WiMAX: The Great Wireless Hope or simply hopeless? That was on my mind as I walked out of last week’s panel (organized by the MIT Club of Northern California.) It is a question, searching for answers. I will get to those, in a minute, but first a few words on the hype around WiMAX. The fact that nearly 150-people showed up to hear about WiMAX on a Wednesday evening, when only 50 were expected, that there is a lot of interest in this technology.
Of course the panel had some real insiders – AT&T’s Behzad Nadji, Sequoia Capital’s Mark Stevens. Aperto Networks’ Alan Menezes, Reza Golshan of the WiMAX Forum and George Wu of Fujitsu. (Please note: missing from this list is Intel, which has been single handedly responsible for creating more confusion around WiMAX than any other company on the planet.) The two-hour long panel discussion, despite long droning sessions where power point abuse was doled out to the attendees, turned out to be an eye opener. I am going to try and sum it all up in a few bullet points, otherwise this could become a really long winded piece.
1. Just as WiFi is being used to generically describe wireless local area networking technologies like 802.11a,b, and g; WiMAX has become a generic term for broadband wireless. Thanks to the f-u-d being spread by some companies, now its no longer fixed broadband wireless.
2. AT&T pays about $10 billion in access charges every year, and would do anything to reduce that number, and yes that includes using fixed wireless technology. They are conducting some research trials in partnership with other WISPs which are using proprietary fixed wireless solutions. If the equipment being used is WiMAX certified, then so be it. Ma Bell doesn’t really give a shit about what the standard is, except they want to see if the fixed wireless works and can be scaled.
3. Mark Stevens, the man representing dollars on the panel said that his firm has two investments in the fixed wireless space right now – one systems company and a chip start-up. “WiMAX is a zero volume market right now,” he said. When pressed by myself and others in the audience, he said that as a VC, he had no plans to fund anyone else. And not even a service provider. Which brings me to the next point.
4. Intel believes that WiMAX is going to be a mega market, and they will put chips in the laptops where people will get mega-speeds over the air. They don’t talk about how these services will be sold. Who will be the service providers that will offer this to the Joe Six-Pack? How will this be a gigantic market when carriers (aka AT&T) want to use fixed wireless for only backhaul right now; and VCs don’t want to fund service providers. In the words of Tom Cruise, “Show Me The Money.”
5. The spectrum constraints: Theoretically, fixed wireless can work in different frequencies, but the WiMAX vision centers around three bands: 2.5 GHz, 3.5 GHz and 5.8 GHz. In the United States, 3.5 GHz is not available, and 2.5 GHz swath is owned by Sprint and Nextel. That leaves 5.8 GHz unlicensed spectrum. But there are some limitations to this spectrum. Lower frequencies have longer range, better wall penetration, and can over come line of sight issues. Higher frequencies like 5.8 GHz are good for backhaul, but when you start using them in consumer laptops or handsets, its as awkward as a nerd in the playboy mansion.
6. The antennas in laptops, as envisioned by Intel are too tiny and service providers would need to build networks that beam signals at much higher power in order for the mobile WiMAX to work. These strong signals in turn cause a lot of problems and interference with other devices.
7. Fujitsu is ready to do a scorched earth on Intel rear-end in the WiMAX chip business. Which means, any start-up which plans to make chips for this money, well you know their future. It is going to be price war, and George Wu pretty much said so.
In summation, my take away from the panel was the while fixed wireless broadband will become prevalent for backhaul purposes, i.e. connecting hotspots to the internet by eliminating the T-1 lines, the consumer mobile WiMAX will prove to be as fanciful as Intel’s success with the Itanic! (Also read: WiMAX washes dishes)