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WiMAX related OSS / BSS
Investments Materialize in 2009
By Patrick Kelly, October 2006
WiMAX will not have a big impact
on telecommunication software suppliers business for
at least another three years because it will take time
for handsets and CPE equipment to enter the market and
infrastructure investments will start with backhaul
and move later to support consumer broadband services.
Other factors include the scarcity of spectrum and although
WiMAX may provide a better business case for supporting
video in very dense urban areas – the economics of 3G
remain intact for providing coverage and capacity of
voice and data services in all but the most dense urban
areas.
WiMAX world was held at the Boston World Trade Center
from October 10 – 12, 2006. This was a chip and infrastructure
conference that has grown over the past two years to
~ 5,000 attendees and 150 exhibitors. OSS Observer attended
WiMAX last year which was largely a technology fair.
This year's event had more concrete business cases for
justifying WiMAX deployments. According to Motorola
the cost to build a 3G cell site in the U.S. ranges
from $80K to $190K per cell site. A “light WiMAX” build
out drops to a range of $30K to $120K per site because
of lower cost for environmental controls, utilization
of water towers and existing buildings, limited objections
from local planning boards that object to building out
cell towers.
The Sprint-Nextel nationwide mobile WiMAX announcement
in August 2006 and early success of Clearwire has generated
much more interest from the capital markets that will
need to back WiMAX early stage chip, infrastructure,
and service companies.
Despite the hype around 802.16e and the promise of mobile
broadband – DSL and cable technologies will account
for the majority of residential broadband access in
2011. And although Sprint Nextel is betting on WiMAX
for its 4G strategy, its doubtful that other tier1 mobile
CSPs will follow its lead as HSxPA deployments accelerate.
We do believe WiMAX offers a strong complement to WiFi
and 3G technologies in providing services to both business
users and consumers.
The state of the WiMAX market today can best be described
as early adopter phase. We think backhaul and muni-mesh
deployments that combine WiFI and WiMAX make the most
sense. Initial deployments can be found in Korea , Australia
, Brazil , Chile , Mexico , United States , Spain ,
France , Denmark , Ireland , and other countries.
In Korea, KT Corp. and SK Telecom launched WiBro – a
proprietary WiMAX technology - earlier this year but
the service uptake has been slow because of limited
service coverage inside the Seoul metro area and no
handsets. Korea has the highest broadband penetration
in the world and the market is viewed closely by outsiders
considering WiMAX as a competitive advantage.
In the U.S. consumer residential broadband WiMAX segment,
Clearwire has come out of the gates first supporting
fixed and mobile WiMAX using proprietary IEEE 802.16
standards. Privately held Clearwire was founded by Craig
McCaw in October 2003 and now serves 162,000 residential
consumers in 250 cities and towns in the United States
. Clearwire also serves consumers in Belgium , Denmark
, and Ireland . Clearwire operates on licensed spectrum
– 2.5GHz in the United States and 3.5 GHz in Europe
. According to Ben Wolff, co-CEO of Clearwire the company
is capturing 1 – 2 % of subscribers within the 1st year
of service for all of its markets. In 20 percent of
Clearwire's markets the operator has reached 10 percent
penetration. The CSP provides two tiers of access in
the United States – Value based plan which offers 768
kbps downlink for $30 a month and Premium at 1.5 Mbps
downlink for $37.
For OSS and BSS suppliers currently pursuing development
activities in the WiMAX market, seek out partnership
opportunities with Intel, Motorola, Samsung, Alcatel,
Siemens, Nortel, Cisco, and ZTE. Early leaders and niche
equipment suppliers such as Alvarion, Airspan, Aperto,
IP Wireless, and Navini should be pursued opportunistically
and we expect these smaller suppliers to get acquired
or marginalized by the larger NEMS as the market moves
beyond the early adopter phase.
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Highdeal Point of View
While there
is no industry consensus on exactly when WiMax will
become a mainstream option for service providers, it
clearly has the potential to be a competitive technology
to 3G (as standardized by 3GPP and 3GPP2) and to have
a major impact of the fixed-mobile market.
Industry
Benefits
There are several reasons to believe WiMAX will
have a major impact on the fixed-mobile market over
the next several years. It offers an opportunity to
provide last-mile connectivity in areas without pre-existing
physical cable or telephone networks. Since subscribers
can self-install the WiMAX terminal devices, WiMAX can
be a viable means for delivering internet access to
regions where broadband installation was previously
economically impossible. WiMax also has the potential
to create an environment where high bandwidth services
will be available everywhere. WiMax can provide different
levels of Quality of Service over the same base-station
and operators can guarantee bandwidth and low latency,
potentially being a viable means for delivering mobile
TV and quad play services. If WiMax can provide wider
coverage with better service quality at faster speed
and at lower buildout cost as many are in the industry
are predicting, WiMax has the potential to create significant
business challenges for Mobile 3G service providers.
Business
Challenges
The majority of WiMax networks are currently being deployed
by wholesale carriers who resell pieces of the networks
to smaller providers who then launch services on the
network. This system requires the support of a sophisticated
billing and settlement system on both the wholesale
carrier side to manage the network charges and on the
smaller providers' side to verify the network charges
they receive from the wholesale carriers.
Many ISP
or broadband providers are deploying new services over
WiMax networks as an alternative to internet dial-up
or broadband connection or as a way to enter developing
markets. These providers are used to offering flat,
all-you-can-eat monthly fees for their services. This
business models can offer a competitive pricing model
to differentiate their services from mobile providers,
but it is unlikely that the providers will continue
to use this pricing model. WiMax is a shared infrastructure
and if one person is always downloading movies from
the network, it means there is less bandwidth for other
users. Therefore, it does not necessarily make sense
to charge both users the same flat usage fee. Once WiMax
can offer complete mobility, WiMax providers will also
be competing directly with mobile providers who already
have developed sophisticated service packages and bundles
targeted to increasingly niche segments of the subscriber
base.
As new services
become a viable reality over WiMax, incumbents and new
entrants will need to have the flexibility, reactivity,
and capabilities to rapidly create and refine new offers
while accommodating partner settlement., If WiMax can
deliver on the promise of fixed-mobile convergence these
business challenges will need to be addressed alongside
the technical challenges.
Learn
more about the Highdeal solution for next generation
service pricing, rating...
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