WiMax USA: Spectrum Crunch
There is one big obstacle standing in the way of operators looking to roll out wireless broadband services in the U.S. using WiMax. There's a distinct lack of licensed spectrum available for such offerings.
Here's the problem: If you expect to use unlicensed spectrum for your WiMax service, there's really no way to guarantee the quality of service or connectivity. And it's already becoming clear that a few of the major carriers have locked down large chunks of the prime licensed bandwidth.
Operators wishing to launch WiMax services over the next couple of years face a choice: They either need to own or acquire spectrum in the licensed 2.5-2.6GHz bands. Or, they will have to use the more crowded 5.8GHz "public" band, which will be more prone to congestion and interference as the WiMax network footprint expands.
It should be a simple choice. Licensed spectrum is always going to make for a better quality of service than unlicensed bandwidth. But the 2.5-2.6GHz licensed bandwidth that is available is mostly concentrated in the hands of a few major operators, and a dark horse or two.
These are the factors that could make it difficult for many ISPs to offer comprehensive WiMax services nationwide without adding at least some unlicensed spectrum to the mix. And as we have seen with the growth of public WiFi networks, unlicensed spectrum often means less reliable connectivity that is prey to congestion.
For those who own it, licensed spectrum will be the way to go. It is already obvious that there some clear winners in the licensed field.
Leader of the pack is the newly merged cellular operator Sprint Nextel Corp. (NYSE: S). Between them Sprint and Nextel have 90 MHz of 2.5GHz spectrum, covering 80 markets in the U.S. Sprint is plotting fixed WiMax tests now and tests on into 2006. (See Sprint's Got WiMax Plans.)
"It is pretty clear that Sprint pretty much 'owns' this part of the spectrum in the U.S. right now," says Jack Gold of JGold Associates Inc. With Sprint already trialing fixed WiMax in this spectrum, they will likely have a six- to 12-month headstart over the competition."
In fact, Unstrung has even heard from a couple of sources that Sprint Nextel is willing to lease WiMax spectrum to smaller WISPs that aren't directly competitive with its main businesses.
But a Sprint spokesman says it's "way too premature" for Sprint to even be considering leasing out WiMax spectrum just yet. "First we figure what's the best technology to deploy within our spectrum assets and the spectrum demands for a marketable service," he says. "As those efforts are just beginning and will extend into 2006 and beyond, we're a bit away from those determinations."
Meanwhile -- down south -- fixed-line operator BellSouth Corp. (NYSE: BLS) owns over 50 licenses in the 2.5-2.6GHz bands, and could lease up to 58 more. It also has 22 licenses in the 2.3GHz band that could potentially be used for these types of services as well.
The operator won't reveal exactly what cities it could cover with the wireless broadband equipment it has been trialing recently, only the regions. "Our licenses are scattered throughout our nine-state service region -- Alabama, Florida, Georgia, Kentucky, Louisiana, Missisippi, North Carolina, South Carolina, and Tennessee -- and into other areas, including Missouri, Arkansas, Virginia, and Washington, D.C.," a spokeswoman tells Unstrung.
The dark horse of the pack is Craig McCaw's new venture Clearwire LLC, which has been rolling out broadband services in small-town America using pre-WiMax gear from its subsidiary NextNet Wireless Inc. (See McCaw's Mystery Millions .)
The company is as tight-lipped about spectrum as it is with everything else. But a source says that, "Craig McCaw owns a lot of 2.6Ghz spectrum" in a 6MHz TV band.
So what of the rest of the operators out there?
"If I were Verizon, Cingular, or T-Mobile, I’d sure be looking for spectrum to compete with Sprint, especially in the mobile space when it is deployed in 2007," says analyst Gold.
Cingular could potentially get spectrum from its fixed-line parent companies BellSouth and SBC Communications Inc. (NYSE: SBC). But neither T-Mobile USA nor Verizon have laid out a wireless broadband strategy beyond the ongoing 3G updates of their cellular networks.
And there are a multitude of smaller WISPs and service providers that will need more bandwidth if they want to expand beyond initial trials and pilot offerings.
The WiMax spectrum crunch may become less of an issue over time as the 700MHz band is gradually being opened up by broadcasters so that high-speed wireless services can be implemented on these bands.
But for now it's a real question for operators looking to offer WiMax services in the U.S.A.
— Dan Jones, Site Editor, Unstrung