Unlicensed-band issues dog mobile WiMax

Taipei, Taiwan -- Now that the ink is dry on the mobile version of WiMax, Taiwanese system vendors are descending on the market en masse. Most expect a spike in demand next year for 802.16e products as carriers in the United States, Europe and Asia throw the switch on broadband wireless nets and as Intel Corp. begins to ship its Wi-Fi/WiMax module for PCs.

Yet, amid the flurry of design activity, some believe the industry is overly focused on developing equipment for the licensed bands of WiMax, where telcos and most greenfield operators will launch services. That, they warn, could stymie application innovation by smaller groups of developers because equipment will be harder to come by and will be more expensive.

"Try to find something in the [unlicensed] 5.8-GHz band. Forget it. It's mostly just written about in the papers," said Michail Bletsas, chief connectivity officer at One Laptop per Child, a nonprofit group that is trying to bring $100 laptops to underprivileged children around the world. "For innovation, we need a bottom-up approach, and right now WiMax is moving in the opposite direction."

Bletsas' remarks underscore that WiMax is trying to straddle the contrasting needs of the developed and the developing worlds. One is looking for cheap, basic connectivity; the other wants speed and mobility and doesn't care as much about cost.

In these early days of deployment, it's pretty clear which one is winning out. "Our price in some regions is twice that of DSL, but people still use it because it is convenient," observed Nicolas Kauser, chief technology officer of Clearwire International, which along with Sprint Nextel is leading the U.S. market in rolling out broadband wireless services.

Bletsas made his comments on the sidelines of a regional WiMax conference in Taiwan last week, where local system vendors showed off 802.16e prototypes ranging from basestations and indoor routers to PCMCIA/PCI Express cards and embedded platforms, such as smart phones and GPS devices. Most of the equipment at the show focused on licensed bands, including 2.3, 2.5/2.6, 3.4/3.5 and 3.6 GHz.

Bletsas said he wished the industry would spend more time developing equipment for the unlicensed bands, a notion that was seconded by officials from some developing countries, such as Pakistan.

But system vendors are going where the money is. And many argue that the licensed bands are far more likely to lead to the large, commercial volumes they need to bring down prices. "That will drive down the price much faster than what will happen in the unlicensed spectrum," said Liu Wei-tu, a product manager at Tecom Co. Ltd.

Greenfield operator Clearwire concurred. "We think it has to be spectrum that is licensed, so that we can control our future," said Kauser. "We also expect that our infrastructure costs will come down in the next year or two as WiMax standardization drives down prices."

"The reality of Asia-Pacific is cost," noted X.J. Wang, vice president for Asia-Pacific research at the Yankee Group. "If the [customer premises equipment] cost can come down significantly, we may see a good opportunity for WiMax in emerging countries in Asia for basic connectivity."

All eyes on Asia
Analysts predict Asia will be a leading user of WiMax in the long run. The deployment of WiBro--a WiMax variant developed in South Korea--has already made Asia a leader. WiBro covers most of Seoul and is being slowly introduced in other big cities. Universal coverage is some distance away, but the service now covers about 25 percent of the population, said Hyun-myung Pyo, executive vice president at Korea Telecom.

Another key driver for chip suppliers and system vendors will be Japan, which is expected to issue licenses this summer. Taiwan is also expected to issue six licenses in July. Although Taiwan is a relatively small market, the government is heavily investing in public projects that use WiMax as a way to provide an early market and moderate the risk for companies developing products.

Globally, spending on WiMax equipment will total $5.7 billion between 2006 and 2008. The value of the entire industry, including software and services, will reach $29.4 billion by 2012, according to Taiwan's Market Intelligence Center.

Although the government here hopes to spur early development in chips as well as basestations, it appears many Taiwanese vendors are sticking to their comfort zones. In Wi-Fi, Taiwan dominates the design and manufacture of home gateways and add-in cards, but it was slow to embark on chip design. By now, though, a handful have taken the leap.

The same is happening in WiMax. Last week, system design shops like Accton Technology, Asus Computer, Cybertan, Gemtek Technology and Quanta Microsystems showed off mostly gateways, cards and a mobile phone or two. Most are working with customers on design-ins. Some of those designs will roll into mass production as early as the third quarter, but the majority will hit the market in mid-2008, around the same time that Intel begins shipping its embedded Wi-Fi/WiMax modules.

A smattering of companies--such as Alpha Networks, Tecom Co. and Zyxel Communications--have basestations that are based largely on chip vendors' reference designs. This is a new area for Taiwanese companies, which did not design basestations from scratch for cellular networks. Their products are expected to hit the market during the first half of 2008.

Taiwan's chip vendors are lagging behind, despite government cajoling and incentives. So far, MediaTek Inc. is the only fabless vendor developing a chip, but its device isn't expected to be ready until at least late 2008. "It's hard to invest in this area now for local chip makers, but Taiwan should have a good chance to capture this opportunity over the long term as WiMax grows," said Wufu Chen, co-founder of Taiwan venture capital outfit iD SoftCapital Group and a co-founder of Navini Networks.

Chen, a veteran investor in the communications business, said that two or three years ago he questioned whether WiMax would survive among the competing wireless technologies. Now that Intel has committed to ramping its modules next year and companies likes Sprint Nextel are investing heavily, "there is no doubt about whether it will be here. It's just a question of how it will be used," he said.

Some of Asia's developing countries also intend to use WiMax but are waiting for equipment costs to drop. Indonesia, for example, sees WiMax as a possible way to offer basic communications services to about 38,000 villages that are "unserved or underserved," said Alexander Rusli, an adviser to the country's Ministry of Communication and Information Technology.

Indonesia may turn out to be one of the more aggressive users of WiMax in the developing world, believing that if it sets up the network it will spur development of innovative applications. "The question has always been, when will there be demand for broadband wireless in rural areas?" Rusli said. "But if they don't know what it can do, how can there be demand?"

Demand in developed countries is a concern too. In part, that is what Taiwanese vendors hope to solve by supplying relatively cheap equipment to telecom operators. Intel will play its role with WiMax-enabled PCs. But beyond that, more development is needed in chips for portable devices, said William Reinisch, a vice president of strategy at Motorola Inc. "In Wi-Fi, companies eventually used the same core to develop for different applications--one for basestations, one for notebook PCs and maybe a low-power version for consumer electronics equipment. That process should happen earlier in the WiMax development than it did in Wi-Fi," Reinisch said.