Can we screw up WiMax, too?

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Can we screw up WiMax, too?

Opinion – WiMax World USA opened its doors yesterday and welcomed more visitors and press than ever before. No question, the WiMax train is gaining speed quickly. Hardware makers had, given the technology’s early state, an impressive array of devices on technologies on display that show that WiMax is real and worth the wait. So, what’s up with the headline? Read on to find out.

What can you expect from an event that is called WiMax World and that is held next to two other events in Chicago’s convention center? Not much, was my first thought, since we still aren’t hearing much about the progress of WiMax. Admitted, you can’t compare WiMax World with the major IT conferences in this country, but I was surprised that there were several hundred attendees, more than 250 exhibitors and a showfloor that was, at times, packed like the Oktoberfest.

The message from WiMax World is that WiMax is real and that the hardware exists. We already knew about Intel’s Echo Peak Wi-Fi/WiMax chipset, but there were also Motorola that had its WiMax consumer modems up and running on the showfloor, Siemens Nokia had a pimped out Mini with functional WiMax gear, there were Xbox 360 consoles networked via WiMax, Samsung showed off a WiMax-quipped Q1 Ultra UMPC as well as a newer and tiny SPH-P9200 UMPC, we saw plenty of WiMax cards in various form factors and WiMax USB dongles.

Walking around the showfloor provided the confirmation that there is an industry that is indeed rapidly moving towards WiMax. From that perspective, the event was certainly the most rewarding one so far for Intel’s Sean Maloney, who is generally considered as the “father of WiMax.” The WiMax initiative has been led by Maloney and Intel since its birth in 2002 and industry observers typically attribute the success of WiMax so far, including bringing major players to one table and forming a common strategy, to him.

So it was not really surprising that Maloney appeared to feel comfortable on stage during his keynote, highlighting the WiMax work that has been done and the work that still needs to be done. “We are at the end of the beginning”, Maloney told listeners and stressed that while the finish line is in sight, “it is here where the race is won”.

Intel is still the key player in bringing WiMax to market and has defined the pillars for a successful rollout. According to Maloney, WiMax needs to provide 5x – 10x the performance over existing products in the market, it needs to run any application on the web, it needs to provide ease of use and cost needs to be structured in a way so that that the technology can be adopted globally.

On performance, WiMax appears to be delivering downlink speeds of 3 – 5 Mb/s and uplink speeds of 1 – 2 Mb/s, as well as a significantly reduced latency when compared to 3G. Also, the architecture is designed to work with IP (Internet Protocol) and therefore should ensure that WiMax devices will be able to allow access to virtually all types of general Internet content.

So, everything looks really promising so far. But there are some unknown variables that have only been addressed vaguely or not at all. They all fall mainly into Sprint and Xohm (the name of Sprint’s WiMax unit) territory: Much of the success depends on decisions the designated WiMax service provider for the U.S. will make. At least from what we have heard today, Xohm’s position is powerful enough to make WiMax an instant success or derail the immediate WiMax opportunity in the U.S.

According to Maloney, the industry “screwed up” with three other communications technologies before. While GSM, 3G and Wi-Fi technologies are successful today, there were hiccups – hiccups Maloney wants to avoid with WiMax.

For GSM cellphones, Maloney said that the technology offers great compatibility worldwide and is easy to use, but it took more than a decade to achieve these goals. The newer 3G technology brought a big step forward in terms of data capabilities, but cost, roaming and performance issues aren’t matching the promises once made. And then there is Wi-Fi, which is available at reasonable cost, good performance and compatibility; but Wi-Fi has issues with ease of us when users need to access new networks.

If we create an overlay of Maloney’s requirements for WiMax, ease of use and cost are still in limbo and depend heavily on the decisions made by Xohm and service providers around the globe.

As it stands now, the usability of WiMax will be similar to that of Wi-Fi. You can access the Internet as long as you are in the range of your main provider’s network, but you will have to sign up for a new account as soon as you transition into a network area that is not covered by your provider. This could turn into a nightmare especially for users who are traveling great distances: While Xohm says that it will only “capture” a user and its payment information once, moving between different networks means that you will have to sign for WiMax services available there and you will have to choose a pay-as-you-go plan when transitioning from one network to another (assuming you will not have a long-term subscription with multiple providers at the same time).

Admitted, WiMax will be an improvement over Wi-Fi, thanks to its greater range, and it will be not so much an issue for people staying in U.S. metropolitan areas. But, clearly, the convenience of WiMax will trail the convenience of the cellphone which adjusts to new networks automatically and does not require users to sign-up for new networks and choose a service plan for a certain time frame from a certain provider. We have heard very little about international roaming agreements so far, but it is clear that service providers will have to make roaming agreements and make WiMax roaming as easy and transparent as it is the case with the cellphone.

Cost is another concern. Intel is pushing for what it calls “30/30” – $30 hardware cost and $30 monthly service cost. Xohm’s president Barry West was very careful when answering questions referring to cost and provided not much detail. So, will the hardware be available for $30? Your guess is as good as ours, but West already said that Xohm will not be subsidizing the hardware and charge the user carry the full cost of a device.

Granted, this model will allow users will get rid of that long-term service charge, but that does not necessarily mean that the service will be cheaper. West declined to provide an idea how much the WiMax service will be priced at, but he did say that Xohm will be positioning WiMax as a “value play”. It wasn’t clear if this phrase compares WiMax against 3G or against traditional broadband services, but the executive noted that there will be tiers of services – lower speeds for less money and higher speeds for more money.

Cost eventually could turn out as a critical component with a massive impact on whether WiMax will be widely adopted or not. While Intel’s Maloney is pushing for that $30 mark and Motorola’s CTO Padmasree Warrior also stressed that WiMax access not only has to be “available on demand” but has to be “affordable” as well, West simply stated that WiMax has the “potential” to support low ARPU (average revenue per user) and declined to elaborate further on the company’s pricing thoughts.

It does not take much to agree with Sean Maloney when he says that WiMax offers a “huge opportunity within the next 12 months”. The hardware is clearly there, Sprint has sufficient 20 MHz chunks of spectrum to enable decent data throughput and the carrier is quickly building up the network to support the new technology. West said that 10,000 WiMax sites are currently in preparation, 1750 base stations are scheduled for a 2007 delivery, 20,000 antennas have been ordered and 8000 Sprint links are currently deployed. The downtown areas or Chicago, Baltimore and Washington are scheduled to be blanketed with WiMax coverage by the end of this year, with a commercial launch following in Q2 2008.

However, it is also clear that Sprint (Xohm) will have to depart from traditional business behavior of U.S. telecoms and, as Motorola’s Padmasree Warrior called it, “leave the mold of legacy” behind. West appears to hope that the performance advantage of WiMax and dropping hardware subsidies will be enough to make WiMax successful: “The horse is out of the stable and it’s running around the track, and there’s not another horse in sight,” he said. We tend to disagree: WiMax is not out of the gate yet. Xohm’s decisions will be critical to the technology’s success – or failure – in the U.S. But if players such as Intel and Motorola can convince Xohm to follow their ideas, then it isn’t unrealistic to believe that the mobile Internet can become the Internet in the not too distant future.

WiMax has without doubt the genes to change the way we use the Internet. It’s up to the industry to make use of it.