-data speeds well beyond what’s offered by current 3G cellular networks and deliver basic voice service. Voice service will be based on the technology’s Voice-over-Mobile WiMAX spec, a VoIP technology that In-Stat says isn’t likely to be used much before 2009 in the United States.

Because WiMAX carriers will offer voice and data services like cellular carriers, they’ll have to “differentiate WiMAX from cellular data and offer each for a different purpose,” the study said. One way would be to promote WiMAX for wireless internet access from laptop PCs and PDAs, while cellular data will be used for cellular handsets.

However they position their service, startup Mobile WiMAX providers “will need to undercut a cellular service provider’s price for service if they are to have any chance of succeeding,” the study said. Such price cuts, however, “will make it more difficult for that WiMAX provider to pay back his network,” In-Stat noted. “In addition, if the cellular operators in the area start to see significant movement to WiMAX, they will reduce their service prices to compete.”

Cellular carriers that build Mobile WiMAX networks, such as Sprint, will likely succeed by using the cellular network for data and voice and WiMAX for data-only service targeted to PDA and laptop users. In fact, it is Intel’s intent to incorporate WiMAX in laptop chips, In-Stat said. The differentiated dual-network strategy “gives the [cellular] company more flexibility because it can deploy WiMAX when it likes, and it can shift its wireless data load between
WiMAX and cellular however it pleases.”

Mobile WiMAX faces many other challenges, including competition by well-established cellular carriers whose networks will likely be more reliable than startup Mobile WiMAX networks. Other challenges include the lack of a
single worldwide WiMAX standard or frequency band that would drive down end-user device costs through economies of scale, said analyst Allen Nogee. The WiMAX standard, he explained, is an umbrella that covers several “profiles,” each of which has a unique channel width, frequency band, and sometimes different duplexing forms to fit into various countries’ existing spectrum allocations, In-Stat explained.

Current 3G cellular devices cost under $250, and some are starting to drop below $100, In-State noted. At these levels, “WiMAX devices will have a difficult time competing on price, and it’s unlikely that the number of WiMAX devices produced will reach just this year’s cellular 3G numbers for many years to come,” Nogee said.

As for infrastructure, when backup power and similar additions such as backhaul are taken into account, WiMAX base stations are roughly equal in price to smaller cellular base stations, he said.

WiMAX’s key advantage over cellular is 20 percent to 30 percent greater spectrum-efficiency than current cellular technologies. Down the road, however, CDMA2000 1X EV-DO Rev. C technology will greatly accelerate cellular data speeds “and allow cellular to directly compete with WiMAX.”2007

Ovum Paints Grim Picture For Asia Pacific WiMAX

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Analysis and consulting firm Ovum is predicting a rough road ahead for fixed and mobile WiMAX, saying both will remain niche technologies in most Asia Pacific markets for the next five years.

In his report WiMAX in Asia: reality bites, analyst Nathan Burley delivers his downbeat estimate for the technology despite the opportunities afforded by uneven fixed and mobile network deployment, and governments eager to latch onto the technology to boost domestic social policy initiatives and export-industry development.

Key to its poor performance is delays in standardising Mobile WiMAX for the mass-market, the report says. With 3GPP technologies being built out fast, the short to medium-term window of opportunity for large scale mobile WiMAX is closing, Ovum says.

It adds that both fixed and mobile WiMAX will remain niche technologies in most markets for the next five years. Beyond this, much depends on the relative volume of WiMAX chipsets built in to consumer electronics, and the extent to which the cellular community can maintain the momentum currently seen with HSPA deployment.

Mobile WiMAX faces considerable barriers to implementation, the report goes on to say, chief among them is the absence of a universally designated spectrum band. The technology is also less specified than comparable 3G broadband technologies and will take time to develop the scale economies essential to compete with 3G.

Despite publicity and trials, few larger mobile operators – especially in developed markets – have committed to large scale commercial deployment of WiMAX as a mobile broadband technology. Ovum says it sees 3GPP technologies (currently high-speed packet access, or HSPA) as the clear leader for wireless broadband in the medium term.

As a result, smaller operators will concentrate on deploying WiMAX in niche markets such rural areas poorly served by fixed DSL or cable.

In developed markets especially, WiMAX will co-exist with 3G/HSPA as fixed operators choose to extend the reach of DSL and possibly as a fixed substitute in cities.

Ovum says that in established 3G/HSPA markets, mobile WiMAX will need to demonstrate superior service or vastly cheaper prices in order to gain widespread take-up – something it sees as unlikely in the short to medium term.

FINTEL Covers Fiji Islands With WiMAX Using Alvarion’s BreezeMAX

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Alvarion announced that Fiji International Communications Limited (FINTEL), the country’s international telecommunications provider, has selected BreezeMAX to offer WiMAX data services to the businesses and residents of the Fiji islands. Working with Paclink, a leading South Pacific systems integrator, FINTEL will start by offering services in the capital city of Suva, later expanding to more of the 330 islands in the south Pacific archipelago.

“We are pleased to be able to bring the ‘4G’ services of WiMAX to the Fiji Islands,” said Mr. Jone Wesele, Commercial & Business Development Manager of FINTEL. “As a complement to our existing fiber and satellite networks, BreezeMAX has proven to be ideal for our island terrain. It’s a robust, ruggedized system with exceptionally high performance for our non-line-of-sight environment and meets the demanding bandwidth and service requirements of our busy tourist industry.”

BreezeMAX is Alvarion’s WiMAX Certified platform designed from the ground up according to the IEEE 802.16 standards and uses OFDM technology for advanced non-line-of-sight (NLOS) functionality.

“Bringing WiMAX to the Fiji Islands is very exciting, and we are thrilled to plan and deploy such a significant addition to FINTEL’s network capabilities,” said Philip Martyn of Paclink. “We look forward to growing our relationship with Alvarion to offer more network solutions to FINTEL and other carriers in our region.”

BreezeMAX carrier-class design supports broadband speeds and quality of service (QoS) to enable carriers to offer triple play broadband services to thousands of subscribers in a single base station. Since its launch in mid-2004, BreezeMAX has been successfully deployed in over 200 installations in more than 80 countries around the world.

“As [WiMAX] deployments in Asia Pacific increase…” said Tzvika Friedman, “WiMAX services will give the Fiji tourist industry a substantial boost with the corresponding economic benefits.”

WiMax IPOs On The Horizon

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On Dec. 18 and 19, two wireless upstarts — NextWave and Clearwire — filed to go public with the Securities & Exchange Commission. Based on their S-1 forms, both companies hope to make their fortunes on WiMax, a broadband-wireless technology expected to start making significant inroads in the telecom market next year.

Market researcher Gartner (NYSE: IT) Dataquest expects the North American WiMax services market to swell from 30,000 connections in 2006 to 21.2 million by 2011.

What’s the appeal of WiMax? The wireless technology could provide consumers with a new source of high-speed broadband services, threatening to displace digital subscriber lines (DSL), cable modems, and today’s slower cellular and WiFi services.

For WiMax operators, product suppliers, and software vendors, the technology represents a huge opportunity to shake up the telecom market — one that Clearwire and NextWave are hoping investors will be quick to appreciate.

Strong Investor Appetite

Will investors snap up Clearwire and NextWave’s offerings? The answer could differ by company, even though, at first glance, the two outfits appear to be very similar: Both are swimming in operating losses and both hope eventually to make their money, at least in part, from building out WiMax networks.

The two companies also expect to go public in early 2007, capitalizing on a revival of the tech initial public offering market — the strongest it’s been since 2000, says IPO expert Tom Taulli. On Sept. 21, wireless broadband gear maker Riverbed Technology (Nasdaq: RVBD) priced above its expected range, and the company’s shares have rallied 210 percent since, to US$30.19, indicating strong investor appetite for wireless broadband-related stocks.

Yet Clearwire’s shares might receive a different reception, and attract very different investors, than NextWave.

One reason: Clearwire has A-list investors: chipmaker Intel (Nasdaq: INTC) and cell phone manufacturer Motorola (NYSE: MOT) . It also has legendary telecom executive Craig McCaw at the helm.

“There’s a natural comfort that comes with the fact that Intel and Motorola are interested, and McCaw runs it,” says Michael Mahoney, managing director at EGM Capital hedge funds in San Francisco. Years ago, McCaw cobbled together the first nationwide cellular empire in the U.S., which he sold to old AT&T (NYSE: T) for $11.5 billion in 1994.

Spectrum Speculators?

How much Clearwire could raise in an IPO is yet unclear. Some estimates suggest the figure could be around $400 million.

Clearwire, which originally planned to go public earlier this year but withdrew its application due to adverse IPO market conditions, already has 188,000 subscribers, up from 1,000 users in 2004. Its network is deployed in 34 markets in the U.S. and in certain locales abroad. It also has $1.25 billion in cash, equivalents, and short-term investments, according to documents filed with the SEC. Clearwire officials did not respond to requests for an interview.

NextWave is famed in its own right, but for different reasons.

Aperto Unveils Mobile Wimax Strategy

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Aperto Networks, has unveiled its strategy to support a wide range of deployment options for network operators looking to capitalize on the IEEE 802.16-2004 fixed and IEEE 802.16e-2005 mobile WiMAX standards.

Aperto’s mobile WiMAX offering is based on an extension of Aperto’s industry leading PacketMAX architecture, including the PM5000, the first base station to be certified by the WiMAX Forum. Aperto has adapted PacketMAX to accommodate the mobile WiMAX standard through 802.16e-2005 compliant radio controller modules and software selectable subscriber units allowing spectrally efficient collocation of the equipment based on the fixed and mobile WiMAX standards, or an elegant migration from fixed to mobile WiMAX.

“Aperto has been a strong solutions partner for GTS Poland for a long time and their introduction of “e” or mobile WiMAX fits squarely into our plans,” said Pawel Kozlowski, field and access engineering director, GTS Poland. “With PacketMAX subscriber units we can run the “fixed” standard or the “mobile” standard depending on software load; and the PacketMAX 5000 base station gives us the flexibility we need to run both standards in the same footprint making technology migration straight forward. By executing on this strategy, Aperto has proven its ability to solve real operator problems.”

With advanced technologies such as MIMO, antenna diversity and space-time coding (STC), the PacketMAX platform will evolve to yield even greater link budgets to enable more effective communications for WiMAX users, no matter where they are located, whether at the office, at home, or on the move. PacketMAX will also include multiple base station form factors for mobile WiMAX, such as single sector, multi-sector and pico-cell base station, allowing network operators to optimize their deployments.

Alvarion’s BreezeMAX Selected For WiMAX Services In Tonga

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Alvarion Ltd., announced that Tonga Communications Corporation (TCC) has selected its BreezeMAX 3500 solution to cover the Kingdom of Tonga with WiMAX services. Tonga CC, the islands’ national operator, plans to overlay its current GSM network with WiMAX to bring broadband data services to the citizens of Tonga. The Kingdom of Tonga, the oldest and last remaining Polynesian monarchy, is an island nation with around 100,000 residents inhabiting 42 of its 170 islands spread over 700,000 square kilometers in the south Pacific, and has thousands more visitors who come to enjoy its year round tropical weather, beach communities, and now broadband services.

“We have been searching for a way to bring broadband to the islands for awhile, but only Alvarion’s BreezeMAX fit our business model,” said Steve Tusler, CEO of TCC. “Given our island topography and tropical weather, we require a robust system that is easy to scale and works in non line-of-sight conditions. We were impressed with the BreezeMAX system’s quality-of-service and proven field reliability worldwide and look forward to bringing broadband to as many island residents as we can and to our many visitors.”

BreezeMAX is Alvarion’s WiMAX platform designed from the ground up according to the IEEE 802.16 standards and uses OFDM technology for advanced non-line-of-sight (NLOS) functionality. Its carrier-class design supports broadband speeds and quality of service (QoS) to enable carriers to offer triple play broadband services to thousands of subscribers in a single base station. Since its launch in mid-2004, BreezeMAX has been successfully deployed in over 180 installations in more than 80 countries around the world.

“As we expand our WiMAX deployments in Asia Pacific, we welcome Tonga CC’s decision to overlay its GSM network with WiMAX to offer the latest broadband services to its users,” said Udi Shaked, Alvarion’s general manager in the APAC region. “The ability of BreezeMAX to provide broadband to users over large areas becomes clear in a geography such as Tonga. And its advanced OFDM technology overcomes the challenges of deployment in an island topography.”