10:15 AM -- This week in WiMax, here are the big issues, as I see them:
Will WiMax's speed advantage last longer than you think? Maybe
After spending a couple days listening to folks from various parts of the industry at the Open Mobile Summit in San Francisco, it's pretty apparent that the big network providers -- namely, AT&T Inc. (NYSE: T) and, to some extent, Verizon Communications Inc. (NYSE: VZ) -- were not ready for the wireless data explosion of the past couple years, and may not be prepared to handle it well in the near-term future.
What that means for WiMax – and, specifically in the U.S. market, for Clearwire LLC (Nasdaq: CLWR) and its big partners, like Sprint Nextel Corp. (NYSE: S) -- is that the speed and bandwidth edge WiMax enjoys right now might continue for longer than you think -- say maybe three, four years, or more.
The problem -- which is a nice one to have -- is the runaway success of platforms like the Apple Inc. (Nasdaq: AAPL) iPhone, which radically changed the way people use mobile data. As Apple's exclusive provider in the U.S., AT&T gets to reap benefits like signing up 7.2 million new iPhone customers in the first nine months of 2009, a figure cited by AT&T CTO John Donovan Thursday.
The downside is the ongoing public-relations hit AT&T is taking for its problems in trying to keep all those users happy, an issue so prevalent that Verizon, its biggest competitor, feels comfortable poking fun at AT&T's network in a series of recent ads (which AT&T is now suing Verizon over). But even as AT&T struggles to tout its ongoing efforts to accommodate iPhone users on its current network, a bigger problem looms for both Ma Bell and, likely, for Verizon -- that the providers' 4G plans, using Long Term Evolution (LTE) technology at the 700 MHz spectrum level, may prove to be inadequate as well, should mobile data consumption continue on its upward path.
"LTE does not solve the iPhone problem," said Boingo Wireless Inc. CEO Dave Hagan, speaking on a panel at the conference Wednesday. While LTE might provide throughput four times greater than current 3G implementations, Hagan said the incredible jump in demand generated by devices like the iPhone will trump such low-shooting improvements.
"They are chasing a 50x increase [in data consumption] with a 4x solution, a 4x solution that's going to take four years to complete," Hagan said. "That's not going to work."
In a keynote and a panel discussion at the event Thursday, AT&T's Donovan did his best to never say that AT&T was unprepared for the iPhone tsunami -- but it was clear from some of his answers that AT&T wasn't ready, from a network perspective, for the transformation of having a portable Web platform with the ability to load new applications at will.
The software, Donovan said, makes it a crapshoot for AT&T to try to predict user patterns, something that was easy in the old days of locked phones. "You could have someone using 20K today, and tomorrow they could become a 500K user," Donovan said. While he contended that AT&T was doing all it could as fast as it can to keep up, Donovan (under the constant grilling of moderator Walt Mossberg) finally admitted that when the company's 3G networks were designed and contemplated, the current usage pattern is "not what they [the designers] had in mind."
Even though Verizon can crow some now, if its new Android-powered smartphones take off the way the iPhone did, they may run into similar capacity problems before long. And as for LTE, both Verizon and AT&T only have around 25 MHz of spectrum depth at 700 MHz -- which may not be enough to handle demands should data consumption patterns continue to increase rapidly. The Clearwire/Sprint team, on the other hand, is sitting on an average of about 120 MHz of spectrum depth at 2.5 GHz -- and is already deploying networks running without the bandwidth-capping limits that are standard for 3G contracts.
As Sprint 4G VP Todd Rowley said Wednesday, "We're playing in the gigabit game." The question: Is that a game AT&T and Verizon can join, anytime soon? Or maybe not as soon as you thought?
Plugfest Need to know more about Clearwire and WiMax? Our second version of the Clearwire NTK report, which covers Clearwire events from June through September, costs less than a large beer at the local Sprint Nascar race. Just $4.95 at the Sidecut store. Also available for the Kindle. Available now for free download is our WiMax Business Deployment Guide.
Speed is not relevant if one has to use 2.5Ghz in a heavily canopied environment, common to most of the SE USA. You will see Clear having issue as they begin promoting their MOBILE offering. Works nicely as long as you have good line of site and or a fixed antenna.
Not sure why radio makers are not developing AWS1 based radios for those in the market with 20-25Mhz of spectrum. This would make a nice Data/Video solution.
Watch what happens with the 2 big carriers-You will see parallel Data/Video and Voice Networks in the next 3-5 years.
Jim
@jacomo, that factor might free up some bandwidth at 3G -- but not until all those current iPhone (or Android at EVDO) customers switch out from their current handsets. Think people who just shelled out $200 for an iPhone or a Droid are going to buy another phone a year from now? (Especially with the new $350 early termination fees?)
And how many more 3G users are going to join in the next year, since we probably won't see an LTE phone until 2011 at the earliest? Just like AT&T's vaunted HSPA upgrade -- it will only work for newer devices that support the new connectivity technology. Old devices are stuck on the old network.
Your point is well taken on one level -- and since LTE doesn't have support for voice right now any dual-mode device is going to need a 3G chip for voice anyway (believe Verizon has already said this will be their go-to-market strategy for LTE phones). But I don't think voice traffic is what's clogging the 3G networks... and I still don't see how you get enough bandwidth at 700 MHz with just 20~25 MHz of depth to support the next 10 million users, who are all going to be big bandwidth users with Droids and (eek!) Apple tablets...
Maybe the LTE stuff will intially be priced so high that it won't have mass adoption. That might keep network saturation down. Otherwise, I think there will be problems, Houston.
The only thing you missed is the fact that VZW & AT&T both have the ability to deploy a separate 4G Data/Video Network and maintain and actually improve performance on their existing 3G networks for their Voice services. Dual Mode sets would allow customers to switch between the 2 networks as needed.
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More Kaps Korner
This Week in Broadband 5:00 PM Sprint should have room to run with the HTC Evo 4G mobile hotspot
This Week in Broadband 10:50 AM Big wholesale numbers for Q1 show the marketing strength of Clearwire's investor partners
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Managing Risk with Analytics - by IBM 7/28/2010
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