WiMax Ramps Up

Intel, Motorola eye next moves in broadband wireless build-out

August 11, 2006

3 Min Read
WiMax Ramps Up

As primary partners in the build-out of Sprint Corp. (NYSE: S)'s planned nationwide WiMax network, Intel Corp. (Nasdaq: INTC) and Motorola Inc. (NYSE: MOT) have seen their substantial bets on the broadband wireless technology pay off. The question now is: Will they be able to meet the aggressive timetable set by Sprint, which hopes to launch the "4G" network by the end of next year and to reach 100 million subscribers by the end of 2008? Or will further investments and acquisitions in the WiMAX field be required?

Certainly both Intel and Motorola have already made substantial investments, both in-house and externally, into laying the foundation for a WiMax ecosystem to support a service of the magnitude that Sprint envisions.

Motorola was among the earliest of the major telecom vendors to place its WiMax bets on 802.16e version of the technology, instead of the 802.16d standard for fixed WiMax. Last year, Motorola announced its "MotoWi4" umbrella brand for an array of broadband wireless technologies that includes mesh WiFi networks, WiMax, and the Canopy wireless technology for unlicensed spectrum. Motorola has made major investments in WiMax companies, including the acquisition of NextNet, the infrastructure arm of Craig McCaw's WiMax venture Clearwire LLC (Nasdaq: CLWR), in July. It also led an $8 million round of financing for Orthogon Systems, a provider of "carrier-class" point-to-point WiMax systems, saying it would incorporate Orthogon technology into its Canopy system.

And it launched a partnership with Sprint to develop handsets and infrastructure for the carrier's broadband wireless network, even before Sprint officially decided on WiMax as the underlying technology. (See Motorola's Maximum WiMax.)

Field trials of that equipment are expected later this year.

Intel, meanwhile, made the biggest splash of all when it invested some $600 million in ClearWire in July. To augment its lineup of silicon technology, Intel invested an undisclosed amount in Beceem Communications Inc. , a highly touted WiMax chipset start-up. Beceem is said to have already begun testing its chipsets in South Korea, which is deploying a related networking technology called WiBro.

Intel's hopes its WiMax achievement will match the achievement of its popular Centrino chip, which supports WiFi connectivity in laptops. In May, the silicon titan said that its Rosedale 2 chipset will support both the fixed (802.16d-2004) and mobile (802.16e-2005) versions of WiMax, listing ten customers, including companies such as Alcatel (NYSE: ALA; Paris: CGEP:PA) and Navini Networks Inc. , that have adopted Rosedale 2 chips or plan to adopt them.

In May, Intel Capital formed a pair of WiMax service joint ventures, located in Egypt and the Netherlands, to help further its WiMax strategy.

Is this enough to meet the Sprint deadlines?

One hurdle, says Prudential Equity Group LLC analyst Inder Singh, is that the three primary vendors supporting the Sprint WiMax initiative -- Intel Motorola, and Samsung -- do not have solutions that are obviously complementary.

"All three of the major suppliers have slightly different implementations" of WiMax, says Singh. "So first they have to rationalize those three different players into one. Once that happens, they have to make the new system backwards compatible with the other existing parts of their network.

"It's an ambitious undertaking."

As for new acquisitions, most observers think Motorola is more likely to go that route than Intel, which tends to take substantial positions in technology providers rather than acquiring them outright.

One intriguing target could be Paris-based Sequans Communications , which has developed both fixed and mobile WiMax systems-on-a-chip and which raised $24 million in a July funding round. The three-year-old fabless semiconductor company claims to be the first to have received certification in fixed WiMax for both base station and subscriber station reference designs. (See Sequans Scores $24M.)

Last month Sequans said it had begun shipping mobile WiMax chips to customers for testing in mobile devices including cell phones, PC cards, and USB dongles.

— Richard Martin, Senior Editor, Unstrung

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