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WiMax Guide

Light Reading
1/5/2005
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2005 will probably be the year in which WiMax sinks or swims as the next big thing in telecom technology. For that reason, plenty of people are going to need a quick and easy way of getting up to speed on what WiMax is and why it's stirring up so much interest.



This report aims to provide that quick and easy guide, by answering questions that are most frequently asked about WiMax. In the report's initial form, answers to eight basic questions are given, one per page. But the idea is that readers can ask further questions on the message board attached to this article. If you want to send a private message, please email [email protected] and include "WiMax Guide" in the subject field. Frequently posed questions will be answered by adding pages to this report.

For those that just want a high-level understanding of WiMax, here are the key points:

  • WiMax is a broadband access technology that delivers high-speed, carrier-grade Ethernet data communications by wireless over city-sized distances.
  • Its main use initially will be to deliver broadband Internet connections to buildings by wireless and to provide links between WLAN hotspots and carriers’ core IP networks (backhaul); later, individual user devices such as PCs will be connected direct, and, eventually, mobile devices.
  • Its big attractions are expected to be the usual Ethernet and wireless virtues of low costs, flexibility, ease of rollout and use, and interoperability.
  • However, WiMax is not expected to be fully commercialized until about 2006.


Industry opinions are divided over WiMax's prospects, judging by early results of a poll being conducted on Unstrung, Light Reading's sister Website covering wireless technologies. So far, 48 percent of respondents say WiMax will "emerge as a credible wireless replacement for DSL/cable" and exactly the same percentage say it will "splutter onto the market with minimal impact."

To take the poll yourself and see the full, up-to-date results, please click on this link.

Here's a hyperlinked list of the questions and answers in this report:



Webinar Archives on WiMax



Paid Research Reports on WiMax

— Tim Hills, Freelance Telecommunications Writer and Journalist


Need to know more about the latest developments in WiMax? check out the coming Light Reading Live! conference:

WiMax – Why Now?
at the W Hotel, Union Square, New York City, on Tuesday, January 20, 2005


This one-day event, hosted by Rick Thompson, Heavy Reading Analyst at Large, will provide qualified attendees from Light Reading's global audience an education in how WiMax will fit into their networking development plans for 2005 and beyond.

  • For more information, click here
  • To register, click here
  • Sponsorship opportunities are still available. Direct all inquiries to [email protected].


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paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 3:28:49 AM
re: WiMax Guide

By the way, rate cap has been the paradigm for over 15 years. That is what causes lack of investment in infrastructure.

You are clearly a bigot. Make the Wireless companies unbundle. Explain why they must not.

You have now killed new services by the way. Lets say that a new service costs $20 Million to create (lets say ADSL to introduce cost $100M dollars). Now, your company must pay that up front before there is any development. Get it? Your model is completely and utterly useless unless its a government body.

Tell me, where does the revenue growth from LoopCo come? How does it get 10% or so growth per annum? If it has no growth, who are its investors?

By the way the answer already exists, there are now 3 competitors driving massive investment in the network. Non-Facility based CLECs should die and let cable replace them for residential. For businesses, gee we had competition before 1996 and continue to do so. So, for businesses there is no problem.

seven
paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 3:28:49 AM
re: WiMax Guide

rj,

The problem with local control is:

- It fragments the market so dramatically that there is no economy of scale. Prices of equipment dramatically.

- Social issues of haves or have nots will cause this to be a national issue. Why should Palo Alto have a network but the South Bronx not?

seven
fgoldstein
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fgoldstein,
User Rank: Light Sabre
12/5/2012 | 3:28:48 AM
re: WiMax Guide
By the way, rate cap has been the paradigm for over 15 years. That is what causes lack of investment in infrastructure.

You're contradicting yourself. Sometimes your message is the rate-of-return would cause a lack of investment. Now rate cap is the problem? Make up your mind. I suggest that neither is necessarily pro-investment or anti-investment; the devil is in the details.

You are clearly a bigot. Make the Wireless companies unbundle. Explain why they must not.

"Bigot" is a term generally used to refer to those who show prejudice against some persons based on personal distinctions such as race or nationality. Your application is bizarre.

Okay, here's the deal. Incumbent wireless providers must unbundle their copper and fiber plant, where it is the principal provider.

(And I'll sell you all my kosher pork chops for a buck a pound.)

Wireless, I point out, has nothing to do with the wireline plant, nor the incumbent common carrier plant, nor broadband common carriage in general. It's a red herring, something irrelevant that you're trying to drag in just to distract from the discussion at hand, the natural-monopoly loop plant.

You have now killed new services by the way. Lets say that a new service costs $20 Million to create (lets say ADSL to introduce cost $100M dollars). Now, your company must pay that up front before there is any development. Get it? Your model is completely and utterly useless unless its a government body.

Again, you are not describing my proposal. I'm suggesting that LoopCo should be required to introduce services that are likely to be widely accepted, as ADSL was, though of course ADSL is (except for the remote-terminal case) not a LoopCo service at all. If LoopCo claims that a service is not likely to be widely accepted, and therefore its costs cannot be amortized into its rate base the way these things have worked since the 1880s, then it becomes a BFR. Regulators should make the call, guided by input from the carriers who would be LoopCo's wholesale customers.

There is, of course, a school of thought expressed in this thread that LoopCo should be municipally owned. I am agnostic on that point. It would work, but I also agree that economies of scale could work against it. With regard to equipment purchases, though, I note that small providers often band together. For instance, little cable companies usually join the Cable TV Cooperative and thus get decent rates on both programming and equipment. Similarly, a bunch of municipals could create a purchasing consortium, as many retail stores do. There are however real regulatory economies with larger entities. At the extreme, I doubt the New Jersey BPUC would want to regulate 566 new municipal LoopCos.

Tell me, where does the revenue growth from LoopCo come? How does it get 10% or so growth per annum? If it has no growth, who are its investors?

That's simple. We put Bernie Ebbers in charge. I have a feeling he's not doing much travel for the next few years. But seriously, the whole point is that not all companies follow the same fiscal mantra. LoopCo is not supposed to be a growth company; it's a utility, and it's supposed to pay a steady dividend and retain value. That's where the investors come from -- it inherits bonds, and the stock should pay a decent yield. GTE, not LDDS. Plenty of investors prefer steady income to risky growth. Yes, I've read Management by Compulsion and while it explains Worldcom perfectly, it's exactly what LoopCo should not be.

By the way the answer already exists, there are now 3 competitors driving massive investment in the network.

Not relevant to the end users -- there is only one common carrier, and it doesn't even want to be a common carrier any more. ISPs and other competitive information providers depend on common carriage. And the ILECs are abusing their dominance in telephony to squeeze out CLECs -- even interconnection is in danger.

Non-Facility based CLECs should die and let cable replace them for residential.

Speaking of prejudice... I frankly don't care that much about UNE-P either, though I find it on balance beneficial. But UNE-Loop is a real facilities-based operation, "Smart Build" being its other name, and it's that type of investment that I'm out to encourage. Encourage modern electronics at the CO end of the wire, but the wire itself, copper or glass, has a longer useful life than the electronics.

For businesses, gee we had competition before 1996 and continue to do so. So, for businesses there is no problem.

For a few thousand large buildings in mostly NFL cities. The vast majority of business locations are not on CAP fiber, and are not on cable. Read the FCC record in the TRO Remand, if you want evidence. For businesses there's a huge problem. And since businesses rarely use ILEC ISPs, it's a really big problem if say Verizontal gets its way and is allowed, as they've petitioned the FCC, to kick all competing ISPs off of their >56kbps (DSL, DS1, DS3, ATM) network.
jim_smith
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jim_smith,
User Rank: Light Beer
12/5/2012 | 3:28:47 AM
re: WiMax Guide
How spineless and pathetic do you have to be to use a new moniker to attack someone on a message board?

Ceoati, will you please crawl back into the hole that you came from.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:28:44 AM
re: WiMax Guide
[Local control] fragments the market so dramatically that there is no economy of scale. Prices of equipment dramatically.

The majority of the expense is paying the labor to install the new fiber. Even free equipment doesn't help with that. So it's not a problem "economy of scale" can solve.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:28:44 AM
re: WiMax Guide
I don't care about a bunch of lawyers and pedantics discussing things in the minutiae, but this is bordering insanity.

Yeah, I get frustrated too.

rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:28:44 AM
re: WiMax Guide
Social issues of haves or have nots will cause this to be a national issue. Why should Palo Alto have a network but the South Bronx not?

Both Palo Alto and South Bronx deserve modern communications infrastructures. Today, neither has one. The challenge is figuring out how to make it so.

The "federalist" approach of looking to Wall St. or to DC isn't solving the problem. Instead we get statements from SBC CEO Whitacre that nobody needs 100Mbs (and he doesn't even mention 1Gbs) on the one hand and on the other hand we get capitalists selling us 1.5Mbs wireless. Neither is adequate nor acceptable.

It's got to start somewhere. Unfortunately, that does mean there will be a period of time of haves and have nots. If that raises the issue such that Congress passes the equivalent of the Rural Electrification Act for real broadband than that's a good thing. It means we're progressing.
strands555
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strands555,
User Rank: Light Beer
12/5/2012 | 3:28:38 AM
re: WiMax Guide
Fred, in a couple of your posts you mention that wireless is decoupled and irrelevant w/r/t natural monopoly last mile considerations. I might buy that. Not sure.

Can you elaborate why/how in more detail?
strands555
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strands555,
User Rank: Light Beer
12/5/2012 | 3:28:38 AM
re: WiMax Guide
brookseven says: "The problem with local control is: It fragments the market so dramatically that there is no economy of scale. Prices of equipment [do not drop]dramatically."

Oh that's such dinosaur economist bunk. The economies of scale exist across advances in silicon and optical device processing in general, affecting all equipment designs uniformly, for all intents and purposes. 500k units of "emerging market" EPON chips doesn't cost any more than 500k units of mature 10/100 Ethernet controllers, unless there's a huge gate count, I/O, or packaging difference (which has nothing to do with current or future market size of the specific function the device implements).

Even with standards-based silicon products, every vendor's mask set is different. They might as well be devices for completely different markets.

Vendor underbidding on equipment using dinosaur economist models that presume some gigantic reduction in cost, from "economies of scale" theories from the industrial revolution (even though most of the market growth spurt happens within the same generation of process technology) should not be confused for "marke
fgoldstein
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fgoldstein,
User Rank: Light Sabre
12/5/2012 | 3:28:36 AM
re: WiMax Guide
Fred, in a couple of your posts you mention that wireless is decoupled and irrelevant w/r/t natural monopoly last mile considerations. I might buy that. Not sure.

Can you elaborate why/how in more detail?


Wireless systems have a fairly linear cost-capacity relationship. If you are supporting 10,000 subscribers, it costs X to build. If you are supporting 20,000 subscribers in the same geography, and the system is fairly well built out (i.e., current take rates, not early-stage development), then it costs roughly 2X to build. Each Erlang of phone call capacity, or its data equivalent, needs the same amount of transmitter power, bandwidth, etc. Therefore there is not a lot of an economy of scale, which is the defining characteristic of a natural monopoly. A small startup is at a disadvantage, of course, but it is nothing like trying to run parallel local loop wires. And while spectrum is tight, it has more room for entrants than the poles have vacanat gains. (Most urban poles are already full, or very close. Overbuilders pay a lot for make-ready, which the incumbent did not have to in order to install its plant.)

There are minor economies, of course, in having one big carrier rather than two small ones. When Cingular bought out AWE, they could lay off HQ staff, consolidate billing, etc. And towers need to be shared; however, that's already done. American Tower, Pinnacle et al own the towers, not the wireless carriers. The FCC has in the past made rules against tower exclusivity contracts.

But those are irrelevant to the "LoopCo" issue. Seven had postulated that wireless companies should lose their plant to a LoopCo, thus replacing a competitive marketplace (no one wireless company has more than about 50% market share in any major market, though the Powell FCC has been moving the market from the Hundt-Kennard 6-carrier-per-market model to a 3-carrier model) with a monopoly, which would presumably treat existing wireless carriers as MVNOs. That is just nonsensical as it goes entirely against the pro-competitive direction of the LoopCo proposal.

Also, the LoopCo proposal serves the ILEC shareholders' interests, because it jettisons debt and allows the slowly-depreciating LoopCo assets to be capitalized differently (more debt) from the (one hopes to be) faster-moving ServiceCos (more equity).
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