“WiMax Can Be a Broadband Alternative”

April 26, 2005

Technology

Given Intel’s recent announcement of WiMax chipsets, Robert Cringely has decided to opine on WiMax and its market potential. I don’t want to outline all the advantages and disadvantages of WiMax. You can read Cringely’s article and/or Google the subject. Nevertheless, the recent announcements make it a subject worth a few lines of commentary. So here are my idle thoughts on the subject.

WiMax has two roles: broadband extension and alternative broadband access.

In its first role, WiMax can be used as a broadband extension technology. Using unlicened spectrum at 5.8GHz, you could extend your broadband access to your neighborhood, but not much further. Indeed, this might be an interesting way of raising money within a homeowners’ association – assuming you have sufficient bandwidth on the back-end. But unlicensed spectrum holds little promise beyond extension of existing access. The reason is simple: to boost a signal to go any substantive distance, you need to be much “louder” than other things in the area. And the FCC really tries to ensure that people are not abusing the EM spectrum.

Nevertheless, unlicensed WiMax will provide some interesting extension possibilities – however localized they may be. I expect to see some entrepeneurial neighborhood networks. But I also expect to see city market deployments and/or town center kinds of deployments – at least, in areas where WiFi mesh networks have not already penetrated.

In its second role, WiMax can be used as an alternative to DSL and cable. Using licensed spectrum, WiMax can connect end points at up to 20 miles distance (and maybe even further). So it would be feasible to extend broadband out into more rural areas by dropping a DS3 in a central location and then connecting it to hubs that are wirelessly extended beyond traditional CO distances (or cable head ends for that matter). In short, WiMax holds the promise of extending wireless broadband to areas where wired broadband might not be able to economically reach.

But this will require licensed spectrum. And spectrum costs real money. And who has the money: telcos and cable providers. And they might have disincentives to such investments. Namely, they would be investing in a competitive technology that might threaten their existing installed (and depreciated capital) base. So telcos and cable service providers won’t have immediate incentives in markets where they already have products. Fortunately, there is enough uncovered territory for the behemoths to fight over.

At the same time, you might see new competition in the lesser-established markets – assuming the economics make sense. A new competitior would only need to hook into existing metro area networks or loops. And what geopolitical features do most fiber runs follow? Usually, they follow highways and or railways. And since most people live around transportation channels (like highways or railways), these seem like the right places to connect into the fiber infrastructure. And who controls rights to highways and railways? Usually, it’s the government (either municipal, state or federal).

So where is this long train of thought leading? OK. I’ll get to the chase. I believe that the muni-wireless discussion will spur many communities to adopt a WiMax distribution model centered around access “hubs” positioned along existing transportation channels. On federal and state highways, I would look to the rest stops as the most likely place to house such infrastructure. And in more isolated communities, I would look to train stations or switch yards as likely targets for the WiMax distribution infrastructure.

In any case, the prize will go to the groups that get connected to the distribution channel first. So the early bets will be on telcos and cable suppliers. After all, they do have the capital advantage. But I wouldn’t be surprised if a number of nimble providers pop up in each market. The trick will be to coordinate the eventual consolidation of all of these smaller providers.

-CyclingRoo-

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