Wednesday, February 20, 2008

News from Barcelona? - Mobile Broadband

Last year in Barcelona, Arun Sarin, Vodafone’s Chief Executive, shook the industry by saying that LTE (Long Term Evolution), the planned evolution of the GSM/WCDMA/HSPA track, had some catching up to do compared to WiMax. This year things turned out different: It seems that LTE has in fact caught up. This year the Vodafone CEO informed that the operator will join China Mobile and Verizon in the path towards LTE. Together with the success of the roll-out of HSPA, this has taken a great amount of the stream out of the WiMax train. This is not to say that WiMax is out. Especially for operators without a mobile license WiMax could be a viable business case, though still surrounded by some essential questions:

- Will WiMax terminals reach a competitive price level with the current volume forecasts?

- Can WiMax provide the aggressively low Subscriber Acquisition Cost that is needed to penetrate low income segments?

- Is a WiMax Base Station cheaper than a HSPA or LTE ditto?

- If transmission cost is the prime cost driver for rural Broadband, and the Base Station typically take up only 15% of the cost for a cell site, why talk so much about the cost of the equipment?

- CDMA and WiFi never got a good automatic roaming standard. Will WiMax?

- Will WiMax terminals come in dual mode version is a sufficient number of models? Today virtually any 3G terminal also works on a GSM network.

In a newly held IPTV congress in Rio, a spokesperson from the Brazilian ministry of communication presented WiMax as the natural technology of choice to establish the return channel for the Brazilian Digital TV Broadcasting version of the Japanese ISDB-T standard. I couldn’t help asking him the question in public of who, according the ministry, should invest in the network. The answer was: The operators. I looked around and saw a fair amount of surprised expressions. Mostly on the faces of colleagues from the operators. Difficult to imagine now that HSPA has been launched in Brazil, and more is to come.

In fact the WiMax discussion has nearly disappeared in the Brazilian press. I guess that current service beats future promises. This is not to say that I don’t think that WiMax will make it self heard in the fight for a space in the sun when it comes to 4G, but right now 3,5G is getting prime time, and operators do their best to capture the head lines based on that.

But telecom regulators have to be aware that the success of mobile broadband could also spell trouble for the current roll out of the 3,5G family. Brazil has very dense urban areas with bad Broadband connectivity via wireline. Therefore the Mobile Broadband solution has a good opportunity to seize the market. This will consume a considerable amount of bandwidth, even with the efficient HPSA in the coming versions. Therefore regulators must se to that operators can expand in the 2,5 GHz band and others if they so choose. If these bands get locked up by other applications, we could very well se a patchwork of non-compatible standards for Mobile Broadband. In some cases, a White Knight sometimes try to make a recovery mission of offering hybrid chipsets with multi mode in all bands. We just need to think a few years back to Qualcomm’s 1xRTT/GSM chipset, and the TDMA/GSM GAITphone. Did we see one or two models? Anyway, they became history even before they could make prime time.

When it comes to it, this is not a technology game as some engineers and vendor try to make it. It is a retail make. Ask why Vivo in Brazil dropped the “more efficient” CDMA standard for the “older” GSM: The subscriber acquisition cost is just so must lower. Think about that when you start rolling out broadband in you neighborhood.

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