WiMAX's Future Is in Emerging Markets

[qi:gigaom_icon_4G] WiMAX, the wireless broadband technology that is vying with Long Term Evolution to become the standard for the next generation of higher-speed wireless networks, draws either delight or derision, depending on whom you ask — its champions or detractors.

When some analyst firm reports that WiMAX is on its way to signing up 70 million subscribers by 2013, we’re ready to believe the technology is finally ready to come into its own. But then another influential analyst firm raises questions about its future . And it doesn’t help when one of its leading proponents, Clearwire, reports a mixed bag of earnings and shows slower-than-expected sign-ups during the second quarter of 2009 — a mere 12,000 subscribers  vs. Wall Street’s expectations of between 20,000 and 30,000. And this gives LTE proponents such as Ericsson Chief Technology Officer Hakan Eriksson a perfect opportunity to dismiss WiMAX as not really 4G.

I imagine that, like all hotly contested topics, the reality is somewhere between these two extremes. And that, essentially, was my takeaway from a short, but to-the-point, conversation last week with Dr. Mohammad Shakouri, acting president of the WiMAX Forum, who bristled at Ericsson’s denial of WiMAX as a 4G wireless technology.

“I think that the Ericsson CTO is missing the mark,” Shakouri said. The reason “why WiMAX momentum is scaring them so much is that the business of broadband is not the same as voice, and they are losing monopoly of the cellular voice network business.”

“In reality, there is not standardization of 4G, and the ITU (International Telecommunication Union) is working on the standard,” he said. “The phrase 4G has been loosely used as meaning broadband, wideband and higher capacity. So any technology including WiMAX can be applied to it.” WiMAX promoters always point to the fact that the technology has the ability to provide more wireless bandwidth, especially because there is more spectrum available for it.

While it is hard for people to perceive, in emerging, fast-growing telecom economies such as Brazil, India, Indonesia and Russia, WiMAX is going to be thriving, Shakouri said. When I asked him why it’s taken so long for the technology to get off the ground, he explained that it has taken awhile to get the right spectrum — 2.3GHz, 2.5GHz and 3.5GHz — allocated for WiMAX services across the planet.

The initial WiMAX services are starting to get rolled out in places such as South Korea and Japan. In the United States, Shakouri pointed to Clearwire, which is being backed and promoted by Sprint and cable companies such as Comcast and Time Warner Cable.

“WiMAX is less adapted in Western Europe,” he said, explaining why companies like Ericsson are quick to dismiss the technology. “We are seeing great success in terms of spectrum allocation and deployment in developing economies.” In some of the emerging markets, voice-over-WiMAX is being viewed as the killer application, but eventually, WiMAX will be used to deliver multimedia and higher bandwidth.

If you look at the growth in telecom, it’s all coming from emerging markets, and many of the companies, including the incumbents in emerging economies, are betting on WiMAX, Shakouri argued. An option being weighed by telecoms in emerging markets is a combination of WiMAX and GSM. In Russia, for instance, HTC sells a WiMAX phone that has traditional 2G wireless technologies. WiMAX is used exclusively for multimedia and broadband on this device, a strategy that could become popular in other markets.

When it comes to LTE and WiMAX, Eriksson told me, “In the end it will be about the economies of scale,” and just like GSM, LTE will win because it will have those economies of scale. When I asked Shakouri about the economies of scale, he pointed out 40 different vendors that are making WiMAX devices in addition to embedded chips for laptops and other on-the-go gadgets. In Russia, more laptops use WiMAX than 3G. “The progress has been made,” Shakouri said, pointing out that around 2012 or 2013 LTE and WiMAX will be running neck and neck.

Either way, this battle of competing wireless technologies is going to hog our attention for many years to come. As far as I’m concerned, like most consumers, I want something that is fast, affordable and reliable — who cares which flavor of the technology gives me that?

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