The day is approaching where average consumers will want a true web-browsing Internet-style experience on mobile devices. It might not be anytime soon, but it’s coming nonetheless. For wireless carriers who are now trying to get subscribers to access mobile data over 3G it is both a blessing and a curse — as many have pointed out too many subscribers that might tune into (and upload video to) a truly-mobile YouTube on cell phones could clog a 3G network pretty fast.
What does that mean? Carriers have to upgrade their networks, and are now making the tough and expensive decisions about which way to turn for 4G (I know, it seems like we just got to 3G!). Does a carrier keep upgrading its 3G network and aim for what the telco world calls “long term evolution” (LTE) — 4G network technology from the cellular world which is many years from prime time? Or do carriers start building alternative data-specific networks with technology like mobile WiMAX that is available now?
Carriers are making different decisions based on a variety of factors: How competitive their 3G footprints are, how much spectrum do they own that can be dedicated for mobile WiMAX, and how they anticipate the growth of data-hungry mobile web subscribers. WiMAX is the wireless word of the year, in no small part to Clearwire’s not-so-smooth IPO efforts and Sprint’s (overly?) ambitious network buildout.
While the success of WiMAX is by no means assured, it is becoming a more attractive choice for certain carriers. Mobile WiMAX might be argued as not officially 4G, but it is a precursor. That’s why time to market is the biggest reason why carriers are starting to look seriously at mobile WiMAX. WiMAX is at least two years ahead of LTE in market time, writes ABI Research analyst Ian Cox in a recent report.
For a third place U.S. carrier like Sprint (which is also losing important post-paid subscribers) the company needs to do something sooner rather than later. As this article points out, Sprint needs to do something aggressive to stay competitive with CDMA-leader Verizon Wireless:
Being the smaller player means Sprint has no leverage to pressure Qualcomm, the mother of all sources of CDMA technology, to help it build a network more advanced than Verizon’s. In short, following the conventional CDMA route could leave Sprint stuck permanently in Verizon’s shadow. — VOIP News
Even the CEO of Vodafone recently pointed out at 3GSM that mobile WiMAX is now a major player for future wireless broadband networks, based largely on time to market, according to Seeking Alpha.
Mr. Sarin admitted that LTE is far from being implemented, let alone standardised, and astonished his audience by suggesting that LTE may not even be supported by Vodafone in the future. – Seeking Alpha
Vodafone even has some WiMAX bets in countries like France, Bahrain, Greece, Malta, New Zealand, and South Africa.
Another reason carriers are considering mobile WiMAX is that it is being touted as a cheaper (in some ways) technology to building and upgrading 3G networks. Dan Lockee, an analyst at Pyramid Research, wrote recently that WiMAX spectrum has been significantly cheaper than 3G spectrum, and “in some cases, WiMAX spectrum has been less than one-thousandth of the cost of 3G spectrum for a given geographic area.” Though, he also points out that WiMAX spectrum will get more expensive as more regulators release lower frequencies to be used for mobile WiMAX.
When comparing infrastructure to infrastructure, deploying mobile WiMAX networks is often thought to be cheaper than deploying 3G networks, though currently, ABI’s Phil Solis says the costs are actually about the same:
“what many companies in the industry are finding out is that the costs are approximately the same when comparing apples-to-apples (including, or not including, site acquisition, towers, other equipment, and backhaul for both 3G and WiMAX). This is not to say that it will remain this way, but just that at this point in time, mobile WiMAX deployment costs are on par with 3G deployment costs.”
Thinking about costs also depends on what networks carriers have already built and how they are upgrading. The costs are varying depending on the degree of the upgrade. Solis says that when Sprint makes its cost comparison claims, it is comparing the addition of mobile WiMAX to its existing 3G infrastructure:
“Existing base stations will be used (and some new ones added), other existing equipment at the site, and the existing backhaul. So what Sprint is really saying is that it will be overlaying mobile WiMAX onto its 3G network at one tenth the cost of what it takes to build out its 3G network. In other words, Sprint is greatly expanding its access speeds and capacity above and beyond 3G, and is doing so with a marginal increase in cost (a 10 percent increase).”
WiMAX might have lower costs and be ready now, but a lot of carriers are still aiming for LTE. ABI says network operators will invest a total of almost $18 billion in LTE capital infrastructure over the period between the end of this year and 2014.
There’s a lot of choices for carriers as they are forced to become mobile broadband suppliers and not just voice networks. While it’s not clear which one will be the “right” choice in the long run, we’re likely to see some pick WiMAX as the right choice for right now.