Future WiMAX Better Than 2002 EV-DO

A couple of weeks ago, I criticized an InStat report which I thought had a questionable premise, and a sensationalist title "End Users Prefer WiMAX". I faced some criticism in the comments for coming to conclusions without knowing the full research methodology (possibly from an InStat rep?) Anyhow, in a current article, InStat analyst Daryl Schoolar elaborated on the methodology of the research. Specifically, respondents were asked to indicate their preference of:

1) cellular broadband at 400-800Kbps with a 5GB/mo cap and a $60-$70 price tag and covering all major cities; or
2) WiMAX service at 2-4Mbps for $40-$50/mo with no usage cap and only covering your city and 1/3 of major US cities.

OK, in general I'm fine with that comparison, so long as it's positioned correctly. It's what's called a "scenario", and that scenario is a stacked deck, with a bias towards WiMAX based on some optimistic assumptions. It hardly provides conclusive evidence of whether people prefer one technology over the other. But I bashed this last time, so let's move on.

The linked article above is chiefly commentary from Jane Zweig of the Shosteck Group, who wonders if Mobile WiMAX will be the next Iridium. Remember that Iridium's plan was to capture a large share of the mobile phone market by offering service based from a global constellation of satellites. The problem was that in the 10 years it took Iridium to launch, GSM and CDMA had reached scale economies and spread from big city cores to suburbs and beyond, and only rural and developing regions were left for Iridium. Not a good addressable base to pay off billions in CapEx. Ms. Zweig suggests that similarly, mobile WiMAX may arrive too late to grab the dominant share of the market that proponents expect. I agree with her theory, and think there will be some reckoning for many WiMAX vendors. I said as much in my answer to InStat two weeks ago - cellular isn't standing still, and will respond to WiMAX. But on the other hand, it's unlikely mobile WiMAX will flame-out as badly as Iridium. It takes 10 years to get a satellite constellation operating in orbit, but mobile WiMAX is likely to emerge in nascent form by 2008. It will get a share of the market.

BTW, it's probably fair to note that, in general, InStat produces some of the best research and data about the mobile market, and no I'm not being coerced or paid to say so.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Rafael A. Junquera, May 8th, 2007 @ 6:56pm

    Still wrong

    I do not think that you should tell us how good or bad In-Stat is in an article that already seems to want to justify your previous one, which was correct, by the way. In-Stat, regardless of the methodology, was not very accurate with its headline for its report and even some of the clarification in the second article does not make it right either. For example, it assumes that WiMAX will offer 2 to 4 Mbps while Wi-Fi only hundreds of kbps. Will not new versions of Wi-Fi capable of delivering 50Mbps? True that, that is not what the user is facing at Starbucks, but in some Latin American markets where fixed WiMAX has been deployed consumers are getting a maximum of 500Kbps on a fixed environment. I am not saying that 4Mbps cannot be offered by WiMAX, but the comparison is still unfair, specially because in-Stat does not factor in, it seems, the cost of a WiMAX device, which I shall remember in the case of Sprint, if they look anything like phones, they will have to support also EV-DO.

     

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  2.  
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    Alaric, May 8th, 2007 @ 6:56pm

    Your Analysis is Dead On: Instat - fantasy land

    Instat's scenario is still a fantasy for the reasons you mention. WiMAX with face EV-DO with higher capabilities and EV-DO carriers will match pricing. More importantly, however, WiMAX covering 1/3 of your cities is a fantasy unless you live in the kingdom of monaco (tiny tiny tiny) or say luxemburg. It'll more likely be 1/3 of your city and 5% of your nation. And the WiMAX capabilities are also a fantasy. 2-4 Mbps with no cap? Is that fixed or mobile? Mobile performance of wimax not so good. How much spectrum does the carrier have because if its a 6 or god forid 1.25 MHz channel then it aint happening without lots and lots of cell sites. What about backhaul? It aint cheap you know and what about building a newtork from scratch,which many wimax fantasy weavers think is going happen? Not so economical is that. We have to ask a fundamental question here? Where will wimax get its capacity from. More spectrum? CDMA can do that. MIMO? Oh wait CDMA can do that to? Higher modulation? Yep CDMA can do that as well. OFDM? Some advantages here but not as much as wimax wants you to believe and CDMA's MAC is being and has been improved. What about dopler shift of all those little OFDMA sub carriers in a mobile WiMAX environment? What about the interference created by those little mobile wimax carriers that just sit there like a dead duck and are not spread via code (like cdma) or bounced around like FLASH-OFDM (has frequency hoping)? What about WiMAX cell planning and resuse schemes? What about the cost to implement MIMO on leased cells sites? What can we say about a technology (wimax) that does not actually offer a capacity increase or much over cdma/wcdma without MIMO. What about the OFDMA uplink budget? Comparing wimax to iridium is nearly as bad as instat's rigged poll. Come on now. Satellites can't split cells easily, they cost a lot of money, they're limited in capacity, they're hard to launch, oh and the real kicker is that those iridium phones require very high power amplfiers (thus making them large and limiting battery life) and fading is prevalent in cities due to the canyon effect.

     

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  3.  
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    WCDMA, May 8th, 2007 @ 6:56pm

    RE: Your Analysis is Dead On: Instat - fantasy lan

    However, the problem that people tend to over look (myself being one of them), is that EVDO carriers may lower their price, but their Operating Expense continues to grow as traffic grows (there are little economies of scale). So, as you lower the price, your users use more MB, your subscriber base approaches, very quickly looses profitability. So, some carriers may lower their monthly ARPU, but they'll also have to lower your monthly MB quota. How would you like your DSL/Cable provider to lower the price, but enforce you at lower traffic levels? WiMAX really shines here.

     

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  4.  
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    Jacomo, May 8th, 2007 @ 6:56pm

    Meanigless Debate

    WiMAX will struggle nationwide because of it is forced to use a marginal license spectrum-2.5Ghz.. Trees and those awful leaves will neutralize (absorb) the service in most suburbs and rural markets-no matter what the engineers tell you about big power boost etc. It will work nicely as a Fixed (PTP & PTMP)solution in major Cities with great line of site, replacing most T-1 services with real Broadband 10-20Mbps PTP) as well as in very controlled environments for Mobile services. The WiMAX forum will eventually save its great features by opening up and allowing the radio guys to build new 700Mhz Radios that will effectively allow the winners of this new released spectrum to bypass most Wired Copper based services (Fiber will still rule) and all Wireless services in the Data and Voice fields. Cell Carriers will at best, until LTE, be delivering NArrowband Data and Voice services-maybe 1mbps and under asymetrical services in a best sceanrios. These folks have to win this 700Mhz spectrum if they are to survive as a data provider-otherwise they will need to go back to their roots and focus on delivering the best damn wireless voice services and try to prevent these new Wireless Mesh and WIMAX providers from walking away with their new VoiceIP services. 700Mhz Spectrum Auction: My bet is on a dark horse called Google. If they elect to play in this new spectrum (alone or with a partner) and win a national slice they will dominate the Content & Applications services with the best Storage (big data centers) and Distribution (NAtionwide Fiber linking centers as well as the only piece they are missing-The Last Mile Bypass of all the incumbents. Keep in mind these boys paid $1.3Billion for You Tube-$5+ Billion is chump change here. This will be really exciting to watch (Feb 2008 with deployment in 1st Qtr 2009) and the winner will take all. Meanwhile we can watch some true competition between two Broadband Services in Chicago WiMAX vs Wireless Mesh. Jacomo

     

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  5.  
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    Industry Analyst, May 8th, 2007 @ 6:56pm

    Magical thinking, let me introduce you to Congress

    There is, as usual in these debates, a great deal of magical thinking about what WiMAX COULD be and who will offer it and who will control it. Despite all the technological posturing on both sides, 3G is not a serious competitor to WiMAX, nor is WiMAX a serious competitor to 3G (c'mon. . . aren't you still feeling embarrassed about the "Wi-Fi will destroy Bluetooth" arguements you were having three years ago?) The only thing that any of these technologies have in common is that their performance can be measured in bits per second. Anybody who is serious about understanding the entire WiMax vs cellular debate must look at the regulatory environment and the positions held by all the players in. If Verizon wants to slow or halt WiMAX, it will. Period. No technology will ever overcome regulatory fiat, regardless of how many bits per second it will deliver or how inexpensive the base stations.

     

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  6.  
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    alaric, May 8th, 2007 @ 6:56pm

    Magical thinking, let me introduce you to Congress

    Verizon might screw up a 700 Mhz auction, they're not going to define to sprint, ATT or T-Mobile what they can do with their current and future spectrum. And Verizon does not care. Nothing will help verizon more than sprint's WiMAX distraction. Sprint is losing customers because of their coverage and their nextel fiasco not due to the speed of their network and, again, MOBILE wimax is probably going to offer little improvement over whatever ev-do has especially if verizon deploys in additional spectrum (which they will by the way). Regulation is a more serious issue in Europe and some other places where spectrum licenses typically carry a requirement to employ a certain technology. That is a real threat to wimax but no threat is greater to wimax than its questionable performance. If its not better, or cheaper, and it so late that IP-based EVDO adn even IP based UMTS base stations are out there, then why bother?

     

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  7.  
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    Derek Kerton (profile), May 8th, 2007 @ 6:56pm

    Not Us

    Regarding: " (c'mon. . . aren't you still feeling embarrassed about the "Wi-Fi will destroy Bluetooth" arguements you were having three years ago?) " I hope you're not referring to us here at Techdirt! We're the ones who were making fun of those news stories and analysts predictions three (nay...four) years ago in 2003. We knew that those two technologies occupied different spaces, and that BT would succeed as well as Wi-Fi. You're thinking of Craig Mathias. Please, don't lump us in with the confused masses. Proof? Here: http://news.techdirt.com/news/wireless/article/2324 http://news.techdirt.com/news/wirele ss/article/3471 http://news.techdirt.com/news/wireless/article/4602

     

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