WiMAX about connectivity, not speed (for now)

If you are interested in WiMAX and its likely impact on competition and regulation, then you want to read this just-released OECD report. The 60-page study examines issues such as spectrum allocation and offers a comparison of different national policies on the question of licenses and band allocation. The report's primary finding was that WiMAX depends critically on spectrum allocation, a process which is still under way around the world. "Despite all the excitement over WiMAX, the ultimate role of WiMAX in the wireless market is debatable," it said. The report also cited concerns about competition from existing network operators, who are more likely to upgrade their 3G investments with HSDPA than roll out an entirely new network. Several mobile operators have recently announced plans to deploy HSDPA in the U.K., including Vodafone and T-Mobile.

Other issues causing concern for WiMAX include the uncertainty about standards for mobile WiMAX, the regulatory environment for connecting networks to the phone system and the possibility that operators would block ports rather than lose mobile phone revenue to VoIP. WiMAX's range makes it potentially complementary to WiFi, but the report noted that this may also pose more security risks as it increases the area over which eavesdroppers may operate.

The OECD report also said that WiMAX could play a key role in providing connectivity in areas currently poorly served by wireless broadband, but not only in such areas. It points out that a typical base station can cover an area between 3 km and 10 km in a non-line-of-sight environment. Now, at about 40 Mbps, this means that one cell would theoretically allow hundreds of business connections at 1.5 Mbps and thousands of residential connections at 256 Kbps. As Om Malik points out in his comments about the report, this makes WiMAX a long-haul technology which would work well in tandem with WiFi meshes for local connectivity. WiMAX, Malik argues, is thus more about connectivity and less about a panacea for higher speeds.

This, at least, is the case for the near term, until equipment becomes cheaper and technology improves to increase capacity and speeds. The current subscriber equipment costs would be around about $300, which is about twice the cost of WiFi, cable or DSL CPE. Also, setting up a national WiMAX infrastructure would not be cheap. In-Stat estimates it would take about $3 billion to set-up a national WiMAX network in the U.S., which means that it will not happen tomorrow.

For more about WiMAX state of play:
- download the report at the OECD Web site (.pdf)
- see Wireless Watch's analysis
- and Om Malik's blog

PLUS: Telecom network operators are convinced that WiMAX will have a positive impact on their ability to deliver new services, and most expect to see deployment of WiMAX in commercial networks by the end of 2007, according to results of a worldwide survey by Heavy Reading of service provider professionals. Report

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