Until a few years ago, fixed wireless was one of the thriving telecommunications industry’s great hopes. That was during the Internet boom, and fixed wireless technology was supposed to bring broadband to desolate localities unreachable by DSL and cable lines, due to financial or technological limitations. Fixed wireless was also supposed to enable different fixed line networks to link remote branches.
But fixed wireless, like many other technologies, found itself in crisis, and many people believed its fate was sealed. However, fixed wireless may now be making a comeback.
In early 2003, the Institute of Electrical & Electronics Engineers (IEEE), responsible for setting global communications standards, approved the a802.16 wireless communications protocol, which uses the 2 to 11 megahertz frequencies. The IEEE approved the parent 802.16 protocol, which uses the 10 to 66 megahertz frequencies, in December 2001.
Besides the different frequencies, there is another difference between the protocols: a802.16 does not need a line of sight between the base station and terminal. Where there is no direct line of sight, such as in cities, the signal broadcast in the direction of the terminal is bounced off obstacles (such as building walls) to reach its final destination.
In contrast, the 802.16 protocol, is related to the b802.11 protocol, better known as WiFi (Wireless Fidelity), and its similar 802.16 protocol, known as WiMax (Worldwide Interoperability for Microwave Access).
WiMax is neither a competitor of WiFi, or its direct descendant. Wireless Local Area Networks (WLAN) are an alternative to cable networks that connect office and home computers. But no matter how much technicians try to extend WLAN use, it is still considered a means to link a network’s computers. The fact that an Internet café’s computers, serving chance customers, are linked to a broadband landline does not alter WLAN’s original purpose of linking computers.
WiMax will therefore not replace wireless networks, but it may link public wireless networks (hot spots) with all types of broadband or provide access for home and business customers who set up wireless computer networks at home or in the office. Each base station using the WiMax protocol can transmit up to 70 megabytes by exploiting compression technology and optimizing the spectrum three-fold. End users will receive the service up to 50 km away.
The image challenge
Market research firm Visant Strategies stated in its study “802.16/WiMax Technologies: World Market Forecasts 2003-2008”, published two weeks ago, that companies that missed the WiFi bandwagon will perceive WiMax as a convenient way to revive the market in a few years. WiMax Forum members stated that there are currently thousands of incompatible fixed wireless connections across the US, forcing operators and developers to absorb the cost of preserving their uniqueness. The WiMax Forum says costs would be slashed if the systems were made compatible.
System and component compatibility would lower manufacturing costs. Collaboration by leading companies such as Intel (Nasdaq:INTC), Fujitsu (Tokyo:6702), and others, and the pending entry of Taiwanese manufacturers will help cut manufacturing costs through the use of common components.
The telecommunications industry believes that these trends will turn the wireless sector around. “Fixed wireless suffers from an image of an unsuccessful sector,” says Alvarion (Nasdaq: ALVR; TASE:ALVR) VP marketing Rudy Leser. “This image wasn’t caused by technological problems, but mostly by regulatory ones, which drove some companies out of the market.”
Leser was referring to US FCC requirements that CLECs buy a separate spectrum than the ones used by the existing communications providers. The resulting chain of events included frequent funding rounds on the part of service providers, soaring costs incurred in the absence of an established business model, and a strategy of trying to gain market share leading to severe losses. The industry wised up too late. Companies such as Teligent, Nextlink, and Winstar vanished, and the survivors, such as Sprint PCS (NYSE:PCS) and WorldCom (which is in receivership), postponed the launch of their wireless services.
Wireless communications operators hope to avoid repeating this history. “The aim is to avoid the mistakes made by the technology suppliers, some of which preferred developing patented technologies rather than using off-the-shelf components suitable for everyone,” says Leser. “Today, even before these systems are sold, our situation is similar to the DSL industry in the late 1990s, i.e. the different systems are compatible.”
Riding the wave
As is fitting for a technology striving to be as widespread as possible, a group of companies combined to found the WiMax Forum. Members include Alvarion, Intel, Fujitsu, Nokia (NYSE:NOK), Proxim Corp. (Nasdaq:PROX), and other global companies and start-ups, including Israeli chip maker Provident. Runcom, and IC4IC representatives attended WiMax Forum’s recent meeting on the WiMax standard.
Despite the industry buzz about WiMax, the situation begs the question why branding is needed at all. “The fact that WiMax has become popular doesn’t mean that it’s something new,” says Gemini Israel Funds entrepreneur in residence Jay Klein.
Ensemble Communications, founded by Jay Klein and Rami Hadar in 1997, develops broadband wireless communications systems. After raising over $100 million, Ensemble Communications may not have realized the hopes placed in it, but the IEEE-set 802.16 standard should give it a boost. Klein says 90% of the standard overlaps the company’s product. Ensemble Communications competed against Nortel Networks (NYSE:NT) and Cybridge’s DOCSIS-based standard, developed from cable.
“WiMax’s original concept, backed by Nokia and Ensemble Communications, was a wireless solution for access layers,” says Klein. “It took several years, until WiFi took off, and they decided to ride the WiFi wave in terms of marketing to the public and industry players. The more widespread the technology, the cheaper it becomes, and the more companies prepared to commit to making compatible systems, the cheaper they are to manufacture.”
In Israel, fixed wireless technology enables Internet providers their customers direct access without the need for Bezeq (TASE:BZEQ) ground infrastructures. All they need is to link up with an independent communications provider such as Israel’s Med 1. Infrastructure providers (Bezeq and the cable companies) now offer their customers high-speed Internet access of up to 2.5 Mbps (Bezeq’s ADSL service) and 3 Mbps (cable), whereas WiMax can provide support scores of subscribers at up to 10 Mbps.
WiMax’s paramount advantage over existing copper-wire technologies, such as VDSL, which can provide similar speeds, is that WiMax’s switchboards can be located up to a maximum of 30 km from customers, compared with the one kilometer for VDSL.
Waiting for Intel
Naturally, WiMax is not problem-free. “Like all technological progress, there is the problem of upgrading existing products,” says Klein. “Image that you’re negotiating to sell a $40 million system to a customer, and he reads in the paper that you’ll have faster and cheaper system in a year. He’ll cancel or minimize the procurement immediately, and wait.”
Leser says, “It isn’t always possible to upgrade. We’re working with our existing customers on this matter. I can’t comment further.” Leser believes the first WiMax standard systems will be launched in 2004.
The price of WiMax base stations is presently estimated at $10,000, and terminals at $1,000. The WiMax Forum hopes that backing of as many companies as possible for the standard will cut the price of terminals to $300.
“At the moment, systems suppliers such as Alvarion and Ensemble Communications are using FPGA (field programmable gate array) chips in their systems, which is costly,” says Klein. “They can’t rely on the small chip makers, because who knows if they’ll be around when the products are launched. Once the first systems are sold, we’ll see systems suppliers switch to larger chip-makers, which will have decided that this market can contribute to their revenue.
“You only have to see that Intel is adapting its Centrino processor to the new standard. If I had to, I’d bet that Intel won’t invest as much in WiMax as it does in WiFi. Intel must keep its finger on the pulse of technological developments. The evidence is in the number of Intel staff attending these meetings, but that is very far from making a commitment.”
Published by Globes [online] - www.globes.co.il - on June 16, 2003