WiMax -> Between Hype and hot
stuff
NEWS ANALYSIS
By Alex Salkever
Bruce Chatterley likes alternatives. As the CEO of national
broadband reseller Speakeasy Networks, he relies on the Baby Bells to
provide his residential and business customers with premium DSL
broadband service. And though Chatterley says the Bells have treated
him well, he still wouldn't mind having other options. Little wonder
Chatterley is jumping on the WiMax bandwagon.
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Although WiMax is still more concept than concrete reality,
Speakeasy plans to launch a WiMax network in its hometown of Seattle
in early 2005. Says Chatterley: "We view this as a potential
disruptive technology."
The first phase of the network will use pre-WiMax wireless
networking equipment, but Chatterley says Speakeasy will transition
into WiMax gear as quickly as possible. The new system could provide
him with a much-needed backup mechanism for his broadband customers,
as well as a neat new product that could undercut existing business
broadband services like T-1 lines. Those dedicated circuits, a
staple of the Bells, deliver data several times faster on average
than DSL or cable modem lines, which often slow noticeably under
heavy traffic loads.
INTEL INSIDE. Yet big questions
surround WiMax and whether it can live up to the hype preceding its
arrival. The tech landscape is littered with startups that tried
pitching wireless broadband for businesses in big cities. Over the
past five years, big players such as AT&T (T
) and Sprint (FON )
have launched and abandoned wireless-broadband trials for
residential customers. And as the Baby Bells sink big bucks into
fiber-optic cable expansions, they will be reluctant to spend
significantly on WiMax.
"We see it as a complement to our other broadband efforts. We
are definitely exploring it, but it's too early to tell," says
Mark Wegleitner, chief technology officer of Verizon (VZ
).
Even early WiMax adopters appear to need some prodding to embrace
the tech standard, which has come in the form of investment from
tech bellwether Intel (INTC
). The chip giant is designing PC chips that will have WiMax
reception built in, echoing a successful strategy it used with its
Centrino chip, which put WiFi connectivity into a majority of new
laptops on the market today. Intel likely will throw big marketing
dollars at WiMax to popularize the technology and plans to stay
involved in developing standards.
While Chatterley says he would have investigated WiMax anyway, Intel
helped his decision by offering to buy a minority stake in Speakeasy
and its support for the WiMax project. On Oct. 25, Intel also took a
$150 million stake in Clearwire, telecom pioneer Craig McCaw's rural
wireless broadband startup. As part of the deal, Clearwire announced
it would use WiMax technology to power parts of its network.
But even with Intel's backing, at least some of the customer
reluctance likely comes from the fact that WiMax gear is not yet in
production and that early commitments to go WiMax amount to buying
into the promise before testing actually occurs.
A WORLD APART. Even some of the
big chipmakers are holding off for now. Broadcom (BCOM
) declined to include WiMax compatibility in its next line of chips
for communications in PCs. "There are some unknowns anytime you
have to talk about something that doesn't exist yet," says Alan
Varghese, a wireless analyst at Oyster Bay (N.Y.) tech consultancy
ABI Research. "It will offer very high bit rates. There are
some questions about how close you have to be to a WiMax
transmission base station to achieve those bit rates, though."
Speakeasy's Chatterley confirms that distance from the base station
significantly affects speeds, but he insists WiMax will easily
outrun offerings from traditional broadband providers.
One other potential drawback: The Federal Communications Commission
has chosen to allocate radio spectrum in the 3.5- and 10-gigahertz
bands to private WiMax providers. The rest of the developed world
has WiMax allocation in different spectrum locations. That means
gearmakers will have to customize WiMax equipment for the U.S.,
possibly driving up costs.
And global WiMax roaming, one of the potential attractions of the
technology, will be problematic for U.S. users. "We are going
to become another wireless island. We are not supporting
international standards. It's not going to be compatible with any
other equipment worldwide," says Robert Sanchez, chief
technology officer of San Diego (Calif.) wireless tech consultancy
inCode.
WAIT AND SEE. Even so, Sanchez
says he loves the idea behind WiMax and thinks it will ultimately
prove a big success. And despite the obstacles, few doubt the role
of WiMax in broadband's future.
But whether that role is big or middling remains far from resolved.
Chatterley at Speakeasy is eager to sell WiMax to businesses, but he
remains far more cautious on sales to consumers -- an area where
overcrowded spectrum and wider coverage could become expensive
problems. Is WiMax the next big thing? Intel and others seem to
think so, but it's still too soon to tell.
Salkever
is Technology editor for BusinessWeek Online in New York
Edited by Beth Belton
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