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As Clearwire investors write off billions of dollars, what is the future for WiMAX?


September 11, 2009
By Anthony Capkun

September 10, 2009

By Terry Norman

Over the last two or three years, WiMAX has gained a strong foothold in developing countries in which there is a need for broadband, but the fixed infrastructure is poor. However, we doubt that the developing market offers sufficient growth potential and size to sustain continued investment from such heavyweights as Cisco Systems, Intel and Motorola without additional sales in the developed markets. But in the developed markets of Europe and the USA, we see some early signs of a difficult future for WiMAX.

In the USA, Sprint is rolling out a national WiMAX network through its
majority shareholding in Clearwire, but the growth in number of
subscribers has been disappointing. Google and Intel, among others,
have already written off billions of dollars they had invested in
Clearwire. This does not look good for WiMAX. Also, it appears that the
North American CDMA operators may move to LTE, rather than to WiMAX.

Ericsson’s purchase of Nortel’s interests in CDMA and LTE will
encourage CDMA operators to shift to LTE, creating greater acceptance
of LTE in North America. Huawei is strongly promoting LTE and has
recently opened up a new LTE laboratory in Richardson, Texas, where
operators can familiarize themselves with the technology.

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In developed European markets, operators are almost certainly upgrading
their 3G technologies to 4G LTE in order to match the rising demand for
data. Analysys Mason’s Research division recently carried out an
extensive series of interviews with the leading MNOs in Europe: none of
the operators interviewed hinted that they might adopt WiMAX, now that
LTE is imminent. They see WiMAX as a technology to be deployed in an ad
hoc fashion in developing countries.

With end-to-end IP capability and a wide choice of carrier frequencies,
WiMAX is in many ways an ideal broadband access technology for
developing countries with poor fixed infrastructure. A few years ago,
WiMAX had a head start on UMTS: it was the first all-IP technology that
was well-suited to carrying data, while other advantages, such as
enhanced antenna systems and flexible spectrum and bandwidth use, were
coming along in the pipeline. However, the lack of a broadband wireless
spectrum (for example, 2.6GHz) meant that WiMAX could not capitalize
upon this early mover advantage to create markets in the developed
countries. LTE now also incorporates the early technology advantages of
WiMAX, such as OFDMA and all-IP capability, so we would argue that LTE
has caught up with WiMAX.

When the new IEEE 802.16m WiMAX standards are developed, the rivalry
between LTE and WiMAX will be greater: in terms of spectrum, bandwidth
capacity and coverage, and the development of advanced antenna systems,
such as beamforming, LTE and WiMAX will be identical for all practical
purposes. We expect that they will compete head-to-head for the same
customer base, and LTE will have a clear advantage in this.

We believe that WiMAX has a role to play and will continue, but mostly
in developing countries. Because of the limited potential of these
markets, there will be some consolidation of vendors and providers
along the way.

Terry Norman is senior analyst with Analysys Mason, which delivers
strategy advice, operations support, and market intelligence worldwide
to commercial and public-sector organizations in telecom, IT and media.

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