This isn't how it was supposed to be, according to the WiMax fraternity. Any one of WiMax's leading lights will tell you that it makes no sense for an operator to invest in yesterday's 3G technology. After all, W-CDMA is far less efficient than orthogonal frequency-division multiplexing (OFDM)-based technologies such as WiMax and LTE. Some operators have bought into this philosophy:
- Helped by some funding from WiMax power broker Intel Corp. (Nasdaq: INTC), Orascom Telecom is taking a GSM-to-WiMax path for its networks in Africa and the Middle East.
- In India, Tata Teleservices Ltd. and Bharat Sanchar Nigam Ltd. (BSNL) are talking down W-CDMA while rolling out WiMax, although limited availability of spectrum for W-CDMA is also a factor in that country.
- Taiwan's Far EasTone Telecommunications Co. Ltd. , a GSM and W-CDMA operator, has acquired a WiMax license and is also starting to make disparaging noises about W-CDMA's performance for data services.
But these are still relatively isolated examples of GSM licensees straying from the straight-and-narrow 3rd Generation Partnership Project (3GPP) path in favor of Mobile WiMax. Operators in other emerging markets continue to roll out W-CDMA aggressively, including in South America, Russia, Turkey, and large parts of Africa. WiMax will still be deployed in these markets, and maybe even in large volume; but it will not take a significant share of GSM operators' mobile broadband capex. Where GSM operators in these markets do deploy WiMax, it will largely be to provide fixed wireless broadband services.
The big unknown is still China. The government's insistence on promoting the home-grown TD-SCDMA standard has left China without 3G W-CDMA service anywhere – not even in Beijing for the upcoming Olympics. But even if China's operators do skip W-CDMA altogether (and they may well do that), WiMax is unlikely to be the beneficiary. If W-CDMA is not deployed in China, it will be because the government decides it wants the country to be at the forefront of LTE deployment. This would be consistent with the LTE development alliance that China Mobile Ltd. (NYSE: CHL) has with Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NYSE: VOD), as well as with the ambitions of Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) to be global leaders in LTE.
A 2G-to-4G leapfrog strategy by China's operators would have profound implications for the global mobile equipment and services business. But they would be very different from those arising out of the GSM-to-WiMax scenario, which is seeing a bit of traction out there in the market – but not much.
— Patrick Donegan, Senior Analyst, Heavy Reading