October 19th, 2006

Investing in WiMAX?


A question I got quite often lately that is particularly not easy to answer.

The first thing to establish is what do the person mean by WiMAX? Because there are actually two kind of WiMAX, Fixed (802.16d) and Mobile (802.16e). The former is often used in point-to-point links whereas the latter is a point-to-multi-point configuration. Often, both tends to lump the two together as if it is the same but really, other than both are using OFDM, they are very different beast when it comes to deployment.

Fixed WiMAX is established whereas Mobile WiMAX is far newer and less tested in the field. However, the one which got everyone excited right now, e.g. Softbank, Sprint, ClearWire/Intel etc.

The main reason why everyone is excited about Mobile WiMAX is that it has the potential to be a competitor to other broadband last-mile technology, current dominated by DSL and Cable. Vendors are also beating the drum of how good the technology is, how it is able to serve 100mbps in a 10km radius which adds to the hype.

Sadly, that’s it: Hype and Hype.Hype 1: OFDM(A) technology can do only 1-2 bit/Hz (depending on various condition). 100mbps? yea, if you have 1 AP and 100Mhz of bandwidth (ha..not everyone is so lucky like Unwired :). More likely, you have 15 or 20Mhz only so you do n=3 or n=6, ie 3x or 6x the investments.

Oh did I mention the bandwidth is shared? In a sector of 5Mhz, you may get a total of 10mbps total bandwidth (two-way) shared among all the concurrent subscribers.

Hype 2: 10km? sure, if you are doing this in outer space. More likely terrains, like hills, mountains, buildings and steel walls will affect you. Realistically, you can get 1 to 1.5km in urban city, 2-4km in sub-urban and 7km in rural with assistant of outdoor antennas.

This is why some people dont think much of Mobile WiMAX. Afterall, Wifi (802.11) can do 250-500m anyway at a fraction of the cost. For the cost of a Mobile WiMAX base station, you can deploy 1,000 wifi base station or 100 mesh-wifi.

Moreover, Mobile WiMAX face competition from other mobile technology, such as 1xEV-DO or HSPA. While those can be pretty expensive to deploy, it is fairly cheap for an existing 3G operator to upgrade their infrastructure to 1xEV-DO/HSPA, cheaper than a greenfield operator to roll out Mobile WiMAX.

And as a competitor to DSL, Mobile WiMAX is still far too expensive. A DSL modem may retail at US$50 but Mobile WiMAX is US$300 or more. Infrastructure wise, it is often cheaper to deploy DSLAM over Mobile WiMAX base stations in dense cities.

Do I sound grim? Hmm…maybe so.

But I am pretty optimistic on Mobile WiMAX. Seriously. It is only under these difficult challenges that one who is able to figure out where and how to deploy Mobile WiMAX is going to make a lot of money.

Now, I don’t claim to have the answers. I do have some questions that you should asked yourself before you invest in Mobile WiMAX.

a) Do you have a “stupid” or “lazy” incumbent?

b) Do you have a regulator who is not siding with the incumbent?

c) Is there an area where community wants broadband but couldn’t get DSL?

d) Is there a Mobile WiMAX spectrum (2.3, 2.5, 3.5Ghz) available from the government (or private sale)?

If you answer “Yes” to the 4 questions, drop me an email please :-)

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