WiMax: Town & Country
The latest report from Light Reading's research division, Heavy Reading, shows that wired operators are very interested in using WiMax to deliver fixed and mobile broadband services but finds that the nascent wireless technology is liable to be a country mouse rather than a city kitty.
WiMax boosters like to talk up the myriad fixed and mobile wireless applications that the technology will be used for -- when officially certified products start to hit the market -- probably in the second half of 2005.
But Heavy Reading's "WiMax Reality Check" finds that larger operators hoping to use technology to extend the coverage of cable and DSL services in urban areas may find it easier to stick with the devil they know rather than leap into the wireless unknown.
In the city, DSL and cable will prove to be extremely competitive on performance and price.
"DSL is continually improving in terms of both bandwidth and in coverage distance from the central office," the report states. "That raises the question: Assuming that commercial WiMax gear debuts in the second half of 2005, will DSL technology have improved to the point that many of the shortcomings WiMax is supposed to address no longer exist?"
And beyond DSL, a huge expansion in fiber connectivity is looming. "There's going to be an increasing number of subscribers who have access to fiber to the home," opines Shaun McFall, VP of field marketing at Stratex Networks, in the report. "When that's done, the game is over for WiMax."
And even on price it is hard to see how WiMax operators will compete with established wired networks. Estimates for the initial cost of WiMax basestations range between $10,000 and $20,000. Meanwhile, CPE boxes could cost anything between $750 to $250, according to vendors quoted in the report.
"Growth in WiMax equipment volumes will drive down the cost of network infrastructure and CPE, and the speed at which it can reach levels that are competitive with DSL and cable will determine how quickly and widely it's adopted," the report notes. "Price competition in the broadband arena is already fierce, so it's rather difficult to see how one could swoop in with an offer that would convince a broadband provider to adopt WiMax rather than upgrading its cable or DSL infrastructure."
And wired broadband operators are already offering services priced around $30 a month -- or under.
"We don't foresee in the near term offering service for $30 a month," says Philip Urso, founder and CEO of TowerStream Corp. in the report. "It's not profitable for us or for anyone."
But in rural areas the story is reversed: Broadband infrastructure is nowhere near as established, and WiMax starts to look like a much more attractive proposition.
"This market condition provides the most fertile ground for WiMax," writes Tim Kridel, the report's author. "In the rural area of a developed country, for example, the only option for Internet access might be dial-up – possibly via a long-distance call... We believe that this strategy is sound."
— Dan Jones, Site Editor, Unstrung