Moto at 3GSM
The arrival of WiMAX is a tad overdue, but its exciting that the stories we are now hearing about involve build-outs, and not protocol infighting at the WiMAX forum. Based upon the number of firms we have heard about that are looking at building out neighbourhood level networks in the U.S., you have to wonder if a WiMAX overbuild is coming to parallel what we saw with all the fibre excitement in the late 90’s.
Here is a summary of CIBC Equity Research’s notes from Motorola’s 3GSM buzz:
• Huawei 3G collaboration – Motorola has seen its first two contract awards (MTNL and MTC) post the Huawei 3G UMTS/HSPA partnership and is hopeful of continued incremental traction. Motorola believes it still has an opportunity with half the market yet to select 3G suppliers – the focus is on tapping its existing 2G customer base in emerging markets (MEA, Latin America, with the MTNL win in India as an example) and with smaller carriers in North America. Motorola is currently rebranding Huawei equipment, but second generation equipment will be based on the joint R&D efforts.
• Ties to TD-SCDMA – Motorola and Huawei have also teamed up on 3G TDSCDMA as well, giving Motorola an entry point into this “home grown” 3G technology in China and an opportunity to leverage past relationships. Although branded Motorola, the TD-SCDMA equipment is not part of the joint R&D effort and doesn’t include Motorola IP. Motorola will act as a reseller in this area.
• WiMAX out of the starting block – Motorola is moving forward with fixed WiMAX deployments/trials, with the most visible being the Sprint Nextel (SSP) deployment in Chicago and Clearwire deployment in Portland. First commercial service should be active by the end of 2007 and gaining ground in 2008. However, the company noted that mobile WiMAX has a way to go with management setting 2009 as a goal for the start of meaningful traction. The company sees a steady progress of functionality with fixed and nomadic data focused solutions coming first, voice being layered on and then full mobility. Even with a 2009 launch, Motorola sees mobile WiMAX having a developmental headstart on eventual competing LTE (Long-Term Evolution) and UMB (Ultra Mobile Broadband) technologies.
• WiMAX IP – There will be royalties on WiMAX with the WiMAX Forum spearheading the effort to keep a reasonable cap on the cost. Motorola is one of the contributors of IP to the standard, but noted that IP for this technology is much more balanced from companies contributing. Qualcomm’s (QCOM-SO) potential impact on this process (and potential incremental costs) with its OFDM IP is yet to be seen.
• What’s 4G anyway? – With the market starting to work on specs for LTE and UMB and evaluating how mobile WiMAX fits in, Motorola touched upon the commonality of the technology direction. OFDM, MIMO, and smart antennas will play a role in the yet to be defined next generation 4G solutions. Similar to WiMAX, Motorola is one of the leading contributors (Motorola indicated highest at this point) of IP to the LTE specification/development process. With LTE being a completely new technology it suggests that a vendor’s past record in 3G wireless is not a big differentiator, which suggests Motorola will compete on a level playing field with other OEMs. Motorola indicated that it is yet to make a decision on whether it will pursue LTE alone or with Huawei or another technology partner.
• 2G – Motorola’s GSM sales fell off faster than expected in 2006, but the declines have moderated. Motorola now feels better situated to match expected ASP declines with offsetting cost reductions in 2007. CDMA trends look to be flat.
• Choices – With more and more GSM carriers upgrading their networks, Motorola highlighted that in many cases WiMAX could be an effective solution. Using rough figures, Motorola noted that 60% of carriers have spectrum (such as 2.5GHz TDD) that is a good fit with WiMAX, with the remaining 40% better suited adding 3G UMTS. While not all of the 60% will go to WiMAX, many carriers are as likely to go to WiMAX as 3G UMTS. Nothing in the Huawei contract precludes Motorola from encouraging GSM customers to deploy WiMAX.
MRM
I’m not a RF engineer, but have been following the WiMAX space for over 2 years for the sole purpose of identify investment opportunities. I have to admit I am less than optimistic about the near term potential of WiMAX. I am not disputing that OFDM is an excellent RF technology and shows tremendous potential, I am more concerned with the seemingly lack of significant progress over the last few years with regards to mobility (802.16e), Tier 1 carrier trials and the certification of standardized products. Sprint’s recent contract is certainly a step in the right direction, but it is only for fixed WiMAX trials; which basically means replacing wired connections, cellular backhaul, and service provisioning to remote areas. All of these markets are currently being served by wire connections that are cheap, reliable and already in place. In short, the market opportunity for 802.16 – 2004, in my mind, is not a very attractive one.
What’s exciting about 802.16e (mobility) is the promise of high-speed mobile broadband. That is the 100B + market! That is 4G! Whether or not WiMAX is a relevant chunk of the 4G market still remains to be seen. GSM and CDMA both have evolutionary paths to 4G with HSDPA/HSUPA and 1xEV-DO/DV, respectively. This is the path the world carriers are on and will continue to be on, unless a disruptive technology comes along.
I hope the startups, OEMs and Tier 1 Carriers prove me wrong! Because we all can’t wait to be able to download music, videos, play games, make VoIP calls, and watch IPTV on our handheld devices at megabit speeds. Sprint has made the first move, but it all depends on the technology and if the Tier 1’s (NTT, KDDI, Verizon, Cingular, Vodafone, etc…) follow.
I LOVE EATING MY WORDS!!!
Vodafone ready to bet on WiMAX
Less than 10 percent of Vodafone revenues are derived from 3G services. That’s what Arun Sarin, Vodafone CEO, told conference-goers at last week’s 3GSM conference in Barcelona. Sarin also said that adopting WiMAX over LTE is a clever “bet on every number of the roulette wheel” strategy, one that eventually will allow Vodafone to dovetail into the “total communications” solution–a mantra that CEO Sarin now champions.
Vodafone’s move toward WiMAX appears inexorable. Its partners are already heavily involved with WiMAX: Vodafone subsidiary SFR in France has deployed a WiMAX network with its partner Neuf Cegetel. Vodafone network partner MTC-Vodafone recently won a license for WiMAX spectrum in Bahrain and the company is expected to bid on WiMAX licenses to be auctioned in Egypt and Saudi Arabia. Vodafone also acquired a WiMAX license in Greece last year, and is deploying a network in Malta. The company also has been testing WiMAX in New Zealand.
Kenneth Ashworth reports that Sarin intimated that Vodafone has grown frustrated with the pace of GSM development, and “thus it became evident that Sarin was urging the mobile industry to prepare for an eventual paradigm shift.” Indeed, Sarin left no doubt that he was convinced of the threat posed to LTE technology by WiMAX, saying: “The industry could be left arguing over standards while WiMAX services roll out and make [LTE] irrelevant.”
Sarin was not alone in his recognition of the impending ascendance of WiMAX. Nortel CEO Mike Zafirovski told a keynote audience at the conference that 3G was not good enough to meet wireless broadband demands. Ashworth concludes: “Time to market seems mission critical for mobile broadband technologies, and most speakers at the 3GSM conference seemed convinced that the wireless broadband crown already has been passed to WiMAX.”