WiMAX Panel Discussion
(WiMAX World, Boston) Panel discussion on the business models for WiMAX. Moderated by Caroline Gabriel who gave the opening talk this morning. Speakers included David McGrath, Head of Business Innovation & Consulting, Global Marketing & Strategy, Networks, Motorola, Inc. and Jim Orr, Principal Network Architect, Wireless Market Development Group, Fujitsu.
Each of the panelists opened with a brief presentation.
David McGrath - MOTOwi4
Significant un-served and under-served market needs, create a market opportunity for cost-effective wireless broadband solution... We see WiMAX as being complimentary to 3G. Big difference between 3G and WiMAX -- WiMAX has a much small cell radius, but the data rate within that cell is much higher. A key factor for the longterm adoption of WiMAX is the "Spectral Efficiency" of this technology -- carry more data in the same amount of bandwidth. Applications: (1) DSL Alternative - cost effective only in Rural and under-served markets (2) cellular backhaul - very price competitive to other backhaul solutions (3) local competitive access (ability to bypass the local loop) -- business case is OK with data, but add VoIP makes the economics work (4) underlay of 2G or 3G cells -- the cost per megabit for WiMAX in this application is substantially lower than other alternatives. Past 2007, also the opportunity to provide mobile WiMAX as a complement to 3G use.
David gave a number of specific examples of how to build out a metro area wireless network, comparing the cost of using WiFi versus WiMAX. The one scenario where WiMAX seems to be significantly less expensive is when covering users inside a building -- this is because the uplink radios can operate at a much higher power level under the WiMAX specification, thus the distance for WiMAX links can be greater, and this allows a significantly smaller number of APs. However the economic calculation depends upon the declining price of the user's CPE. David suggested that the cost per user would drop below $100 by 2010.
Jim Orr - Fujitsu Network Communications
Fujitsu WiMAX Worldview = 4G is a state of mind. Access to your data, all of the time, when and where you want it... It is going to be content driven... it is going to be a market with a lot of participants -- cellular carriers, traditional telcos, cable companies, satellite providers, governments, content providers, business owners. 4G will be a unification of wireless standards that allow for interoperability. This will happen on the network and on the devices. The advantages of WiMAX as a part of this mix -- performance, QOS, "nimbleness" (ability to operate on multiple channels), vendor diversity, flexibility, and this all leads to a cost advantage. So WiMAX will be a big part of that 4G world in 2010+. What are the business advantages of WiMAX? Access to difficult to reach customers, short deployment cycle and thus fast time to revenue, lower risk to add customers in areas that physical plant doesn't reach, shared survivability, ethernet overflow. Summary: WiMAX is driven by a global market, WiMAX will be a "participant technology" in 4G, Fixed WiMAX has a viable business case in the US Market.
Q: Why do you make such a big deal of the CPE subscriber unit when cellular operators have dealt with this problem very effectively for years?
Caroline: In the fixed markets, if the operator has to subsidize the CPE, it becomes a cost item that may not be competitive against other fixed alternatives such as DSL.
Jim: It comes up in our conversation with every operator because they want to get out from under the subsidization
David: As you reduce the cost of the CPE, you increase adoption. But there are other factors that can be more important to adoption.
Caroline: Also, some governments in Asia are talking about banning subsidies.
Q: Can the panel address the challenges of delivering Voice?
Jim: Voice can be implemented through the QoS element. Its not going to be circuit switched, it will be VoIP.
David: You can build a viable business model for WiMAX on data alone. But you cannot do so on voice.
Caroline: We think VoIP will become a commodity very quickly and that operators will need to look for other premium products other than voice.
Q: In the developed markets we have very high penetration of DSL, we have the capability of DSL2 of 10 Mbps+ so can we will provide the kind of bandwidth that the applications like triple play will demand (with WiMAX) compared to the next generation of DSL?
Jim: In the cellular market, people were willing to give up quality and services in order to have mobility. The same thing is going to happen with data. People are going to want their data services to follow them.
David: Spectrum is always going to be an issue. It is a precious resource no matter where we use it. There is going to be a number of different services and it may be that applications like Television will not be best suited for WiMAX. You have to look at where it is most useful.
Caroline: The value of spectrum will depend upon what operators can do with it, so yes in developed countries the wireless data opportunities to consumers will be about mobility.
Q: Please address the application of interactive TV in rural areas where WiMAX may be the only way to deliver...
David: The whole technology around broadcast television using WiMAX isn't proved out as a business model. I don't think this is the best use of the spectrum, and that you aren't likely to get a good ROI.
Caroline: Perhaps at a significantly lower part of the spectrum, like Qualcomm's Mediaflo at 700 Mhz, but WiMAX as not going to be.
Jim: There is one other way, which is a client based DVR. If this is about using WiMAX as a distribution vehicle ahead of media consumption, it could be effective.
Q: When will Motorola make WiMAX handsets available? How will you support so many different radios in a single device - size, cost, power consumption?
David: For 802.16e, we are tied to the profiles that the WiMAX Forum has outlined. So the timeline is the second half of 2006 for the profile and so you can expect handheld devices from all of the major manufacturers in the early 2007 timeframe. There is an enormous number of challenges - how do I manage all of this complexity with a limited amount of battery power being one of the largest. WiMAX can actually be put into a sleep mode more effectively than many of these other technologies, so this will actually be easier than with some of the other radio technologies.
Q: Wondering about the implications for vendors from a licensing and royalty perspective as 802.16e migrates to Wi-BRO.
Caroline: By bringing Wi-Bro into the IEEE, many of the royalty issues will actually become easier, at least by comparison to the 3G world. This will bring RAND (reasonable and non-discriminatory) royalties to this market, which might not have happened with Wi-Bro if it hadn't been converged with the 802.16e roadmap.
David: What the IEEE is doing with cross licensing is very advantageous to WiMAX to make sure that it is not sabotaged by any one vendor. We are not in too bad a position, in the longer term the whole industry moving to a RAND model is crucial to consumer adoption of the technology - bringing down the cost of CPEs for example.