Five reasons why WiMax is not convincing just yet

Posted by Wolfgang Gruener

Opinion – It was about time. After months of uncertainty, Sprint’s Xohm unit was finally ready to roll out WiMax in Baltimore earlier this week. The network appears to be working as planned, but it seems that the promises made by the carrier are a bit exaggerated and there are many variables that need to be pinned down to enable consumers to make a decision whether they should subscribe to such a service or use 3G or wait for LTE instead. Right now, I believe there is very little that makes WiMax a compelling offer for the U.S. consumer. Of course, I invite you to disagree and join the discussion why WiMax is exactly what you were waiting or why you can live without it.

I still feel the burns from the dotcom bubble and the great (or not so great) ideas that were promised to change our world. Remember the Kerbango web radio? Dead. Remember 3 Com’s Audrey web pad? Dead. Remember BeOS and its BeIA operating system? Dead. There are hundreds of examples of interesting ideas that never made it – not just because they were born in the wrong time and fueled by virtual demand and venture capital, but also because they lacked a certain common sense and failed to hit the sweet spotsof the target market.

With a very critical look at the wireless market, here are my five reasons why this first WiMax network in the U.S. will does not look good.

1. WiMax is controlled by old telco interest

I may be a bit negative on this one, but it seems never to be a good idea to let an old telecommunications company take the lead in establishing a new technology, at least here in the U.S. If I am looking at how companies such as Comcast are limiting the available broadband bandwidth that will discourage the development and use of services such as IPTV, if I am considering the fact that AT&T has yet to understand the potential of the iPhone and needs much more affordable service plans and if I generally look at the lack of innovation that comes out of the traditional telco industry, I have my doubts that a company such as Sprint will be able to sell WiMax. Example: The decision to tie mobile WiMax to only one WiMax device. What exactly is the problem with supporting the same account from multiple WiMax devices?

Plus, recent communication successes such as VoIP and Wi-Fi have not been driven by telcos, they have been driven by technology that developed outside telco interest. Sure, Intel and Google have a stake in the new WiMax network, but it just a minority stake: WiMax needs fresh minds to become a success.


2. It cannot replace your cellphone, it cannot replace your broadband

What will WiMax exactly replace? Wi-Fi, in the long run, perhaps. But it is unlikely that WiMax driven VoIP will be replacing your cellphone, since it is fair to say that full global WiMax coverage is decades away. Also, it cannot replace your broadband connection at home. It is too slow to enable a generally shared broadband Internet connection at home. And it is certainly not a mobile family broadband solution as long as one WiMax account can be tied to only one device. In effect, WiMax is an addition to your cell phone and/or your broadband connection at home. Which one of the three would you give up first, if you had to? I’d drop WiMax.   

3. Price matters

Let’s be realistic. WiMax is expensive. If you don’t have a six-figure salary and have to somewhat plan your monthly budget (which most of probably have to do or at least should do), WiMax is not for you. $50 for slow broadband in the home and one supported WiMax device is pricey. In any case, the extra $30 per month for one mobile device alone adds to your broadband and cellphone bill. It may be debatable, but as an add-on to what people are used to use, $30 is expensive – especially if multiple accounts are needed. What about a $30 per month service for four devices and the whole family? And what about $9.95 per month as an option for Sprint subscribers? Sprint always said that it will position WiMax as a “value play”. I don’t see that yet.
The good news is that there is no contract requirement so you can cancel or activate the service anytime.

4. Limited coverage, Roaming

Probably the biggest downside of WiMax is its limited coverage. So you pay $30 per month for mobile broadband in Baltimore now. Big deal. By the end of the year, there may be – in a best case scenario - a couple more cities and in 2009 perhaps a dozen more. I haven’t received answers yet when the entire U.S. will be covered so that you have Internet access before you board a plane and you have access as soon as you leave it. General availability is the value proposition of WiMax and it will not deliver on that promise for a long time.
And I am not even talking about roaming. What happens when you cross country borders - and let’s just say there is WiMax available? Well, you have to sign up with that provider, create an account and choose service options you may or may not like. Why can’t it work like it does with the cellphone? And what exactly is the advantage over Wi-Fi, when you have Wi-Fi access at your place of business in other countries as well as in your hotel anyway?

5. No competition, no choice

Simple: No competition for any technology is bad. Clearwire, Xohm and other stakeholders in the company (Comcast, Intel, Time Warner Cable, Google and Brighthouse) control the only WiMax network in the U.S., while other telcos rely on advanced 3G technologies such as HSPA+, WiMAX and long-term evolution (LTE). Your choice in services and hardware will be very limited for some time and there is just no compelling product that could be considered a killer application for WiMax.

Summed up, WiMax misses the sweet spots of price, availability and convenience. If you live in Baltimore and only travel around town, I have no doubt that you will enjoy this service (if you really need Internet on the go). For everybody else, 3G and Wi-Fi are better options.

Ready to chime in? Leave me a comment below and what I may have missed.