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Industry News

Sprint and Alcatel-Lucent Need WiMAX to Get Around the Giants

802.16 is the best hope for growth

December 13, 2007
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The unceremonious departure of Sprint Nextel CEO Gary Forsee has inevitably prompted speculation that the operator will pull back on its commitment to WiMAX and a planned leapfrog into 4G-class services, an outcome that would shake the whole WiMAX world, such a cheerleader has its favourite cellco become. But as the vendors have already shown us, with Motorola and Alcatel-Lucent talking up new WiMAX contracts in the past week to distract attention from their problems, 802.16 is the best hope for a serious growth spurt, for any player that has lagged behind in 3G. Without WiMAX, Sprint Nextel becomes a third placed cellco that is likely to lose, not gain, share against the big two, even if it gains a more effective operational chief, and which could even start to slip against new entrants from the internet and media worlds. Similarly, without WiMAX, Alcatel-Lucent is stuck in the wireless world with an increasingly thankless battle with Ericsson, at least until LTE and possibly UMB come along, while Motorola has no major growth technology pre-LTE either.

Forsee’s successor would have a hard job explaining to the FCC why Sprint was pulling back from the build-out obligations that went with being allowed to keep its own and Nextel’s 2.5GHz spectrum post-merger. And what the mobile broadband unit Xohm needs is a strong pair of hands to ensure it is run efficiently and that the core company is successful enough to cushion the impact of the capex spike and the investor nervousness (see Wireless Watch October 8 2007). The issues Xohm and a new CEO need to face are practical ones, like how to adapt billing and other back office systems for an open access model while retaining acceptable levels of customer service and ease of use. If the incoming chief instead decides to agonize over whether to keep Xohm or not, or how to reduce its costs too far, he or she will be focusing on a dangerous distraction that will just play into the hands of Verizon and AT&T – both with their own mobile broadband and convergence ambitions, but lacking the scale and quality of spectrum that should make Xohm into a success. Sprint has said that it will dedicate $2.5bn in capex by the end of next year to building its WiMAX network and $5bn by the end of 2010. It is working with partners Amdocs and IBM to streamline its back office operations in preparation for Xohm, and particularly for open access.

Meanwhile, Alcatel-Lucent has been trying to divert attention from the increasing difficulty of competing on price with Ericsson in GSM and UMTS (see separate item) by focusing on its opportunities in the platform where the Swedish giant is not playing, 802.16e. At last week’s Broadband World Forum show in Berlin, Germany, the vendor talked up Mobile WiMAX, claiming 15 commercial contracts and more than 70 pilots and field trials, which it says is more than any other vendor. Karim El Naggar, head of WiMAX operations, said the firm has been converting trials into commercial contracts at a rate of two per month for the past six months.

"We are now working on WiMAX deployments with a range of fixed, mobile and convergence-minded greenfield operators, in both established and high growth markets worldwide," he said.

Alcatel-Lucent also demonstrated, on its commercial equipment, simultaneous use, in a single sector, of two MIMO downlink technologies, space-time block coding (STBC) and spatial multiplexing (SM). MIMO STBC uses spatial diversity to improve signal robustness and therefore data rate in adverse radio conditions, by up to 30%. MIMO SM increases data rates by sending different signals on each of the antennas, doubling throughput.

Motorola, perhaps the vendor with the greatest reliance on WiMAX for future success in mobile infrastructure, also makes major claims for the rate of trial and adoption of its 802.16e systems and is promising a “major breakthrough” in Europe. In the meantime, it has announced a deal with Far EasTone, one of the six WiMAX licensees in Taiwan, which aims to roll out in late 2008 and go commercial the following quarter. FarEasTone, the island state’s second largest telco, will start to build its first phase this quarter. It holds the license for for the southern part of the island, along with Vastar Cable TV Systems and Tatung Telecom, while the northern Taiwan licensees are First International Telecom (Fitel), Global On Corp and WiMAX Telecom. Far EasTone will invest T$5bn ($153m) to build its services for southern Taiwan, and about T$10bn ($306m) to build services for the entire island, (it plans to collaborate with a northern license holder. WiMAX Telecom and Vastar have already struck such a deal). It also offers HSDPA and, via its Q-Ware subsidiary, Wi-Fi coverage in northern Taiwan. Far EasTone is the only mobile phone operator to win a Taiwanese WiMAX licence as Chunghwa Telecom and Taiwan Mobile failed in their bids.

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