Year in Review 2010: WiMAX struggles in commercial operator market, thrives in vertical markets

It was a tough year for the WiMAX camp as some major operator backers have shown waning interest in the technology, and LTE gained momentum. This past summer, WiMAX Forum Chairman Ron Resnick acknowledged WiMAX technology will likely be a minority technology down the line, but that the technology still has its place.

During 2010, Russian operators Yota announced it would no longer roll out WiMAX but instead deploy LTE in its remaining markets, while Clearwire (NASDAQ:CLWR) embarked on testing LTE, and most likely it will deploy LTE alongside its WiMAX network.

Meanwhile, Clearwire and wholesale partner/investor Sprint Nextel (NYSE:S), saw their lead in the 4G market erode with Verizon Wireless' (NYSE:VZ) introduction of LTE service in 38 markets earlier this month. Clearwire struggled with financing until it more recently made a $1.33 billion debt offering and sold exchangeable notes. Tensions among Clearwire's investors increased over the strategic direction of the WiMAX operator. Major markets like New York, Los Angeles and San Francisco have only recently garnered access to Clear's WiMAX service despite a head start that began in 2008.

The WiMAX Forum also had its hopes set on India, where the government earlier this year auctioned off spectrum in the TDD band for wireless broadband services. WiMAX was supposed to be a shoo-in as the TDD version of LTE was seen as a far off prospect. However, Qualcomm  (NASDAQ:QCOM) successfully bid for spectrum and indicated plans to deploy TD-LTE. In addition, lone nationwide license holder Reliance Industries indicated plans to build out a network based on TD-LTE--despite the fact that TD-LTE networks won't be ready until the second half of 2011. Meanwhile, Qualcomm and Ericsson demonstrated a TD-LTE network in the region and have been lobbying license winners heavily to wait for TD-LTE.

Still, WiMAX is far from having to be put on life support. Heavy Reading senior consultant Berge Ayvazian recently asserted that a movement toward TD-LTE doesn't spell the end of WiMAX in India, as a deployment could vary by service area and operator. "For example, Reliance may select a few rural circles for WiMAX deployments to deliver low-cost broadband, taking advantage of the current cost and maturity advantages of the WiMAX base stations and devices. But in major cities (the operators) will deploy LTE TDD, even if it delays service rollouts," he said.

Moreover, vendors such as Alvarion, Motorola (slated to be part of Nokia Siemens Networks), and Samsung have introduced base stations capable of upgrading to TD-LTE if a WiMAX operator so wishes. The move has opened the door for WiMAX deployments as operators now have 4G-deployment flexibility. For instance, Alvarion signed a $75-million deal with Canada's rural broadband provider Barrett Xplore to deploy a WiMAX network across the country, and the deal includes the option of migrating to TD-LTE in the future.

The U.S. government's broadband stimulus award program is also bringing WiMAX to rural areas, but it didn't turn out to be the coup for WiMAX that backers had hoped as the agencies in charge of distributing the funds focused heavily on middle-mile fiber projects.

While WiMAX struggles in the commercial operator community, it is thriving in vertical markets. WiMAX is beginning to ramp up as a key access technology for smart-grid initiatives. WiMAX vendor Airspan scored an exclusive deal with LightSquared to offer utilities--which are keen on gaining spectrum to build their own smart-grid networks--a combination of WiMAX equipment and spectrum in the 1.4 GHz band. GE, one of the top smart-meter makers in the U.S., is banking on WiMAX to power the smart grid. In March, GE announced a pilot program with Consumers Energy Michigan to use WiMAX-enabled smart meters. GE called it the first-ever U.S. smart-grid pilot program using WiMAX.

ABI Research forecasts that about 40,000 4G (M2M) cellular modules will be shipped in 2010--and all of them will be WiMAX-based. Digital signage and video, telematics, industrial personal digital assistants and surveillance networks are examples of M2M applications that require the bandwidth WiMAX provides.

What is advantageous in the U.S. market is the availability of the 3.65 GHz semi-licensed band that nearly anyone can put dibs on. WiMAX is already being deployed in that spectrum for smart grid trials and municipal WiMAX networks with video surveillance as the driver. Potential network operators could also drive the technology's adoption in the 4.9 GHz band, which is reserved for public safety, or even the unlicensed 5 GHz band.