Operators Eye WiMax Femtos
But while many service providers have WiMax home base stations on the drawing board, most vendors take a wait-and-see approach to the technology for now. (See Vodafone Dreams of Metro Femto.)
According to the new Unstrung Insider report -- "The Future of Mobile WiMax: Where, When & How Much?" -- one of the main reasons for WiMax operators to consider femtocells is the potential to reduce backhaul costs on the macro network.
The report notes that a three-sector, 5 MHz WiMax channel carrier would require about 90 Mbit/s of backhaul capacity. The small home base stations, by contrast, use the customers' broadband connections to backhaul traffic back to the core network.
U.S. cable operator Comcast Corp. (Nasdaq: CMCSA, CMCSK) has been the most forthright about its plans for WiMax femtocells. Comcast is one of the companies that is investing in the proposed Clearwire consortium that will merge Sprint Corp. (NYSE: S)'s XOHM operations with Clearwire LLC (Nasdaq: CLWR) to create a national mobile WiMax operator in the U.S. (See Comcast Goes for WiMax Femtocells, Sticking Those Fem-Toes in the Water, and Power of the Press.)
Comcast's senior VP for wireless and technology, Dave Williams, said in June that a key element of the new Clearwire deal is that 5 MHz of spectrum will be set aside just for WiMax femtocell deployments and be available for use by any of the consortium members, which include cable operators Comcast, Bright House Networks , and Time Warner Cable Inc. (NYSE: TWC), as well as Google (Nasdaq: GOOG) and Intel Corp. (Nasdaq: INTC). (See Cable Plays Clearwire Card and Clearwire: We're Still on Track.)
With a WiMax femtocell deployment, Comcast could sidestep the wholesale charges it would have to pay for capacity on the new Clearwire WiMax network. So, it clearly has a vested interest in femtos.
Comcast and the Clearwire consortium could be among the biggest drivers of the development of mobile WiMax femto equipment.
For now, though, big vendors like Nokia Networks have not yet committed to WiMax femtocells, according to the report, and are waiting for the right amount of demand to kick in. Another example is femtocell vendor RadioFrame Networks Inc. , whose CEO, Jeff Brown, recently told Unstrung that he had not committed to WiMax femtocells but that he probably will. (See Femto Vendor Lands $28M.)
Back in the macro…
While WiMax operators and vendors continue to evaluate the potential of femtocells, the price pressure and competition among WiMax macro base station equipment is fierce, finds the report.
"Vendors are willing to eat their margins to make a sale and reduce the price premium over cellular," writes report author Tim Kridel, noting that prices have fallen dramatically over the last several months.
In theory, WiMax base stations should cost 50 percent more than cellular 3G base stations because it is a newer technology and, with the use of multiple-input/multiple-output (MIMO) technology, WiMax base stations use more radios, power amplifiers, and antennas. But the report finds that this is not the case and that cellular 3G and WiMax base stations are actually comparable in price. That means vendors are likely struggling to make much of a profit on this equipment.
The report concludes: "Unless a killer application is found, mobile WiMax must be insanely great… So, to grab market shares from cellular, mobile WiMax must create the perception among consumers and enterprises that it is better [e.g., lower latency], faster, cheaper, or some combination of the three."
— Michelle Donegan, European Editor, Unstrung