The broad deployment of IP-based WiMAX networks for mobile Internet access could open the door for wireless VoIP phones and usurp cellular carriers. However, the cellular giants are ramping up 3G for mobile Internet to try to beat WiMAX to the punch. This week's Tech Sanity Check sorts out the upcoming fight and predicts the results.
Fierce competition can bring out the best and the worst in businesses, and it also makes for great theater. In the technology world over the past three decades, we have watched commercial empires rise and fall with amazing swiftness and drama. New competitors have arisen out of nowhere and trumped established dynasties in a matter of years, as Microsoft did to outmaneuver IBM in the personal computer business, as Linux did to marginalize Sun Microsystems and Silicon Graphics in the UNIX server market, and as Google did to race past Yahoo, AOL, and Microsoft in Internet search.
Now there's a new technology peeking over the horizon that could cause a major shake-up in the tech industry: WiMAX, which I wrote about last week in my article "Sanity check: Is WiMAX almost here and will it unlock the next stage of the Internet?" WiMAX has the potential to create new markets, change the scope of the Internet, revolutionize the mobile phone landscape, and upend empires.
However, although WiMAX now has a large stable of blue blood supporters in the tech industry -- led by Intel and joined by Motorola, Samsung, and Sprint -- and a huge cash investment from them, it also has a healthy share of doubters. Those naysayers believe that it will be a multibillion dollar flop, and that by the time it's deployed widely enough to make a mass market challenge, the world's existing cellular carriers will have already beat it to the punch with a fully deployed version of 3G wireless.
The WiMAX vs. 3G cellular showdown is poised to become one of the next great market battles in the tech industry. Fortunes will be made and lost in this battle, and the user experience of the Internet will be irreversibly changed (hopefully, for the better) in the process.
The WiMAX advantages
Conceptually, WiMAX has been designed as an Internet access technology and not as a replacement to the existing cellular networks that have gained global scale during the past decade. But since WiMAX is built around IP and has been designed from the ground up to support strong QoS and security, WiMAX provides an excellent platform to run VoIP.
As a result, it is natural to associate WiMAX with VoIP, which is rapidly replacing many wire-based phone lines because it makes much more efficient use of the bandwidth and lines and opens up voice to a whole new range of applications.
That's why WiMAX is sometimes viewed as the technology that will make the current cellular networks obsolete. It's actually VoIP that is the disruptor. WiMAX -- once it's fully deployed -- will simply provide the roaming global Internet access that will bring VoIP to the same corners of the earth that cellular towers have covered today, and WiMAX could spread that coverage even farther.
Initially, WiMAX was compared more to Wi-Fi -- except with much longer range -- than it was to cellular networks. WiMAX providers are essentially ISPs that provide either Fixed WiMAX or a combination of both Mobile WiMAX (for roaming users) and Fixed WiMAX (for home or small business access, very similar to cable or DSL).
There are several important factors that distinguish WiMAX from other wireless technologies and make it a platform that so many tech heavyweights have been willing to support:
- IP-based network -- Since WiMAX is built on IP, it natively runs existing IP-based products, services, and utilities. VoIP is one example. This also enables much easier and cheaper network monitoring and management with standard tools.
- A flatter, simpler topology -- Because it has been designed as a data network from the ground up, WiMAX has a much simpler network topology than cellular networks, which have had to add extra layers and invent new tricks to enable their technology to handle data. WiMAX takes less equipment and less time to set up than traditional cellular infrastructure or wide-scale Wi-Fi. Figure A provides a quick look at the WiMAX topology.
- Lower CAPEX and OPEX -- As a simpler architecture that uses less network equipment, WiMAX takes lower capital expenditures (CAPEX) to build networks and lower operating expenditures (OPEX) to maintain them. Naturally, this can result in lower service costs for end users. But just as critical is the fact that this enables WiMAX to scale very low for small installations and to quickly scale higher to meet large growth on demand.
- Low-cost interface chips -- Chipset leader Intel and chipmakers such as Sequens and Beceem have always thought of WiMAX as a mass market technology and so have architected WiMAX chip solutions aimed at large production and low cost. This has resulted in inexpensive network interface devices such as WiMAX modems and PC cards, but more important, it will make it easier for computer and consumer electronics makers to soon embed WiMAX chips into a lot of different kinds of devices.
Source: Navini Networks
The 3G alternative
No company has been a more outspoken critic of WiMAX than Ericsson, especially in 2007. That may seem strange since Ericsson is not a cellular carrier, but the company is a major seller and developer of cellular infrastructure, and an important supplier of cellular handsets through its Sony Ericsson partnership.
Ericsson has played a critical role in the development of cellular data networks, including various 3G platforms, GSM, WCDMA, HSPA, and the technology that it thinks will ultimately trump WiMAX: LTE (Long-Term Evolution) wireless. Ironically, LTE is almost more similar to WiMAX than it is to existing cellular technologies and it will require an investment (and technological transformation) on the same scale as WiMAX.
Initially, Ericsson was a member of the WiMAX Forum and a lukewarm supporter of WiMAX technology as part of the future evolution of cellular networks. But this spring, Ericsson announced its decision to close down its WiMAX development projects and shift all of its focus to LTE. Since then, Ericsson has been actively touting the fact that its current HSPA-based networks will already have comparable performance to WiMAX when WiMAX launches on a large scale in 2008. The primary reasons that Ericsson thinks it can get away with HSPA are:
- Bandwidth -- In cooperation with carriers in its home country of Sweden, Ericsson has already deployed an HSPA-based network with mobile broadband speeds of 3.6 Mbps downlink and 1 Mbps uplink. A software upgrade that is currently in progress will double that bandwidth to 7.2 Mbps down and 2 Mbps up, and the network itself will eventually have the capacity for 14.4 Mbps downloads. WiMAX will have the capacity for about 10 Mbps. However, the usable speed for mobile broadband is expected to be about 2 Mbps. An Ericsson representative who lives in Sweden told me that he currently gets an average of 2 Mbps on the HSPA network in Sweden, and said that it is so reliable that he often stays on that network, rather than switching over to Wi-Fi, when he is working on his laptop at home. Ericsson views this type of experience as indicative of what current cellular networks will do in the near future.
- Existing infrastructure -- It took a decade to build out the current global wireless infrastructure. The cellular carriers doubt that WiMAX will be able to duplicate the breadth of this network within a few years. As such, they believe that it makes more sense to simply upgrade the current infrastructure.
- Existing relationships -- Cellular carriers can leverage existing relationships with customers and business partners to make it easier to transition users to mobile broadband. That will be much less expensive than WiMAX's task of marketing a new product and explaining what it is, what it replaces, and how it will help the user.
- Cellular IP -- Ericsson is advising cellular carriers to transform their existing infrastructure into IP-based networks using Softswitch and the IP Multimedia Subsystem (IMS). If cellular can turn its networks into IP networks, it could pre-empt the threat from VoIP.
- Fixed wireless -- With its current cellular infrastructure, Ericsson wants to provide the same kind of fixed services that WiMAX is touting for spreading broadband Internet to lots of new places. With a widely deployed network and new fixed broadband modems to access it, this is an easy play for cellular carriers. It's already starting to happen in many places, including Sweden.
While Ericsson may be the most vocal detractor of WiMAX, it isn't alone. Verizon Wireless has also opted to sit out WiMAX and put its efforts into expanding 3G and developing LTE. Mobile chip maker Qualcomm has also balked at building WiMAX technologies and focused instead on further developing 3G cellular chips.
Sprint, which will become the world's largest provider of WiMAX services with its major deployments in 2008, even has some internal detractors of its WiMAX strategy. Reports surfaced last week that investors and board members at Sprint have lost confidence in CEO Gary Forsee. They are unhappy that Sprint has not expanded its cellular business as quickly as AT&T and Verizon Wireless, but primarily they have grown impatient waiting for the huge investment in WiMAX to payoff, and some of them may even be losing faith about how much of a competitive advantage it will give Sprint.
So we have Intel, Samsung, and Sprint on the one side betting heavily on the success of WiMAX, and we have Ericsson, Verizon Wireless, and Qualcomm on the other side betting heavily against it. Even in a converged marketplace that will likely have a place for both WiMAX and 3G in the short term, there will be big winners and big losers in this battle. And even the neutral players that are playing both sides, such as AT&T, Motorola, Alcatel-Lucent, and Nortel, will be affected as well.
Sanity checkFigure B provides a nice comparison of cellular (3G) and WiMAX and includes Wi-Fi in the mix as well. The graph shows that the current strengths of cellular include coverage, mobility, and QoS (voice quality), but it is also expensive for data, and the performance speeds are not great in most places. Wi-Fi has great performance and is relatively inexpensive (for small, localized deployments), but it's not very mobile, has inconsistent coverage, and has voice quality issues. WiMAX does not have the top marks in any of these five categories, but it does at least have solid capabilities in all five. Figure B: Comparing WiMAX, WLAN, and cellular
Source: Intel and Rethink Research Associates
Ultimately, it's still too early to predict the winners here. Nevertheless, I think there are three important factors to watch in determining who wins and why:1. Encryption modules vs. SIM cards
Starting next year, WiMAX networking chips are going to be inexpensively embedded into tons of new laptop computers, phones, and consumer electronic devices. Cellular technologies such as HSPA simply will not be able to match that scale for one simple reason: SIM cards (Subscriber Identity Modules). Devices that connect to the cellular network must have a physical SIM card. The combination of cellular network chips and SIM cards is more expensive than the WiMAX chips and not as easy to deploy and manage.
In place of SIM cards, WiMAX uses software encryption modules that are much more configurable, flexible, and scalable. If WiMAX starts to catch on in lots of different consumer electronic devices, this will be a win for WiMAX and a strike against 3G. Of course, 3G could switch out SIM cards for a software solution, but that would likely take years to show up in the market. The other strategic option for cellular carriers could be to focus on the phone as the mobile broadband connection hub and use Bluetooth or Wireless USB for last-mile connectivity to consumer electronic devices.2. True performance
While 3G cellular advocates such as Ericsson talk about and demonstrate HSPA bandwidth speeds that are equivalent to WiMAX, that doesn't necessarily mean that the performance is the same. Because WiMAX is IP-based at the core and has a much simpler network topology, it should have better spectral efficiency and lower latency than cell networks. Spectral efficiency is the amount of data that can be transmitted over a certain amount of bandwidth. In essence, spectral efficiency is the true performance of a network link.
The other performance issue to watch is scale. WiMAX advocates claim that the current cellular networks simply would not be able to support wide-scale mobile broadband Internet traffic. They claim that it is a wireless spectrum issue. WiMAX will have a lot more wireless spectrum to occupy, which is the equivalent of a much fatter pipe. While these factors appear to favor WiMAX, it's important to realize that WiMAX still has not been put to the test on a large scale, while cellular providers have been managing high volume wireless connections on the their current networks for over a decade, and that gives them a major advantage in experience.3. Customer perception and demand
Cellular carriers will have a much lower bar to hurdle in convincing customers that next-generation wireless services will bring the same kind of broadband experience that they have at home to their mobile phone, and by extension to their laptop and any other devices that can connect to their mobile phone via Bluetooth. Many mobile users are already using Bluetooth devices and are using their phones for messaging and basic Internet services, such as checking the weather plus a few favorite Web sites that have mobile editions. In this scenario, the 3G-powered cell phone essentially becomes a mobile equivalent of a DSL or cable modem.
The alternative scenario in which WiMAX could trump 3G would be if WiMAX becomes the equivalent of the next generation of Internet access in the minds of consumers, in the same way that cable/DSL were in relation to dial-up. That could happen if WiMAX pulls off a well-orchestrated combination of mobile and fixed WiMAX, in which a user has one high-speed Internet connection (10 Mbps) at home or the office using a fixed modem and can then roam with mobile Internet (2 Mbps) while away from home with a laptop, phone, and/or other mobile devices -- all for about the same price they are currently paying for stationary broadband. That would be a revolutionary experience.
The other big mobile Internet battleground for 3G and WiMAX will be with mobile business users. Sprint has an established business unit dedicated to enterprises and will certainly exploit that to offer Mobile WiMAX. However, other cellular carriers also have established relationships and have more mature, more widespread networks to offer. Since enterprise are allergic to new and unproven technologies, 3G has a good opportunity to hold on to that business in the short term. WiMAX will probably have its best luck with small businesses, entrepreneurs, and independent consultants.
What's your opinion of the WiMAX vs. 3G battle? What are the most important features you would like see in these next generation wireless networks? How will all of this affect your choice of ISPs and mobile carriers in the future? Join the discussion.