Outlook Mixed for WiMax at 700 MHz

Ever since the concept of mobile WiMax caught hold, its backers have viewed the 700 MHz band as an ideal opportunity to prove just how disruptive the technology could be. So with the Federal Communications Commission (FCC) set to hold the world's first major auction of 700 MHz spectrum in February next year, what are the prospects for WiMax?

According to the latest Unstrung Insider report, 700MHz Technology Options: Reshaping the U.S. Wireless Market, the outlook is mixed.

With the WiMAX Forum working on 700 MHz system profiles, equipment should be available for deployments in 2009. And, clearly, there is pent-up demand for WiMax, notably in the wireless ISP sector.

However, there has been no word yet on what specific combinations of bandwidth and duplexing methods will be supported in commercial, certified equipment. And with most of the spectrum configured as paired bands, the WiMax community quickly needs a convincing story on FDD (frequency division duplex) to supplement its focus on TDD (time division duplex).

For those who missed the memo, FDD systems send and receive information in separate (paired) frequency bands, while TDD systems send and receive information in the same band at different times. There are pros and cons to both, but received wisdom is that it's hard to deploy TDD adjacent to FDD due to interference concerns.

The most obvious place WiMax will play is with the local independent operators that have a chance of winning some of the more than 800 regional A and B Block licenses (each has 2x6 MHz). Vendors such as Airspan Networks Inc. (Nasdaq: AIRN) and SOMA Networks Inc. already offer 700 MHz products and would be well positioned here.

The outlook for WiMax in flagship C Block (2x11 MHz) is less clear. With an auction process designed to enable a new entrant to acquire nationwide spectrum, it's an ideal opportunity for WiMax backers, and supporters of disruptive wireless business models, to prove their worth. But it would take a huge investment just to acquire the spectrum and deploy a bare bones network.

Even with a conservative view of the costs involved it's hard to imagine an investor with enough stomach make a new entrant play. Assuming the C Block licenses sells at or around their aggregate reserve price of $4.6 billion, and then assuming $20 per person in capex for the network rollout, it would cost a minimum of $10 billion to meet the 75 percent of population coverage requirement. In reality, it's likely to cost much more than that to create a network that, regardless of technology, will have substantially less capacity than today's 2G and 3G networks.

There's no doubt that the likes of Intel Corp. (Nasdaq: INTC), Google (Nasdaq: GOOG), and Apple Inc. (Nasdaq: AAPL) have deep pockets, but would they plow money into a heavily loss-making venture over at least five years in the hope of selling more chipsets, advertising, and phones? Probably not.

Perhaps the best chance for these "disruptors" would be through some kind of high-tech consortium making a play on the networking-sharing concept, where capacity is sold at a wholesale rate to individual service providers. This could involve partnering with someone like, say, Frontline Wireless, LLC , to make a bid on combining the C Block with the nationwide D Block and public safety band. But even then, would such a venture choose WiMax? Not necessarily. Motorola Inc. (NYSE: MOT), one of WiMax's biggest backers, is advocating 3rd Generation Partnership Project (3GPP) LTE technology for public safety.

The real wild cards in this auction are the cable companies. One potential scenario would be for SpectrumCo LCC -- a joint venture of Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox Communications Inc. , Time Warner Cable Inc. (NYSE: TWC), and Advance/Newhouse -- to bid on all or some of the C Block licenses and combine this with the Advanced Wireless Services (AWS) spectrum they won last year.

Cable operators are known to have evaluated WiMax in the past and one source interviewed for the report says the cable firms have all but taken the decision to deploy WiMax FDD in the AWS bands and could look to supplement this footprint with 700 MHz coverage. SpectrumCo has not confirmed these plans. (See Spectrum Auction: It's a Date , Cable Wants In on TV Spectrum Auction , SpectrumCo Gets Licenses , and Sprint to Exit SpectrumCo Venture .)

The upshot is that well-connected sources interviewed for the Insider report hold out hope that finance can be put together for a WiMax-friendly player to make a concerted bid in next year's auctions. But at this point, it's far from obvious that any one company has the stomach, or the deep pockets, to take on the big cellular players.

— Gabriel Brown, Chief Analyst, Unstrung Insider

The report, 700MHz Technology Options: Reshaping the U.S. Wireless Market, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.

wap545 12/5/2012 | 3:01:09 PM
re: Outlook Mixed for WiMax at 700 MHz Excellent review Gabriel. We need more of this level of speculation to encourage debate on what makes sense in these emerging Broadband Wireless markets.
I feel Verizon Wireless cannot afford to lose the C Block spectrum (and will bid to win)if they are to remain a competitor in the Broadband Wireless space-Their existing Narrowband EV-DO data business is at risk. If they win the 700Mhz C block they will deploy along side their Cell Net.
Google has estimated that it would cost $12 Billion plus (what it takes to win the spectrum)to build out a C Block net and take 3 years. Verizon has the infrastructure (towers & support)in place today.
Not sure the MSO have the stomach (business case)to compete for the C block, especially when they already have the 1700-2100Mhz spectrum, which looks to work nicely with WiMAX-far better then the existing 2.5Ghz that will have trouble with foliage in most East Coast markets. The only concern I would have here is, can they find a manufacturer willing to split its production to address both the 700Mhz and the AWS spectrum WiMAX handhelds. What would handheld devices cost and would Intel buy into the AWS with Centrino??
What are your thoughts here?
As an Independant Service Provider the Lower B Block looks very attractive to us,especially if we can work with existing spectrum holders in the adjacent Lower Band C Block. By combining the 12mhz in each we'd have a very strong 24 Mhz of contiguous spectrum to work with and compete with any Large Upper Band C block owner. Would there be enough Independants winning the Lower A & B Blocks to justify manufacturers splitting their production?
Question: What makes more sense in the above B Block scenarios:
1.FDD or TDD, especially if we need to compete with the Big TV Broadcast (MediaFlo) (50,000Watts)transmitters in adjacent spectrums??
2. Would TDD or FDD handsets be cheaper to manufacture and what do you suspect Intel will opt for in the Centrino Line for 700Mhz (WiMAX)??

Many more questions here. look forward to other comments on this important piece.

IPobserver 12/5/2012 | 3:00:33 PM
re: Outlook Mixed for WiMax at 700 MHz Hi Jacomo:

Sorry for the late reply in posting. Obviously I can't answer all these questions.

Cable's in a strange place because its investors donGÇÖt appear to want it to go and spend a ton of money on a wireless networkGǪ yet they just acquired a lot of AWS spectrum.

From what I can tell, the WiMax "community" is quickly trying to get FDD products out the door to support deployments in these paired bands.

Some of the terminal chipset makers are telling me they'll support FDD in their next-gen products. Not sure what bands they'll support on the RF side. It seems to be up in the air.

So far as I know, you can generally support up to 4 bands in any one device. This quad-band USB dongle from Airspan shows how it might go. It doesnGÇÖt support 700 MHz at the moment, but a product like this could integrate 700 MHz relatively easily, I'm told.

See: http://www.unstrung.com/docume...

DonGÇÖt' know exactly what Intel is doing, but it's widely known to be developing a muti-band RFIC so that WiMax users can roam across different networks.

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