LTE vs. WiMAX: The next standards rivalry?

Standards rivalries have always fascinated me. The dynamics are quite surprising sometimes. Until I saw this item over at GigaOm today, I thought that LTE had won the battle for the next generation mobile standard. What this article points out is that this may well be true for the industrialized world, but it is far from the case globally. So are not going to converge on a single mobile air interface (to facilitate roaming) this generation?

More on Clearwire

I found this item over at GigaOm a worthwhile followup to my earlier article.  The article lays out the dilemma faced by Clearwire and its backers.  On the one hand is the short term market opportunity and on the other is the current competition from WiFi and the future competition from LTE.

Clearwire and the future of WiMAX

This article over at Forbes is interesting:

In a note to clients, Stifel Nicolaus analyst Christopher King said the latest round of financing will probably not cover all of Clearwire's cash needs over the next few years. He expects the company to lose several billion more dollars.

But he added that "Clearwire needs to build out its nationwide network as quickly as possible, as both Verizon and AT&T will begin to quickly catch up with what we believe will likely be a superior 4G network."

Clearwire's second-quarter loss, though narrower than a year earlier, came to $73.4 million. The company reports third-quarter results after the closing bell Tuesday.

So, Sprint and Comcast are investing an additional US$1.5 billion. Google decided against upping their ante in the WiMAX provider. So, is this a near term play? Will Clearwire switch to LTE when they can or will they focus on fixed wireless broadband?

Interesting article re: WiMAX

I found this item over at GigaOm extremely interesting. It appears that Clearwire has contractual commitments to what it recognizes is a less efficient technology than LTE (at least for mobile). Interesting.

I wonder what will happen in 2011! It is not out of the question for Clearwire to do a technology transformation; this has been done before when it has been strategically beneficial to do so.

The future of WiMAX

I find it worthwhile looking in the financial literature when it comes to new technologies since it is often a more worthwhile predictor of where things are going than the technology press. Thus, I found this item interesting. The article states:

The much-hyped next-generation (4G) technology of WiMAX is quickly losing ground to the alternative technology of Long-Term Evolution (LTE). Large telecom infrastructure equipment makers are gradually shifting from WiMAX to LTE, and as a result the WiMAX field is getting less crowded day by day.

Later, the article notes that there is a role for fixed WiMAX even as the fortunes for mobile WiMAX seem to be fading. If this is true, it seems as though perhaps Sprint erred in choosing mobile WiMAX as its 4G technology to gain first mover advantage!

Future of WiMAX

I am not quite as pessimistic about WiMAX as this item is. Instead, I think it will serve a role as a wireline replacement technology rather than as a competitor for LTE.

LTE testing in the US

If you're interested in technology migration in the wireless industry, you might find this item over at Ars Technica interesting. The article reports on this news release:

Verizon Wireless today completed its first successful Long Term Evolution (LTE) fourth generation (4G) data call in Boston based on the 3GPP Release 8 standard; the company also announced today that it had earlier completed the first LTE 4G data call based on the 3GPP Release 8 standard in Seattle. The successful data calls involved streaming video, file uploads and downloads, and Web browsing. Significantly, Verizon Wireless has successfully made data calls using Voice over Internet Protocol (VoIP) to enable voice transmissions over the LTE 4G network.

----------SNIP-------------

Boston and Seattle each now have 10 LTE 4G cell sites up and running on the 700 MHz spectrum. These LTE 4G markets were selected by network planners due to their geographic configuration of suburban and urban areas as well as the areas’ high-technology population. The trials will help Verizon Wireless and its LTE 4G network partners understand issues that include how to best prepare cell sites and how to add the new technology to the network.

Surely Verizon is interested in LTE because it provides a bridge to the GSM world, which it now lacks.

In regards to the competition with WiMAX in the race to 4G, Ars observed:

The announcement also made one of LTE's advantages over WiMax clear: a number of traditional wireless telecom powers were backing it. The tests' description read a bit like a who's who of the cellular world. Network equipment came from Starent Networks and Nokia Siemens Networks, Alcatel-Lucent and Ericsson provided the base station hardware, and devices were provided by LG and Samsung.

But a key factor may ultimately wind up being bank balances. Verizon has continued to grow its earnings throughout the financial crisis, and wireless services account for nearly 90 percent of its income; it can't afford to appear as an also-ran, and has the money to make sure that it doesn't. Clearwire benefits from the deep pockets of its backers, most notably Intel, and has nearly $2.5 billion in the bank, according to its recent earnings release. But, at its current rate of operating losses, that cash will last it less than three years.

In other words, it may have little or nothing to do with the technical benefits of one versus the other, but rather with the ability to sustain the technological conversion. This reveals one of the essential features of telecom: that large capital investments are required before revenue can be earned, giving incumbents a powerful advantage.

Here is a related article from GigaOM.

Sprint could spin off WiMAX division

This has been quite a month for the wireless industry. Between Verizon's recent announcements (see this and this) and the earlier news regarding Sprint and WiMax. In this article, Sprint interim CEO Saleh said:

... that Sprint was currently examining its plans for widespread WiMAX deployment in 2008 and deciding “if it’s the right course for us.” He then said that in the future, Sprint’s WiMAX division could take “multiple forms,” including one scenario where Sprint would “contribute our [WiMAX] asset to some kind of entity and find investors who are willing to fund the deployment of WiMAX.” Sprint would then buy services from that entity and resell them are on the market, he said.

I find the wholesale scenario most interesting (especially given my interest and work in secondary use and secondary markets for spectrum). This amounts to the creation of a wholesale WiMAX infrastructure from which Sprint would lease capacity for a potential retail operation. This is not unheard of in this industry. Note that Sprint is the carrier for MVNOs (Mobile Virtual Network Operator) like Virgin Mobile. Also, many of the carriers have sold or outsourced their towers to companies such as Crown Castle and American Tower. So, I am wondering a couple of things as a result of this announcement:

• Is the Sprint retail brand going to separate from its carriage services in its 2G and 3G (i.e., CDMA) operations as well? If they do, then Sprint (retail) will be just another MVNO on the Sprint (carrier) network. If they don't I wonder what spinning off WiMAX really buys them. This is roughly akin to the functional/structural separation that is being discussed (and in some cases implemented) in the wireline industry.
• Is the Verizon annoucement a signal that the industry is in the process of restructuring itself into separate handset, retail and wholesale services components? If this is the case, it suggests that the economic and strategic benefit of integrated package delivery is coming to an end; that the transaction costs that have driven this integration have decreased significantly so that a new industry organization can become feasible.

It is clear that it could take a few years for this scenario to play out ... we have yet to see what AT&T has in mind in this regard, as well as the carriers in other countries that have a highly sophisiticated mobile industry.

Verizon Picks LTE for 4G Wireless Broadband

I have blogged about 4G technologies before. Now, in this item, Om Malik reports that Verizon has made its choice. He ties it to Verizon's recent announcement that they are opening their network:

The LTE evolution negates the GSM vs. CDMA debate, and it also promises global connectivity. In a recent chat, AT&T Mobility President & CEO Ralph de la Vega said that his company was going to migrate to LTE as the 4G solution. In such a scenario, you and I can then switch between the two services without worrying too much about handsets.

What does this mean for WiMAX?

Update (2007-11-30): CNet has a bit more to say about this in this article.

EarthLink and municipal WiFi

As you know if you have read this blog before, Earthlink began reevaluating its commitment to municipal WiFi this summer. According to this and this, the results of this evaluation indicate that Earthlink will be exiting this business. you might enjoy this analysis as well.

Do you think this dooms the concept of municipal WiFi? Or, does this simply open the door for WiMAX based systems? What about the possibility that Earthlink was pursuing this as a strategy to exit the declining dialup business?

More on Sprint/Clearwire and WiMAX

As I have mentioned earlier, Sprint and Clearwire have ended their partnership plans. Several articles (see this and this, for example) are wondering what the future of mobile WiMAX is, especially in light of the recent LTE test. BusinessWeek has speculated about investment by Intel, in light of the strategic importance of this technology (see this), or a significant engagement with Google (see this as well).

Do you think that this is another case of analysts falling over themselves to get attention (i.e. a lot of hot air)? Or, is this truly a deep blow to mobile WiMAX prospects?

Sprint and WiMAX news

This article reports that Sprint is considering a merger with Clearwire. The two companies had collaborated on the construction of a nation wide wireless network.

Are you surprised that we are seeing consolidation already? Do you think that a merger like this would act as a significant deterrent for potential new entrants into WiMAX?

Update (2007-11-09): According to this article in the Wall Street Journal (via Forbes), Sprint and Clearwire are not combining their networks after all. Do you think that this is a good strategic move for them? What about for consumers?

WiMAX news

WiMax got a few boosts over the past week:

• This article reports that WiMAX has been approved as an ITU standard. This endorsement means that it will be easier for companies to get spectrum for this technology. Since the ITU is a treaty organization, this approval can, in some countries, serve as an enabler for its adoption.
  
• This article reports that Taiwan has made commitments to invest in WiMAX networks
  
• Sprint has announced plans to continue its WiMAX rollout, despite the change in their executive suite.
  

Sprint and WiMAX

The Washington Post reported that Sprint's President Forsee resigned because the payoff on his bet on WiMAX is too slow in forming (at least in part). This article over at CNET has a deeper analysis of Sprint, investors, and WiMAX.

Did Sprint get cut on the bleeding edge?

AT&T's spectrum purchase

Showing that a secondary market does, in fact, exist in spectrum (even if it is "lumpy" and very thinly traded), AT&T purchased spectrum at 700MHz. So, it is interesting to speculate about AT&T might use this spectrum.

GSM-based systems are currently not designed for 700MHz ... so do you think this is for WiMAX? Is AT&T's recent spectrum purchase like an option on a future WiMAX network?

Motorola's new leap?

Through this interview with chief technology officer, Padamsree Warrior, we can see Motorola’s recent strategy. Motorola, which has been beaten by Samsung in Q2 2007 for the number two spot in mobile phone market share after four years of stable ranking (see this), seems to concentrate on WiMAX business.

As CTO said, is it efficient to proceed to the WiMAX technology in some countries that are at a 2G level now? If WiMAX is not adapted as a standard for the 4G, what will be Motorola’s future?

Technology history of WiMAX

If you're a fan of technology history, you will enjoy this article in BusinessWeek. The article describes Intel's role in the development of this technology, that may well prove to be a marketplace disruptor.

This article reminds me of the early days of Ethernet, when Digital Equipment Corp (remember them?), Intel and Xerox teamed up to develop the DIX Ethernet standard, which preceded the IEEE 802.3 Ethernet standard. As Marvin Sirbu and Kent Hughes, in their 1986 TPRC paper point out, each member of the DIX alliance played a role that allowed Ethernet to succeed ... DEC to incorporate the standard in minicomputers (this preceded PCs), Intel to provide chips, and Xerox to provide workstations and software. In similar fashion, this article points out that Intel (chips), Sprint (network) and Nokia (handsets) allied to make this happen. The handset alliance has since come to include Samsung (see this).

This paper also highlights the rivalry in standards committees. This was the case with Ethernet (IBM was a proponent of token ring); in this case it was Qualcom, according to the article.

Anyway, this is an excellent read. This strategy was clearly successful with Ethernet ... time will tell if it will prove successful with WiMAX. Can you think of other technology standards that emerged out of a partnership like this one (and like Ethernet)?

Mobile WiMAX in Europe

This article frames mobile WiMAX as a disruptive technology in the European telecommunications market. The essence of the article is this:

For the past 15 years, American tech giants such as Intel and Microsoft have been largely shut out of the European-dominated mobile phone industry. Not that they haven't tried—Intel (INTC) made processors and memory for handsets and Microsoft (MSFT) is still pushing a pint-sized version of Windows for handheld devices. But the business was still largely controlled by telecom companies such as Nokia, Ericsson, and Vodafone.

Now, with the pending arrival of a disruptive new wireless technology called Mobile WiMAX, the U.S. crowd stands its best chance in years at knocking down Fortress Europe. A kind of Wi-Fi on steroids, Mobile WiMAX delivers data at speeds comparable to conventional third-generation (3G) mobiles but promises to be cheaper to implement because it uses newer, more efficient technology.

Do you think this article is correct? Does WiMAX match the criteria for a disruptive technology laid out by Christiansen in his book?