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Analyst News Brief

There are many new developments in wireless these days:

  • The impact of open OS and device applications
  • Industry reaction to the proposed rule changes and Android on iPhone issue in front of the FCC
  • Development of LTE chips sets, devices and network deployment plans
  • The impact on incumbent and new operators from the rapid increase in bandwidth traffic
  • Mobile video services
  • Acquisitions, partnerships and surrounding speculation

News worth commenting on comes up often to capture our attention and serve as fodder for analysis.

We think it is good every now and then to take a step back to ask questions about the basic assumptions that are helping to shape the industry and that have significant impact on individual companies and segments of the industry. Let us review a basic claim for WiMAX.

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Business managers and industry analysts must anticipate a range of possible scenarios from favorable robust growth and market position to radical restructuring of the status quo based on feasible market and economic conditions.

Doing a what if 'brain salad surgery' extreme extrapolation can lead to a possible Armageddon business scenario for incumbent mobile wireless operators:

Why discuss disaster scenarios? The incumbents have a huge advantage: massive cash flows and market position. That also leads to volume efficiencies for networks and services. A current winning situation.


But let's face it, the American economic juggernaut has gone from one bubble to the next based on world wide expansion of markets that soak up the irrational exuberance of an ever more lofty derivative economy. Following close behind, and in some cases out-besting the walk to the edge of the economic precipice, the UK and some other economies are in equal if not more vulnerable circumstances. Consumers of goods and services have become detached from producing like value. Derivative financial instruments, the point of the pyramid scheme, create little of usable value. The ability to absorb international float that has grown into the trillions of US dollars is now unwinding, hopefully in an orderly fashion due to spending which adds to the mind boggling national debt. The economic stimulus plans, however well calculated they might be, add to the deficits and perhaps prevent some of the realignments to a less top-heavy economic structure. Only Bernie Madoff could pass off the current situation as sustainable.

So we thought we would take a leap off the edge of the cliff with this article which hypothesizes on the collapse of mobile operator revenues. Come to think of it, this has been contemplated by operators and suppliers for several years: what if the shift to IP networks and services were to result in operators becoming wholesalers of fat pipe broadband? Progress has been made to that removes some of the doubts that customers can be held to the flypaper of sticky packages and hot new devices. Nonetheless, the threat of open IP services running over the top on IP broadband leaves an uneasy feeling with mobile operators.

The Shoe is Yet to Fall for Incumbent Operators as the US Economy is Restructured:

Major international mobile telecommunications companies have developed into debt leveraged enterprises that are dependent on the huge cash flows generated from mobile phone subscription and services revenues. Debt coverage ratios that business schools would have once ruled as extremes have become the commonplace if not the norm. This has seemed tolerable given the leverage that licensed operators have in critical mobile phone service revenues.

However, much of the control over cash flows stems from control over consumer spending that in turn derives from the mobile phone ecosystem that is now changing hands from operators to the combined device-OS-apps trilogy suppliers ushered in by the Apple iPhone. But this lock-in can be viewed as a transition to a flatter open supply environment now depicted by Google Android.

Last Updated (Tuesday, 08 September 2009 03:05)

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The primary difference between LTE and WiMAX are the diffferences in upbringging: like close cousins, there are deep blood ties between the two standards, (similar frameworks of technology), but the 'families' that have raised them are different: different goals and different means. But as each group has now prepared their standards to fulfill proposal requirements mandated by ITU, International Telecommunications Union, IMT-Advanced, the two standards are seeking jobs at the same huge 'factory' - the factory of open IP unified communications.

Both WiMAX and LTE have evolved to become 'evolutionary frameworks' that are based on the same core wireless and network technologies. Many of the differences can be viewed as specializations upon that core theme:

WiMAX has its roots in the wireless broadband access industry which had used a hodge-podge of non-standard technologies. For that matter, WLAN, wireless local area networking, had been a mix of mostly proprietary approaches until the success of of the IEEE 802.11b/a standard. The IEEE 802.16 effort had been underway and produced its first version of the standard, but until the powerful semiconductors become available at low cost to enable WiFi based on 802.11 to explode in popularity, the 1st version gained little adoption, even among the developing companies.

Success in WiFi helped speed the development of chip designs and clarified what was possible to develop in WWAN, wireless wide area networks. Not alone, Flarion/Qualcomm, and companies providing mobile systems also had considered the day when it would become feasible to use MIMO-OFDM and other advanced technologies. But the 3GPP/3GPP2 efforts also considered other technologies including layering of OFDM on top of WCDMA (wonder why? ; ^).

So, when the discussion is about 'What is WiMAX (or LTE)' the answer should also include a statement that "these are two systems developing along the same lines but optimized to work somewhat differently. WiMAX is primarily aimed at Greenfield (new) fixed to mobile deployments while LTE is mostly aimed at incumbent (existing) deployments that must work with existing networks and business practices".

But you can quickly see even that is a simplification that does not completely fit the current state of development: Sprint now sells dongles with mobile devices soon to appear that will support both Clearwire's WiMAX and Sprint's 3G EVDO. And they are working on doing seamless hand-offs of voice and other communications. That will soon mean users of Google Android or other phones and mobile devices will be able to start a VoIP call on the WiMAX network and keep on talking as they travel to a Sprint or collaborating 3G network. Chips are in the works to also allow that to happen across WiMAX and HSPA/GSM.

Likewise, some LTE developers say it will be used for fixed networks as well as for mobile networks.

The next versions of both, 802.16m WiMAXm and LTE-Advanced, are being designed to meet the same guidelines for IMT-Advanced which calls for an adaptive framework that can be used from local area fixed networks to large scale mobile networks and to use multiple carriers across multiple bands of spectrum. No sense getting into the details but it is important to view both WiMAX and LTE headed to become the 'Swiss Army knives' of wireless. Should they merge? They are already on the path of converging at many levels and will eventually be practically merged.

Robert Syputa

Last Updated (Sunday, 06 September 2009 15:24)

 
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