Intel makes biggest WiMAX intervention yet with Indian alliance
Despite regulatory delays and political debates over auction rules, India is still the most promising major market for WiMAX and now the technology's greatest cheerleader and financial backer, Intel, is taking steps to ensure this potential is realized.
The chipmaker has often lent its financial clout to the WiMAX cause by investing in operators in emerging, high potential markets, either directly or through equipment deals. But its new alliance with India's largest carrier, state-owned BSNL - a significant supporter of WiMAX - is in a different league.
The partnership will see Intel, and reportedly Cisco, putting a framework in place that should enable BSNL to accelerate its roll-out, with a far higher likelihood of commercial and operational success, despite the economic and geographical complexities of the Indian territory. Intel is to review BSNL's deployment roadmap, which has started with fixed access services in 3.3GHz, but will expand to embrace mobile, nomadic and hotzone systems too, in 2.5GHz and 2.3GHz. The US vendor will help develop basic standards to underpin the roll-out and its applications, regardless of technology supplier, region or frequency band. This should reduce costs by giving all suppliers a set of standards to work to - an increasingly common tactic of mobile operators looking to reduce fragmentation in 2G and 3G - and provide a measure of future-proofing for BSNL. It should also help attract developers of attractive and region-specific software and content, by offering them common frameworks to work to.
The agreement will also help BSNL create soft interfaces for interoperability between Wi-Fi, WiMAX and the IP backbone while supporting interconnection with other Indian carriers working with Intel. As such, Intel is putting together an ecosystem of different operators and their suppliers, with itself at the heart. This should facilitate roaming and common services, the only practical way to achieve national services in a reasonable timescale, and with acceptable ROI for carriers, in a country of the size and diversity of India. By coordinating the web of alliances, Intel gives itself significant influence on how the Indian WiMAX market could evolve, as well as greatly enhancing the likelihood of widespread broadband wireless services becoming a reality, and one that appeals to consumers of many different profiles.
While the business cases for India's rapidly growing and hi-tech urban centers are not hard to make, the need for broadband is vital in its rural areas, which are inevitably harder to justify commercially. Thus the Intel partnership will focus mainly on issues such as spectral efficiency and low cost of build-out/service delivery, that are crucial to rural systems.
Intel and BSNL will also establish a proof of concept laboratory to study wireless broadband technologies including new CPE formats suited to India's markets. Finally, the chip giant launched a government/industry wireless initiative aimed at speeding the introduction of services across India. By 2012, the government hopes to link 500m citizens to the internet via more than 100m broadband connections and devices, the bulk of them wireless.
Such figures will be the lure for Cisco's reported, though unconfirmed, involvement. A broadband wireless internet system, spanning a country of the size and economic potential of India but based on a PC/IP model and technology, rather than cellular assumptions, would be a massive shot in the arm for the world view of Cisco, as well as Intel, Microsoft and others seeking to transfer the PC internet model to the wireless and mobile worlds. As in Wi-Fi, WiMAX services could well run on open networks supported by massive IP routers, and be delivered to open, commoditized devices that are not tied to any one carrier. In both these markets, Cisco and its subsidiary Linksys are dominant.
Later this year, the Indian Department of Telecommunications is to make 40MHz in the 2.3GHz band and 40MHz in the 2.5GHz band available for BWA, most likely WiMAX. In the 2.5GHz band, 20MHz has already been set aside for state operators BSNL and MTNL. The remaining 60MHz in total is to be auctioned to three or more operators. In 3G operators will be allowed to bid for one pair of 5MHz channels - 5MHz in the 1920-1980MHz frequency band and 5MHz at 2110-2170MHz.
Following the auctions, the potential for WiMAX operators to offer a full range of services will be greatly boosted if India's Department of Telecommunications (DoT) succeeds in its proposals that WiMAX licenses will carry VoIP as well as data rights.
However, the proposed new rules would come at a price - instead of calculating the BWA (broadband wireless access) license reserve price at 25% of the 3G license reserve price on a per MHz basis, the DoT has recommended that the percentage would be upped to at least 50%. Both auctions are scheduled for later this year, giving operators the potential to implement a two-tier 3G/4G roll-out strategy in different bands. However, some cellcos had been attracted to the idea of gaining low cost spectrum for high performance data services, while leaving voice on 3G, and will not welcome the increased reserve price for BWA, which could now rise from Rs505 crore ($115m) to Rs1010 ($230m).
The WiMAX Forum had previously said it was working with the Indian government to reduce the BWA reserve prices even below the current 25% level - while, of course, the cellular lobbies want parity if WiMAX carriers are to be allowed to offer voice services. "The WiMAX lobby had argued that reserve price should be lower to enable them to make broadband services affordable. If they are allowed to offer voice services also they should be treated at par with existing mobile operators bidding for 3G spectrum," a GSM industry representative told local newspapers.
Meanwhile, state-owned BSNL has become the first Indian cellco to launch 3G services, unveiling a 2Mbps free pilot service to 2,000 postpaid subscribers in the city of Pune. Video calling is already available and videoconferencing, video MMS and visual mail services will be provided in the next six months. ITI and Alcatel-Lucent are the as equipment providers for the trial though BSNL had previously said it expected to work with Ericsson on 3G. Prior to the auction, the two state operators, BSNL and MTNL, were awarded 5MHz each in the 2.1GHz band for 3G services.