Blog Post

WiMAX Can Win — If It's Not Playing Against Cellular

Nokia recently called WiMAX “wireless Betamax,” and its just one example of the lashing WiMAX has received from the technology community and the press. Most mobile operators are going with LTE. Even the much-heralded HTC WiMAX phone for the Russian WiMAX network Yota requires an awkward service arrangement that requires a customer to subscribe to two different service providers; Yota for WiMAX, and a mobile operator for areas without WiMAX.

But even if WiMAX can’t compete with cellular, I believe there is a market for WiMAX. WiMAX’s problem comes from that fact when people talk about it, they do so within the context of the cellular technologies like LTE — but WiMAX is suited to a different use case altogether. Unlike cellular technologies that offer true mobility, WiMAX will offer what I call “nomadicity” — mobility a person can use while in a city but not when traveling between two metro areas.

I conducted surveys at In-Stat in 2007 and 2008 to measure consumer interest in different wireless business models. The business models were based on laptop data usage, and described service offerings from mobile operators, hotspot providers, and Sprint/Clearwire’s WiMAX service plans. In both studies, consumers responded more favorably to the business model I described for WiMAX than those for cellular or Wi-Fi. The basic components of the WiMAX service description were: unlimited use in one’s home, across one’s home city and one-third of other cities; 2-4 Mbps down and 1 Mbps up; and a monthly price of $40-$50.

Two key findings from my research support Clearwire’s current WiMAX service strategy:

  • Coverage everywhere may be ideal, but consumers really want coverage just where they are. For most consumers, this location is their home metro area. The business model coverage description of WiMAX was limited to coverage in consumers’ home metro area, and a third of all U.S. cities. This is what I call “nomadicity” vs. “full mobility,” as is found with cellular.
  • More than 80 percent of consumers said they had some level of interest in a plan that would provide broadband service both at home and on-the-go. Another 40 percent said they would switch from their current fixed broadband provider for one that could give them home and on-the-go service. Currently, Clearwire provides this in its Portland market.

Devices are also an important factor for WiMAX to be successful. An integral part of the WiMAX strategy has been to keep the intellectual property licensing costs low for devices. This keeps the overall cost of WiMAX-enabled devices low, which encourages vendors to add WiMAX capability to their devices. When prices are low, that reduces the risk factor for consumers and encourages them to try it. In Baltimore, users can get a WiMAX USB modem for $59.99 without signing a service contract. A similar 4G modem on Verizon Wireless, using LTE, would cost $239.99 without a service contract. With this strategy the WiMAX device roadmap will look like the Wi-Fi roadmap: WiMAX-enabled laptops and data devices will come first, followed by consumer electronics. Where Wi-Fi is today, WiMAX should be in the future.

Because of these reasons, I believe there is a business case for WiMAX, as represented by Clearwire and other vendors such as Amsterdam-based Worldmax. However, I also recognize the success of Clearwire and WiMAX in the U.S. is far from certain. Clearwire faces several critical challenges, including funding, timing of its network rollout, device availability, economy and competitors. Whether or not Clearwire survives, I believe its emphasis on nomadicity, with a service that mixes both fixed and mobile broadband, will be successfully used by other WiMAX service providers.

Daryl Schoolar is a senior analyst with the market research firm In-Stat.  He has been covering all things broadband since 2000.

15 Responses to “WiMAX Can Win — If It's Not Playing Against Cellular”

  1. Tom Foale

    There’s certainly room for two network business models even in mature markets, just as there is room for low-cost and national carriers in the airline industry. However, both of these could be delivered with the same technology. The mobile operators will struggle to cope with the variable demand across their network, which means quality of service, download and upload speeds will be variable. I believe there is a need for a network that has capacity reserved for critical applications on a different commercial basis.

  2. Hugo Cunha

    I agree with you absolutaly Mr.Daryl,

    WiMAX is to be an alternative to the internet services that we have on our Metropolitan Area Network….

    Within a large number of years maybe when we have an Global Area Network with WiMAX, it can compete with Mobile Operators……

    But first the market of WiMAX is to explore the nomadicity that it will create with the MAN….the use of internet wherever you are wherever you want, with download and upload speeds much better that what we have today….

    Of couse that we can’t forget about VoIP app thru WiMAX, for me one of the Killer’s app, don’t forget that people major phone calls are within the MAN, and with WiMAX people will be able to do it wherever they are, when they want, with good quality, at zero cost, because that service will be included on the monthly single bill (SLA)…

    WiMAX has to be carefuly plan and have a very good network planning to fulfill the public demands, with a cheaper cost to the end user….I thanks pretty much to Clearwire for implementing WiMAX against all the odds and lobys from the telecom providers…..that’s a very good example, not like buzz telecom that has quite on the first stage of problems…..

    Regarding Nokia, just wait a few months or yers untill they change their attitude, I believe that they’re going on the wrong direction….

    WiMAX and LTE can perfectly co-exist and hope they do!!

    Personaly I believe in WiMAX, it’s a demand that people have and will have even more within a couple of years….it’s an alternative to dsl/adsl service……

    Please Mr. Daryl I would like you to contact me, here is my email, [email protected]

    Thanks for the news,

    Best regards,

    Hugo Cunha