India gets closer to WiMAX auctions, with Samsung in hot pursuit
By Caroline Gabriel
Intel and AT&T were among the major foreign companies that attended a pre-bidding conference held by the Indian government, ahead of the 3G and WiMAX auctions planned to start in January. And the Department of Telecom indicated that it would look to open up several new bands, including 700 MHz for WiMAX and broadband wireless, soon after the end of the 3G sale.
One of the constant sources of speculation, throughout the tortuous process of getting the Indian spectrum auctions on track, has been whether foreign operators would look to gain a foothold - as some, such as Vodafone, DoCoMo and Telenor already have - or even whether vendors would want to participate in joint ventures or franchise agreements. In franchises, suppliers and carriers share risk and reward and they can give a vendor a chance to push its preferred technology.
At the conference, according to Indian newspaper Business Standard, a clearer idea could be gained of which firms are likely to bid for the new licenses. The established cellcos were prominent, notably Vodafone Essar, Bharti Airtel and Reliance, as well as some of the new entrant carriers which gained 2G spectrum last year, such as Uninor, STel and Datacom. Most of the foreign telcos that have been linked with Indian auctions, such as SKT and Telstra, did not show up, however. According to Economic Times, France Telecom and Cable & Wireless have confirmed that they will not take part in the sales.
The pre-bid conference was organised by the Department of Telecom to address concerns and queries of any interested players, but did not entirely fulfil its mission - there is still no decision on the important issue of whether the auction will be conducted for all four slots in each telecoms ‘circle’ or region, or just in those slots where spectrum is already available (some has not yet been vacated by incumbents such as the Departments of Space and Defense, a critical risk factor for the progress of 3G and WiMAX in India). The DoT said it would announce its finalized policy on December 8, the day it will also invite formal applications. “If the defense forces are able to vacate the spectrum by then, we would go ahead with the auction of all the four slots. Otherwise, only available spectrum would be auctioned,” said DoT joint secretary JS Deepak.
The DoT was unable to answer another pressing question - whether it would award the new licenses to successful bidders immediately, or whether there could be a delay, as there has been in 2G (some of the winners in recent auctions still have not received their licenses).
After the 3G and WiMAX auctions, further spectrum bands are expected to come up for sale “quickly”, said the DoT, though judging by the 3G experience this could mean several years of rulemaking and debate. The next bands are likely to be 800MHz to add more spectrum for CDMA players (but, unlike in GSM/W-CDMA and WiMAX, state-owned BSNL and MTNL will not have early access); 2.1 GHz and 2.3 GHz for WiMAX, once the latter has been vacated by space agencies; and then 700 MHz for WiMAX and other broadband wireless technologies.
Once the spectrum is actually freed up, India is expected to be the world’s largest market for WiMAX vendors, and all the majors are already conducting trials with different operators there, while BSNL and MTNL have deployed some networks and are working on their franchise relationships with suppliers like Telsima/Harris Stratex and SOMA. The big WiMAX vendors - Motorola, Alvarion, Samsung and Huawei - will all be looking for rich pickings from 2010 onwards, and the technology is perhaps particularly important to Samsung and Alvarion, which have little or no presence in 3G and LTE.
There is no logical need for vendors to choose between WiMAX and LTE, just as many sold both GSM and CDMA systems. But despite the two-pronged strategy of Motorola, Huawei and others, there is an increasing tendency for suppliers to major on one 4G platform or the other, the choice partly driven by the kind of operators they aim to sell to. Samsung, while not writing off its chances in LTE, clearly sees WiMAX as its best market, and as it makes steady progress across the world, its chief wireless marketing executive said it could be a bigger revenue source for the Korean firm than CDMA had been.
Just as WiMAX has often supported disruptive operators focused on alternative service models, so it can provide vendors with a chance to break into the GSM/3G citadel of Ericsson and the other European majors. Hung Song, VP of global marketing at Samsung Telecommunications, said in an interview with Telephony that early leaders in WiMAX could become major players in 4G. In the same way, in 2G and 3G, the biggest vendors stayed out of CDMA, allowing the likes of Samsung, Lucent and Nortel to thrive, he argued. However, from his own company’s point of view, he sees WiMAX as being a bigger opportunity, as its success in CDMA was limited mainly to its home country, and its handset business was the chief beneficiary.
Samsung may have won only about 10 CDMA network deployments, but it already has more than that in WiMAX, where it makes up the big four with Motorola, Alvarion and Huawei (its fellow suppliers to the technology’s flagship operator, Clearwire). Song said the company is in talks with about 40 providers about new Mobile WiMAX deals.
The largest of its existing customers are KT and SKT, the Korean cellcos, which are using the local WiMAX variant WiBro, and UQ Communications in Japan, a joint venture led by CDMA operator KDDI with backing from Intel and others. Samsung announced additional Mobile WiMAX contracts from UQ this week, for delivery early next year. The Korean firm has already built out the metro centers of Tokyo, Nagoya and Osaka.
Samsung also supplies kit to fast growing operator Yota and has also joined the WiMAX Innovation Network in Malaysia, led by YTL Communications - the program also includes Cisco, Clearwire and GCT Semiconductor, and is looking at roaming and collaborative development opportunities. YTL will launch commercial services in late 2010 using Samsung gear and IMS, though its launch will be well behind fellow Malaysian WiMAX player Packet One.
The vendor is also said to be one of several parties interested in a proposed WiMAX joint venture with Indian manufacturer ITI, which aims to attract foreign investment in three of its businesses, including 802.16 kit.
Song said in the interview that 90% of his global marketing efforts are spent on WiMAX today and about 10% on LTE, though this proportion could change if it makes headway in the newer technology - but he did not envisage a situation where LTE would be more than 30% or so of effort.
WiMAX Poised for Portable Broadband Success
By Andrew Mitchell
By Dr. Philip Marshall, Ph. D., Senior Research Fellow, Yankee Group Research
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Bolstered by an improving economy and a more suitable marketing plan, global WiMAX subscriptions are expected to grow from 3.9 million today to 92.3 million in 2015.
What happens when you take a strong wireless technology like WiMAX, introduce it with great fanfare and then slam it with a poor economy, slow spectrum licensing and incorrect positioning in the marketplace? Just exactly what happened to WiMAX worldwide over the past year or so.
Previously, Yankee Group forecast that in 2008, global WiMAX subscriptions would hit 3.8 million. In reality, that number won’t be reached until year-end 2009, primarily because WiMAX has been hit with a veritable tsunami of constraints. In addition to a deep, worldwide economic recession and the collapse of the credit markets, WiMAX last year faced slower-than-expected spectrum licensing, especially in areas with huge subscriber potential like India and Indonesia. And as if the economic crisis wasn’t enough to dry up investment dollars, WiMAX also saw a crisis in investor confidence due to its mismatched positioning against 3G and advanced 3G technologies like LTE, HSPA and HSPA+.
What’s Weighing WiMAX Down?
Flawed market positioning is the biggest gating factor for WiMAX, as providers and regulators continue to place WiMAX in the mobile broadband space versus the portable broadband market. Yankee Group defines “portable broadband” as a service that is available for stationary or pedestrian use within limited network coverage areas. “Mobile broadband” services, by contrast, are available over wide coverage areas and support continuous connectivity at vehicular speeds. For the most part, WiMAX and portable broadband are best suited to unserved and underserved markets, whereas 3G and advanced 3G technologies tend to flourish in the mobile broadband arena, where legacy technologies abound.
But when WiMAX first hit the scene in 2004, its primary aim was to disrupt the mobile broadband market, which had a less-than-stellar track record, especially in terms of price, performance and reliability. Since then, however, the mobile broadband industry has pulled its act together and accelerated the development of 3G, HSPA, HSPA+ and LTE. Now, with its 3G competitors in more of a position of strength technology-wise, WiMAX has less of a story to tell-and less of a compelling business opportunity-in the mobile broadband space.
The fact is WiMAX isn’t especially suited to mobile broadband. Its high-performance radio technology and end-to-end all-IP architecture does, however, shine in green-field fixed and portable broadband applications-a market it is just now beginning to address in earnest. While we assume the mobile broadband market will be dominated by technologies like HSPA, HSPA+ and LTE, the portable broadband market-an area of rapid growth especially in emerging EMEA markets like Central and Eastern Europe and Africa-is WiMAX’s for the taking.
Over the next few years, as the gating factors begin to ease, Yankee Group believes WiMAX is poised to take off. In fact, we forecast that WiMAX subscriptions will grow from 3.9 million today to 92.3 million in 2015, a CAGR of 69 percent (see Exhibit 1).
Exhibit 1: Global Subscription Forecast for Mobile WiMAX Technology
Source: Yankee Group, 2009
Some Like It Mobile
While the lion’s share of WiMAX’s predicted increases will happen in the portable broadband segment, there are notable exceptions to the rule. For example, service providers in the U.S. (in addition to Japan and Korea) are taking a relatively aggressive stance targeting WiMAX toward mobile applications.
In North America, WiMAX activity is dominated by Clearwire, which aspires to deploy a nationwide WiMAX network in the U.S. in the 2.6 GHz frequency band and provide 4G services to its strategic partners, including Sprint and Comcast. Clearwire is in the process of upgrading from a proprietary technology to mobile WiMAX (802.16e), and to date, it offers commercialized mobile WiMAX service in Atlanta, Baltimore, Las Vegas and Portland, Ore., with aggressive plans to launch additional markets through 2009 and 2010. Combine Clearwire with upstarts DigitalBridge Communications and Xanadoo, and the North American market is well-served by WiMAX players.
Another impetus for WiMAX growth in the U.S. market is the American Recovery and Reinvestment Act of 2009, which earmarks $7.2 billion to broadband-related projects. With these factors in mind, Yankee Group projects that WiMAX subscriptions in North America will increase from 1.0 million in 2009 to 13.4 million in 2015, a 53 percent CAGR (see Exhibit 2).
Exhibit 2: Robust Growth in North America as WiMAX Penetrates Residential Broadband
Source: Yankee Group, 2009
Slow Going in Asia-Pacific
In contrast with North America, the Asia-Pacific region is growing more slowly in terms of WiMAX subscriptions. While it presents tremendous opportunities for WiMAX, particularly in areas like India and Indonesia where there is low broadband penetration, licensing issues are a major stumbling block. For example, our forecast does not account for WiMAX subscriptions in the 2.6 GHz (BWA) band in India because of the continued delay in licensing. Plus, WiMAX has been incorrectly positioned to compete with technologies like HSPA and LTE in the region, resulting in heightened political antics and protracted timelines for spectrum licensing in many markets. In addition, it is unlikely WiMAX will see meaningful adoption in China, where the service providers have embraced TD-SCDMA and LTE TDD.
We do, however, expect that licensing of the 2.6 GHz band-which is most suited to WiMAX-will occur during the forecast period, freeing up WiMAX providers to address this burgeoning market. With that in mind, we project WiMAX subscriptions in Asia-Pacific to increase from 0.5 million to 40.4 million between 2009 and 2015, representing a CAGR of 102 percent over the forecast period (see Exhibit 3).
Exhibit 3: WiMAX Gets Off to a Slow Start in Asia-Pacific
Source: Yankee Group, 2009
EMEA Leads the Way
While Asia-Pacific holds the most potential, the region of the globe set for the most dramatic WiMAX growth is EMEA. Our forecast predicts that WiMAX’s strongest adoption will occur in emerging markets in EMEA, particularly in Central and Eastern Europe and in Africa. Investments in Africa are accelerating, particularly with the implementation of several undersea cables and the freeing up of capital markets. We see slow progress for WiMAX in Western Europe, however, because most of the service providers are subscale with networks operating in the 3.5-3.8 GHz bands. We believe that this will remain the case until significant 2.6 GHz frequency bands are auctioned and future acquirers of TDD licenses in Western Europe are required to embrace WiMAX.
Taking these factors into consideration, Yankee Group projects WiMAX subscriptions in EMEA to increase from 2.1 million to 33.9 million between 2009 and 2015, at a CAGR of 59 percent (see Exhibit 4).
Exhibit 4: WiMAX Demand in EMEA Driven by Emerging Markets
Source: Yankee Group, 2009
WiMAX Languishes in Latin America
Perhaps the best example of market positioning hobbling WiMAX adoption is found in Latin America. Not only is spectrum scarce-particularly in the optimum 2.6 GHz band-but in this 3G-heavy environment, many investors view WiMAX as a “dead” technology and are shying away from making necessary capital investments. In addition, many urban centers across the region already offer speeds in excess of 2 Mbps, leaving WiMAX with few ways to differentiate itself. As a result, WiMAX across Latin America tends to be relegated to rural regions that are of less priority to major service providers.
Even with such constraints, however, Yankee Group sees WiMAX subscriptions in Latin America increasing from 0.3 million to 4.7 million between 2009 and 2015, a CAGR of 59 percent (see Exhibit 5).
Exhibit 5: WiMAX Growth in Latin America Truncated Relative to Broadband Demand
Source: Yankee Group, 2009
Getting There
The global WiMAX market is notoriously difficult to forecast, primarily because it relies on a range of interdependent factors, any one of which can work to stifle demand and service proliferation. To reach our forecast of 92.3 million worldwide WiMAX subscriptions by 2015, several economic, regulatory and technological barriers must be overcome. But we are already seeing signs of progress-particularly in terms of an improved economy and more savvy market positioning.
To gain widespread adoption, WiMAX must gain greater industry support-particularly from regulators and investors. We believe this support depends on WiMAX establishing itself as a compelling portable (as opposed to mobile) broadband solution, particularly in emerging markets. But as long as WiMAX continues to be erroneously pitted against 3G and emerging 3G technologies like HSPA, HSPA+ and LTE in the mobile broadband space, the mobile broadband community will create regulatory and technical roadblocks to stifle the success of WiMAX in the marketplace.
In addition to improved market positioning, regulatory easement in major markets such as India and improved investor sentiment in regions like Latin America are critical for WiMAX to gain meaningful market scale and sustained industry support.
And a little success trumpeting wouldn’t hurt either. In addition to appropriate market positioning for WiMAX, we believe it is contingent upon incumbent WiMAX operators to demonstrate and promote their market successes with the aim of improving confidence among regulators and investors.
WiMAX is a strong wireless technology with a compelling story to tell, especially in the portable broadband arena. Once it overcomes these few market barriers, the technology is indeed poised for global success.
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WiMAX Voice Heard at MWC with Flexibility Message
By Caroline Gabriel
WiMAX has always had a tough job to make its voice heard loudly at Mobile World Congress, because of the show’s roots in the 3G community, and this year was always going to be particularly hard, because of the wave of momentum behind LTE, as it reaches the peak of the hype curve. WiMAX enjoyed that place on the curve a couple of years ago, and now has to take a different approach, which the ecosystem has addressed enthusiastically at MWC, giving the technology a profile beyond what many expected.
Tuesday morning saw Intel hosting a panel of the great and the good of WiMAX, with senior executives from major vendors joining 802.16’s great cheerleader, Intel’s senior VP and CMO Sean Maloney. These were asked the question: ‘What game changing WiMAX initiative will your company deliver in 2009?’ Many of the responses focused on the wider WiMAX story, and if listeners were hoping for promises of killer devices or significant standards upgrades, they would have been disappointed. In fact, changing the game is all about ‘growing up’ – placing WiMAX in a wide and mature ecosystem and delivering end-to-end systems cost effectively and flexibly. In a recession, dramatic new technology enhancements are to be mistrusted, bringing risk and potential delay – and downturn makes a virtue out of the duller focuses, on ready availability of equipment, a broadening ecosystem, and on harnessing what is already there (Wi-Fi devices, for instance, in Clearwire’s case).
So Alvarion and Cisco were attacking the end-to-end issue from different standpoints, each stressing that working with partners or other parts of their own firm would deliver a solid IP core story for WiMAX as well as a widening range of device alternatives. Motorola was also focusing on proliferating its CPE types to suit a whole range of operator and consumer requirements in emerging and mature economies, and on leveraging the Wi-Fi installed base in the home and laptop. Nokia Siemens and Alcatel-Lucent have both been reported in recent months to be backing away from WiMAX, and clearly their most important target customer base lies with the major cellcos, whose natural bent in many cases will be to adopt HSPA and eventually LTE. But ALU’s WiMAX VP Karim El Naggar and NSN’s head of radio access strategy Markku Ellila were both vehement that WiMAX was a full commitment, and again, stressed the theme of widening the range of supported business cases, from simple fixed access to embedded or machine-to-machine networks to full open web applications – and so appealing to operators from outside the traditional cellular handset structure. And ZTE and Huwaei were both aggressive about supporting the entire range of wireless platforms, according to operator requirements.
So, coexistence with 2G and Wi-Fi; flexibility and openness of model; a steady increase in the range of devices (with a focus on affordability and time to market); and the maintenance of a two-year market availability lead on LTE – these seem to be the credo of WiMAX in 2009, and all these points are designed to play to the needs of operators facing capital crunch and consumer slowdown.
Meanwhile, the WIMAX Forum has announced that 802.16 networks now cover 430m people worldwide and are on a path to nearly double to 800m pops by end of 2010. This is based on almost 460 deployments in 135 countries, and new roll-outs will be driven by auctions in India and Brazil, among others. “In both emerging markets and mature countries, companies and governments are deploying 4G WiMAX networks to help bridge the digital divide,” said Intel’s Maloney.
