The analysis of Market for WiMAX Serviceetd.dtu.dk/thesis/...the_Market_for_WiMAX_Services.pdf ·...

Center for Information and Communication Technologi es Technology University of Denmark

Analysis of the Market

for

WiMAX Services Master Thesis

Ling Bai

Supervisor: Morten Falch

Lyngby Denmark

May 2007

Analysis of Market for WiMAX Service CICT

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Acknowledgement I would like to first give my gratitude for my supervisor Morten Falch, who has given me significant suggestions and inspections during the whole process of the thesis. It’s my first experience to write such a big project with foreign language by myself. From the form of primary idea of the subject to the completion of thesis, I really acquire much knowledge about how to organize a well-structured report step by step. I would like to give my great appreciation to my husband. He always stays beside me, encourage and sustain me when I feel tired and confused. I give my gratefully acknowledge to my parents which lives thousands of miles apart from Denmark, every week we talk about my life through the phone, and they care about my health more than care my thesis. Thanks my dear parents for your love for me.


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Abstract 2006 was a landmark year for WiMAX industry. At the beginning of this year, fixed WiMAX products was certified by WiMAX forum, and after that, more and more certified WiMAX products became available in the market. Operator and service provider thus moved from trails to service launch phase in many countries around the world. This report stands on the point when the initial launch of fixed WiMAX have been served for customers for around one year, and mobile WiMAX haven’t been released yet. Under such situation, the aim of this report is to analyze the current market business model and give appropriate strategies for the future deployment of WiMAX service. The report will give a general technical understanding of WiMAX standards first, and discuss the technology and cost comparison among WiMAX and DSL, Wi-Fi and 3G. The aim of this comparison is to find out the advantage and economical feasibility of WiMAX service. The market analysis of WiMAX service is the main part of this report. WiMAX is a new technology and there are many issues in the market need to be discussed. The report analyzes the service concepts, technology framework, organization arrangement and financial arrangement which are the theoretical representation of business model to analyze the nature of WiMAX service. Furthermore, this report also focuses on the discussion of regulatory environment. After the understanding of business model and regulatory issues, we make use of the above analysis results to plan appropriate strategies that could be used for both developed and developing market. Key words: Business model, SWOT, WiMAX, Wi-Fi, 3G, DSL, Ecosystem, Value chain, Operator, Service provider, Vendor, Strategy,


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Table of Content CHAPTER 1 INTRODUCTION ..............................................................................................................8

1.1BACKGROUND.....................................................................................................................................8 1.2 PROBLEM DEFINITION........................................................................................................................9 1.3 STRUCTURE OF REPORT......................................................................................................................9

CHAPTER 2 THEORIES AT THE BEGINNING ............................................................................... 11

---------- BUSINESS MODEL AND SWOT ......................................................................................... 11

2.1 BUSINESS MODEL............................................................................................................................. 11 2.1.1 Business Model Concepts........................................................................................................ 11 2.1.2 The Role of Business Model ....................................................................................................12 2.1.2 Business Model Components...................................................................................................13 2.1.3 WiMAX Interrelated Business Model Framework...................................................................14

2.2 SWOT STRATEGY ANALYSIS METHOD................................................................................................16

CHAPTER 3 OVERVIEW OF WIMAX TECHNOLOGY ..................................................................19

3.1WHAT IS WIMAX?.............................................................................................................................19 3.2 HOW WIMAX WORKS.......................................................................................................................20 3.3 THE TECHNOLOGY ADVANTAGE OF 802.16 STANDARDS......................................................................21 3.3 WHY WIMAX?...............................................................................................................................24

CHAPTER 4 COMPETITIVE TECHNOLOGIES ..............................................................................25

4.1 FIXED WIMAX & DSL.....................................................................................................................25 4.2 WIMAX, WI-FI AND 3G....................................................................................................................26

4.2.1 WiMAX & Wi-Fi ......................................................................................................................27 4.2.2 WiMAX & 3G ..........................................................................................................................30

4.3 ANALYSIS OF FIXED WIMAX COST AND TECHNO-ECONOMIC........................................................32

CHAPTER 5 WIMAX APPLICATIONS AND USAGE .....................................................................38

5.1 APPLICATIONS FOCUS......................................................................................................................38 5.1.1 VoIP over WiMAX....................................................................................................................38 5.1.2 IPTV over WiMAX...................................................................................................................40

5.2 USAGE SCENARIOS...........................................................................................................................41 5.2.1 Private Networks.....................................................................................................................42 5.2.2 Other Usage for Private Network ...........................................................................................45 5.2.3 Public Networks ......................................................................................................................46

5.3 USER PERSPECTIVE..........................................................................................................................48

CHAPTER 6 GLOBAL MARKET STATUS ANALYSIS OF WIMAX SE RVICE ..........................50

6.1 OVERVIEW OF WIMAX MARKET........................................................................................................50 6.2 WIMAX IN DEVELOPED COUNTRIES.................................................................................................51

6.2.1 U.S...........................................................................................................................................52 6.2.2 West Europe.............................................................................................................................52 6.2.3 Korea.......................................................................................................................................53

6.3 DEVELOPING COUNTRY....................................................................................................................54 6.3.1 Latin American and South American ......................................................................................54 6.3.2 China.......................................................................................................................................54

CHAPTER 7 THE ANALYSIS OF WIMAX BUSINESS MODEL AND VALUE CHAIN ..............56

7.1 WIMAX SERVICE CONCEPT..............................................................................................................56 7.1.1 Value Proposition ....................................................................................................................56


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7.1.2 Target Market Structure by Demographics..............................................................................57 7.2 TECHNOLOGY ARCHITECTURE OF TARGET ACCESS MODEL ................................................................59

7.2.1 Technology Framework Design of Operator’s Business Model ..............................................63 7.3 ORGANIZATION ARRANGEMENT.........................................................................................................64

7.3.1 WiMAX Industrial Ecosystem..................................................................................................64 7.3.2 WiMAX Service Ecosystem Stakeholders.................................................................................66 7.3.3WiMAX forum...........................................................................................................................68 7.3.4 Value Chain Structure..............................................................................................................69

7.4 FINANCE ARRANGEMENT..................................................................................................................72 7.4.1 Share of Investment by Providers ............................................................................................72 7.4.2 Risks for Providers ..................................................................................................................74 7.4.3 Revenue Potential....................................................................................................................75

CHAPTER 8 REGULATORY ENVIRONMENT .................................................................................79

8.1 STANDARDIZATION............................................................................................................................79 8.2 LICENSING.......................................................................................................................................82

8.2.1 Licensed Spectrum...................................................................................................................84 8.2.2 License-Exempt Spectrum .......................................................................................................85

8.3 SPECTRUM MANAGEMENT................................................................................................................87 8.3.1 Technology Neutrality .............................................................................................................87 8.3.2 Liberalization or Harmonization.............................................................................................88

CHAPTER 9 ANALYSIS OF WIMAX MARKET POTENTIAL ........................................................90

9.1 WIMAX SWOT ANALYSIS .............................................................................................................90 9.1.1 Strengths and Weaknesses .......................................................................................................90 9.1.2 Opportunities and Threats.......................................................................................................92

9.2 STRATEGIES.....................................................................................................................................95 9.2.1 Strategy for Developed Market ...............................................................................................95 9.2.2 Strategy for Developing Market ..............................................................................................98

CHAPTER10 CONCLUSION ............................................................................................................101


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List of Figure

Figure 1 the Role of Business model .......................................................................12 Figure 2 WiMAX Interrelated Business Model Framework ........................................15 Figure 3 SWOT Matrix ..............................................................................................17 Figure 4 WiMAX communication network ................................................................19 Figure 5 WiMAX 802.16 Network ..............................................................................20 Figure 6 Wireless Access Mode ...............................................................................27 Figure 7 Spectral efficiency and sector throughput comparison of HSPA, EVDO-Rev

B, and Mobile WiMAX under the same user traffic conditions ..........................31 Figure 8 Typical Percentage of Network Cost...........................................................33 Figure 9 WiMAX Deployment Cost by Demographic.................................................35 Figure 10 the Comparison of WiMAX Network Deployment Architecture and DSL....36 Figure 11 Comparison of Deployment Cost between WiMAX and.............................37 Figure 12 WiMAX Multiple Access Mode ..................................................................44 Figure 13 WSPs Access Network .............................................................................46 Figure 14 WiMAX Solution in Rural Areas ................................................................47 Figure 15 WiMAX Development by Region .............................................................50 Figure 16 Population Patterns in Rural Areas...........................................................59 Figure 17 PMP access model ...................................................................................60 Figure 18 WiMAX Mesh Network ..............................................................................61 Figure 19 Hotspots Access Backhaul.......................................................................61 Figure 20 Terminal Access Mode .............................................................................62 Figure 21 CPN Access Mode....................................................................................62 Figure 22 Possible Technology Framework of Operator/Service Provider Business

Model...............................................................................................................63 Figure 23 WiMAX Service Delivery Process .............................................................64 Figure 24 Current WiMAX Service Ecosystem Stakeholders ....................................66 Figure 25 Sprint Nextel’s Ecosystem for Mobile WiMAX in US .................................67 Figure 26 356 WiMAX Forum Member Companies in WiMAX Ecosystem .................68 Figure 27 WiMAX Value Chain..................................................................................69 Figure 28 Share of investment by Multiple Providers (2006-2008) ............................72 Figure 29 Global WiMAX Service and Equipment Revenue 2007-2012......................76 Figure 30 Climbing Revenue Potential for WiMAX Operators and Service Providers77 Figure 31 Climbing Revenue Potential for WiMAX Equipment and Chips Vendors ...78 Figure 32 IEEE 802.16 <=> ETSI HiperMAN Correspondance....................................79 Figure 33 CPE and End User Device Standardization Roadmap ...............................81 Figure 34 2 to 6GHz Centimeter Bands Available for BWA .......................................82 Figure 35 WiMAX Primary Deployment Bands..........................................................83 Figure 36 Compare between Liberalization and Harmonization................................88


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List of Table

Table 1 IEEE802.16 Standards Main Track ............................................................... 22 Table 2 Comparison of 802.16x and 802.11 .............................................................. 29 Table 3 CAPEX and OPEX Assumptions for WiMAX Network Deployments ............. 34 Table 4 WiMAX Application Services ....................................................................... 38 Table 5 WiMAX Usages Scenarios ........................................................................... 41 Table 6 Advantage of licensed and license-exempt solutions .................................. 86 Table 7 Strengths and Weaknesses ......................................................................... 91 Table 8 Opportunities and Threats........................................................................... 93


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Chapter 1 Introduction

1.1Background

Today’s life is being changed step by step very thanks to the evolution of telecommunication industry. Internet, broadband and mobile technology has become the part of daily life that people can not live without. The requirements of portable, mobile and high speed connectivity are increasing rapidly. Services such as wireless VOIP, IPTV, streaming media and interactive gaming need to be supported with broadband access. 3G has been serving mobile market for some years, and it is still an expensive voice service and lacks the strong capacity to support data service. At present, significant mobile operators, service providers and other actors in telecom industry are looking for the way to build up high speed but cost-effective broadband wireless access (BWA). The user demands of broadband wireless access service with high speed, low cost, and flexible mobile connectivity has been increasing dramatically. Current access mode generally includes DSL fixed access, Wi-Fi fixed wireless hotspots access and 2G/2.5G/3G wireless mobile access. The emerging of WiMAX has become another remarkable access technology which could provide both fixed and mobile connectivity through high performance system. This technology shows us a seamless communication world; at least, we are heading towards this direction. WiMAX technology could provide “Last mile” solution, which might end the monopolization station of DSL and Cable access mode, because WiMAX could provide well fixed wireless broadband access as good as or even better than DSL and Cable mode. WiMAX has been regarded as the next milestone of BWA (broadband wireless access) technology. It does not only provide fixed access, but also provides mobile access just like 3G does. It has also been considered as the complement or even the replacement of 3G applications. WiMAX shows great advantages over the technologies in current wireless and mobile telecommunication market. In recent two or three years, WiMAX has become one of the hottest topics in telecom industry. The absorbing specification defined by IEEE802.16 has been attracting around four hundred market actors to form WiMAX forum to prompt the development of this technology. WiMAX rises up competition with other adjacent technologies such as Wi-Fi, DSL and 3G. WiMAX and all others are more or less the same from technology and market aspects. Whether their relationship should be opposite against each other or coexisting is an interesting topic, which is worthy of a discussion.


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1.2 Problem Definition

WiMAX is a suit of wireless standards that covers both fixed and mobile communication fields. Nowadays, it becomes one of the hottest topics among telecommunication world due to its strong ability to offer solutions in wireless DSL, last mile, and backhaul services. The objective of this report is to analyze the current market status and predict the future of such technology from a commercial angle of view. The evolution process of WiMAX contains innumerous features from either technical or market aspect. Because of the limitation on time, the scope of our discussion in this thesis is confined to focus on the following five questions: What is WiMAX and its advantage over competitive technologies? How is its current market status in developed and developing countries? What is an appropriate business model to describe players within WiMAX world? What would be the proper strategy to explore market potentials in the coming future? How is the regulatory environment around it?

1.3 Structure of Report

To answer the questions in problem definition, this report uses ten chapters to discuss related topics. A methodology research will be presented at the first part of chapter 2. So that readers could have the background knowledge about the principle of business model. After that, this chapter focuses on the introduction of a strategy analysis tool – SWOT, which we will use in Chapter 9 to analyze WiMAX market players. Chapter 3 presents general technical discussion of WiMAX standard, which will focus on different features of profiles. The chapter is targeted to offer readers a rudimentary understanding of this technology for further discussion about the development inside WiMAX technology and emerging hotspots. The comparison of related and competitive wireless technology in chapter 4 is very important for analyzing the future development of WiMAX. Without which, we will lose the whole context and have no clue about its weakness and strength. The intuitional and transverse distinction between current wireless technologies and WiMAX will be put into this part. The comparison comes from different aspects, including performance, billing, cost, deployment period, licensing, and so on. At the same time of showing the difference, similarities between these technologies will also be discussed. Chapter 5 will address on the business applications of WiMAX services in the wireless communication market. It will present to readers with both the launched applications and the developing ones. Through discussion, the chapter presents readers with the answer to questions like what kind of services can be delivered by WiMAX, and which applications could exhibit the advantage of using such technology. Together with Chapter 2, this chapter will cover all the indispensable background information for


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latter research. At the last part of this chapter, we will discuss about the target user groups, which includes both existing subscribers and the potential users. Chapter 6, to research the market potential of WiMAX, it is necessary to analyze the current situation in the global market under the international environment. Due to dissimilar economical environment, the discussion is conducted in two tracks – one for developed country and one for developing country. Chapter 7, in this section we will emphasis on the analysis of WiMAX business model. It includes service value proposition and the analysis of different service delivery model for WiMAX operators. The core part in this chapter is the analysis of WiMAX industrial ecosystem and value chain structure. Meanwhile, we will discuss the main supplier and operator’s strategy, as well as their plan on WiMAX technology. Chapter 8, there are always governmental regulations in the communication industry all over the world. In this section we will analyze WiMAX regulation in different regions around the world, in order to know the attitude of government and related public entities for this emerging highlighted new technology. In this part, some typical cases will be chosen to study. The discussion involves many related topics such as licensing issues, spectrum distribution, positioning, government support, main operator attitude, situation of country, and so on. Chapter 9, in the first section, the analysis of market potential is performed based on the method of SWOT. Strengths, weakness, opportunity and threats of WiMAX service will all be put into consideration one by one. In the second section, we will discuss the market strategy of major players in different regions, according to the above four aspects. Readers will see how WiMAX, as a new technology, could impact the wireless broadband market in the future and how it could evolve with other competitive technology. Based on the discussion in the above nine chapters, we would conclude our findings in chapter 10.


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Chapter 2 Theories at the Beginning

---------- Business Model and SWOT

2.1 Business Model

2.1.1 Business Model Concepts

In the procedure of business operations, there are several critical factors that determine the success of daily business. Such factors include capital, human resource, produce, market, business model, technology and trade. Among all the above factors, business model plays a more important role than all others. It is often used to describe the key components of a given business. Business model is concluded and created base on many daily business operations, and it is the representation of business operations facts. The term of business model has been emerged since 1950s,1 and becomes more and more important in competitive environment of nowadays. Single version of business model does not exist, since it has been defined in many different ways. The main idea of business model refers to a conceptual system that contains a set of components. Paul Timmers (1998) has defined business model as “The description of business logic which includes the organization of product, service and information flows, and the sources of revenue and potential benefits for suppliers and customers”.2 According to Timmers’ definition, a business model should also describe the business actors, their roles, their potential benefits from the business model and the relative revenue stream as well. Business model does not only suit for single firm to measure and evaluate its business operations, but also fits the way that multi related companies cooperating together to create value, capture value and share profits from offering different types of service to the customers. All these interrelated companies achieve economies of scale by form of industry chain and value chain system. The goal of business model is to get more profit for company with regular organization of business factors. In nowadays environment of information economy market, the emerging of Internet, e-commerce and mobile technology changes the traditional way of business operation into a new way, with which more businesses operate and generate profit through Internet as new intermediate. The situation of business model has become much more important than ever because of the impact of virtual media. The competition is no longer face to face between companies. Instead, the competition of business model 1 “Business model” http://en.wikipedia.org/wiki/Business_model 2 “Business models for Electronic Commerce” by Paul Timmers (1998), Journal on Electronic markets


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becomes the mainstream for advanced economy growth. It’s safe to say that a successful business must have a successful business model behind.

2.1.2 The Role of Business Model

Business model plays the role of intermediate between technical domain and economic domain. As we all know, the technology innovation could bring with a certain value. Then, to transfer such technique input into scaleable value of economic output benefit, you have to rely on a proper business model. Business model describes how company create value in the marketplace, and it can be regarded as a construct link between these two domains. The relationship of these three domains is shown below:

Figure 1 the Role of Business model3

Source: By Henry Chesbrough and Richard S. Rosenbloom--Harvard Business School

Undoubtedly, technology advantage is a strong support for the development of company, but the company could hardly keep profitable continuously if it can not get support from a proper business model. Successful business model depends on three preconditions. First, a good business model should provide unique value with one or more strong points that are different from others. Secondly, it shouldn’t be easy to copy from competitors at least within short periods, so that the business built on such model could stand there steady. At last, a successful business model should be based on real life practice without any exaggerated drawings. Business model is closely related to innovation. Business model innovation offers major financial and business benefits, including operating cost, reduction and flexibility to respond to changing market demands4. A successful business often needs an innovative business model as much as innovative product offering. Innovation could conduce to differentiation competition which is very much needed for the company. It is the way that company could extend the value of product or service to create new opportunities and increasing profitability. 3 Henry Chesbrough and Richard S. Rosenbloom--Harvard Business School 4 “ The components of business model” by IBM


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Business model keeps changing across industry combination and technology evolution by the innovative economy and network economy. Network economy brings more opportunities and competitions to market players. The precondition of company survival does not depend on single technology or product any longer, while, it should make use of group power and have good sense of business model. Business model is distinctive from business plan and strategy. Sometimes it is difficult to distinguish them since they have very close meaning. Business plan is a preparation of how the business or organization intends to present their value to customer. It is often used inside the company and sometimes kept confidential before launching a certain product of service. If business model belongs to the model-world, then business strategy is in the real-world. Business model is an abstract representation of some aspect of firm’s strategy, and it come first than the others.

2.1.2 Business Model Components

Chesbrough and Rosenbloom(2002) have made an in-depth analysis for business model which is widely adopted by market researchers. They think the analysis of business model for a given firm should closely reflex with its strategies. They defined business model into six components, the identification of value proposition, the partition of market segments, the analysis of value chain structure, the description of revenue acquirement, the extension of partnerships and the competitive strategy analysis. These components depict the major aspects of business model and effects on the eduction5.

� Value Proposition

Value proposition is the offering of value. The company provides product or service which could satisfy certain needs of customer, or solve certain problems. This identifies the practical significance of a company to the customer. To achieve this goal, the company should make clear about what the product is, who should buy the product, and why the certain product is surely useful. Customers could estimate a certain technology by using its products. And they have the ability of creating new possibilities and solutions. Different prospective customers may desire different latent attributes of the technology.

� Market Segment

Business model must identify the market segment to answer questions like for whom and for what purpose the certain technology is going to be useful. It is the division of market by scope and the group of customers by different characteristics. The market target could be divided into much variable segmentations according to accommodation region, demography, psychology and so on. For example, a certain mobile product of service with entertainment program should put target on young people, instead of the

5 “The business model” www.quickMBA.com access on 03/11/2006


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group of customers who lack of interests in it. Especially, it should make a target of students in high school or academy, since this kind of special focus could maximize the value of the product or the service, and would ultimately generate the most benefit to the company.

� Value Chain Structure

Value chain is a value system which could describe value activities and position of firms in a value network. This value network is formed by the related entities, including the firm itself, the firm distribution channels, the firm's buyers and so on. These entities have cooperative relationship around a certain technology or application. Meanwhile they might as well compete with each other in another form at some point.

� Revenue Model

The architecture of revenue is required to be identified clearly between the value entities. The consideration should include how a customer will pay, how much to charge, and how the value created will be assigned between customers, the firm itself, and its suppliers. Revenue model covers wide options such as firsthand sale, support, renting, advertising and subscription model, and so on.

� Partnerships

Identifying the position of firm with the value network is demanded for the company to recognize where it is standing. The company should know its competitors, complementary and any network effects that can be utilized to deliver more values to the customer.

� Competitive Strategy

To build feasible and successful business model, the company should have a sustainable and competitive strategy. The business competition strategy includes numbers of existing strategy such as differentiation competition, cost-effective net, assessment of market opportunity, assessment of competitors’ relative strengths and weaknesses to increase market share. The company also could create potential strategy according to its practical condition.

2.1.3 WiMAX Interrelated Business Model Framework

Considering the speciality of ICT, the business model in this area should be adjusted to reflex the reality. Instead of following the concept in classic business model, we introduce a new angle of view, which presents ICT business in four different aspects – service concept, technology architecture, organization arrangement and financial arrangement. These four components interrelate with each other, and we are going to discuss about their relationships next. The concept from classic six components model, are dispersed naturally into each of


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those four aspects. The service concept mainly focuses on the value proposition, target user group and market structure. Organization arrangement of WiMAX focuses on the industry ecosystem analysis, value chain analysis and the strategy of actor in value network. Financial arrangement discusses about the revenue model of WiMAX market. While technology architecture includes the technology advantage design of WiMAX network infrastructure and service deliver model.

Figure 2 WiMAX Interrelated Business Model Framework6 Source: Designing business model for mobile ICT service

The main framework of business model describers the key components of a given business by inter-relationships influence of different entities from value network. A viable and feasible business model should always deliver value to customers as well as to all other participating actors in the value creation system.7 Finally, the created value will be delivered to customers, and service provider could also obtain a certain profit from the cooperation with network operator. Service concept: service concept design aims to present “value proposition” to the customer or end users. The provider intends to deliver a certain value proposition which customer or end user expects. The other objective of service design is the nature of innovation. This kind of innovation in one way refers to the service which builds on top of existing old version service, which is the evolution and optimization of old service. Another way is a brand new service with one or more revolutionary elements. Technology architecture: Technological architecture describes the fundamental infrastructure of technical system, which is needed by the companies to deliver strong technical background at service design phase. Organization arrangement: Organizational arrangement presents the value network 6 The paper from “16th Bled Electronic Commerce Conference eTransformation” Bled, Slovenia, June 9 - 11, 2003 7 “developing a dynamic business model framework fro emerging mobile services” by Björn Kijl


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which could deliver a certain service by good-relationship cooperation between each other. The value network may consist of many different actors. These actors have certain resources and capabilities, and could carry out their own strategies and goals through the organizational arrangement. Financial arrangement: financial arrangement exhibits the financial arrangements between different market players in the value network. The set of finance arrangements between different markets actors may includes how profit, investment, cost, risk, and revenue sharing are arranged8

2.2 SWOT Strategy Analysis Method

Here we review the theory of SWOT analysis approach to provide a background to WiMAX SWOT analysis in the later chapter. SWOT is one of the most straightforward methods often used to analyze business strategy. The decision-makers could recognize organization’s environment from both internal and external point of view by analyzing the important aspects. SWOT is an acronym for “Strengths, Weaknesses, Opportunities and Threats”. This method was originated from the course study of Harvard Business School in 1920s and widely discussed as major strategic thinking since 1960s.9 SWOT analysis groups four aspects into internal and external environment analysis. The analysis of internal condition focuses on the strengths and weaknesses of organization, while the analysis of external condition aims to seek the opportunities and threats around the entity.

� Internal Analysis

Strengths: Strengths refers to the factors of the organization’s resource, capabilities and core competency which could strongly sustain the development of organization. The description of all these positive factors could understand the firm self’s advantages. The strengths could be for example:

• Have good reputation among customers • Advanced technology infrastructure and good performance of products • The well-design of product and cost-effective of certain application

Weaknesses: The absence of strengths could be regarded as weaknesses. The weaknesses should be discovered by honest and realistic consideration, which could include points like:

• Lack of the well-cooperation team in the organization • The disadvantage technology of certain product or standards • The limitation of the human resource and close management model

� External Analysis 8 “Heterogeneous network and services” by Su-en tan at CICT of DTU 9 “SWOT” by www.quickmba.com access on 11/11/2006


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Opportunities: They exist anywhere, anyplace even anytime of market under the influence from network economy. Finding an opportunity directly equals to having newly increasing point of business. These external points could be:

• Arrival of a new technology • An exciting government policy coming out • The increasing demands of customer

Threats: There are various threats existing in the competition marketplace. The recognition of threats could help the organization avoid risk and constitute corresponding strategy. Threats could present as:

• Closely technology performance of product • New competitor joins in the market competition • Changing of customer requirements

Once all these factors are identified, formally, it should fill in the SWOT matrix shown as figure 3. The SWOT Matrix could help to organize and distinguish them in a form as show in figure. From the Matrix we could see there is one type of strategy for each pair of internal and external aspects.

Figure 3 SWOT Matrix10 Source: QuickMBA.com S-O strategies: This strategy focus on the goals to take advantage of the strengths to aggressively pursue the opportunities which strengths and opportunities can be utilized at their maximum to build success of business. W-O strategies: This strategy could help actors focus on how to overcome weaknesses by use of opportunities. S-T strategies: identify ways that the organization could use its strengths to avoid or confront the external threats. W-T strategies: Establish the defensive strategies that external threats are not able to destroy and block the development of the organization.11 10 “SWOT” by www.quickmba.com access on 13/11/2006 11 Ibid


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The aims of SWOT analysis are to reveal the competitive advantage, pursue opportunities, eliminate the threats, improve shortage and avoid risk. In the old time, SWOT is only used for enterprise to analysis and evaluates its business strategy. While nowadays, SWOT has wide usage in many areas which need analysis of strategy, such as popularization of a new product, single technology, or certain service. In chapter 9, we will apply SWOT method to analyze the proper strategies for major WiMAX market players to carry out this technology in both developed and developing countries.


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Chapter 3 Overview of WiMAX Technology

3.1What is WiMAX?

WiMAX, an acronym of Worldwide Interoperability for Microwave Access, it is a standard-based and well-defined wireless technology which could provide multiple access mode that includes fixed, nomadic, portable and mobile across wired and wireless connectivity. WiMAX is IEEE standard，developed as IEEE 802.16 standard specification technology by founding member of WiMAX forum12. WiMAX is both a broadband wireless access (BWA) standard, and a metropolitan access network (MAN) technology which addresses to deliver high speed, cost-effective and high quality services for residential and enterprise customers with long distance broad coverage. To meet different applications and performance demands, WiMAX specifies two classes of services, which are 802.16d and 802.16e, simply named fixed WiMAX and mobile WiMAX. The former one is designed to deliver fixed wireless connection through backbone network and IP network. Meanwhile, the later one provides mobile connectivity service for laptops and PDAs through cellular network with the same performance. The figure4 shows the communication network of WiMAX.

Figure 4 WiMAX communication network13 Source: “network architecture for WiMAX applications” presentation by Robert Healey

12 “Understanding Wi-Fi and WiMAX as Metro-Access solutions” Intel white paper 2004 13 Figure reference from http://www.apricot.net/apricot2005/slides/C5-1_3.pdf access on 10/12/2007


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Ideally, WiMAX has the capability to provide broadband wireless access (BWA) up to 30 miles for fixed stations with maximum theoretical throughput of 75 Mbps, and 3 - 10 miles for mobile stations with expect throughput of 15Mbps.14 WiMAX uses Air Interface technology to enable point-to-multipoint connectivity with the advantage of none-line-of-sight (NLOS) from the base station. WiMAX could provide "last mile" broadband connections, hotspots and cellular backhaul, and high-speed enterprise connectivity for residential and business users. WiMAX could offer various application services like wireless VOIP, data service, IPTV, streaming media service and so on with QOS guarantee. WiMAX service provider is able to operate such application in both licensed and licensed-exempt band to the end-user. For sake of the above attractive usage without the expense of string line and distance limitation of DSL, it could be the alternative to traditional DSL, Cable modem and T1/E1 class services.

3.2 How WiMAX Works

Basically, WiMAX system mainly consists of two parts - base station and WiMAX receiver. Base station is a tower which is similar to the concept of cell-phone tower that works together with a set of indoor electronics. A single WiMAX tower can provide widely coverage up to 30 miles radius at maximum, depending on the tower height, antenna gain and transmission power. Typically, the deployments will use cells of radius from 2 to 6 miles, so that the wireless node could get access within this range. The center base station is connected with a number of subscriber’s station, which is referred as customer premise equipment (CPE) receiver. The WiMAX communication network utilizing base station and CPE to build up wireless communication system are shown in figure 6. WiMAX receiver could be either installed as a small box out door of house and building, or integrated in the personal computer as memory card, or built into a laptop as the way Wi-Fi access does today.

Figure 5 WiMAX 802.16 Network15 Source: Intel

14 “Understanding Wi-Fi and WiMAX as Metro-Access solutions” Intel white paper 2004 15 Figure reference from http://9cdr.blogia.com/2005/091402--que-es-eso-de-WiMAX-.php access on 19/12/2007


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Figure5 shows the basic concept of fixed WiMAX. First, a subscriber sends a wireless access query from the fixed antenna on top of a building or using indoor CPE. The base station receives transmissions from multiple sites and sends the traffic over NLOS or LOS links to a switching centre by using 802.16d protocol. Then the switching centre sends traffic to the ISP or PSTN to access Internet. While in mobile WiMAX network, the terminal such as laptop, PDA and WiMAX phone that are embedded with WiMAX chips inside could directly receive the signal from nearest tower, and the user could be portable and move within a certain region up to 30 miles.

3.3 The Technology Advantage of 802.16 Standards

The strong system performance and high capacity depends on the advanced technology infrastructure design. WiMAX infrastructure adopted an advanced technology - OFDM which is also widely recognized as the core technology of next generation network. To understand how strong the infrastructure is and how does the underlying technologies enhance the power of the WiMAX, the evolution path of 802.16 standards can give us a good answer.

� IEEE 802.16 Standards Track

At the beginning, IEEE802.16 standard was only appointed to wireless metropolitan access network. Along with the development of broadband wireless access technology, IEEE802.16 extends the performance and transmission environment. The evolution of IEEE 802.16 standards has experienced a few phases of extension and amelioration, from initial 802.16 to 802.16a, c, d, e, then f, g, some of them ( like 802.16a,c) are already completed, while some others are being developed(802.16e) and researched(802.16f,g), here we only put our focus on two representative version - 802.16d and e16.

16 “WiMAX, opportunities and challenges in a wireless world” white paper of signals research group ,LLC. 2005


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Table 1 IEEE802.16 Standards Main Track17 As the main evolution track table shows, it is not hard to find the change of many major features. The original 802.16 standard was approved at December 2001, which aims to provide point-to-multipoint connection in the frequency bands between 10 to 66GHz. Line-of-sight (LOS) is required for transmitting data between base station and receiver. 802.16a version was approved in Jan, 200318. with the extension of 802.16. It was defined to use 2-11GHz frequency bands and unlicensed bands to build up wireless air interface system. The frequency bands could be used for NLOS transmission, and the coverage could be up to 30 miles at maximum. It enables QoS feature in MAC layer to support voice and video real-time operations. All of these features make 802.16a more valuable than 802.16 in wireless access world. And the later version was designed also based on this

� 802.16d-Fixed WiMAX19

IEEE802.16d standard is also known as 802.16-1004, based on 802.16a. Some times we call 802.16 as 802.16d. This standard was finalized on June, 14, 2004. It is the replacement version for 802.16a standard. It is by now the latest version of fixed WiMAX. The design of 802.16d is focused on fixed and nomadic wireless broadband access, on which both LOS and None-of-sight (NLOS) transmission use lower frequency bands between 2 to 11GHz. The coverage is up to 30 miles, and the transmission speed could reach up to 75Mbps. The standard is called “fixed wireless” because it uses a mounted antenna at the subscriber site as refer to CPE (customer premises equipment). 802.16d provides wireless connectivity between base stations as well as from the base station to CPE on subscriber’s site. It does not allow mobile usage, but allows portable usage to access from multiple locations, while the CPE is not fixed. The adoption of NLOS design is very useful when obstacles, such as trees and buildings, are encountered during deployment. The receiver station can be mounted on houses or buildings rather than towers on mountains. 802.16d was defined with a very strong infrastructure in MAC and PHY layer. In PHY, the 802.16 technology structure integrates both Time division duplex (TDD) and Frequency division duplex (FDD) transmission options to address various worldwide regulations, where one or both may be allowed. It adopts 256-point Orthogonal Frequency Division Multiplexing (OFDM) waveform in PHY layer to support addressing multi-path in outdoor LOS and NLOS environments to extend the transmission coverage20. The use of OFDM also could overcome the inter symbol

17 image from http://www.ednasia.com/article-278-whenwhereandwimax-Asia.html access on 12/12/2006 18 “WiMAX, opportunities and challenges in a wireless world” white paper of signals research group ,LLC. 2005 19 “Business of WiMAX” by Deepak pareek 20 Ibid


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interference in broadband communication channel. The 802.16d PHY layer was designed to support smart antenna systems. In MAC layer, 802.16d uses TDM/TDMA scheduled uplink/downlink frames to provide efficient bandwidth usage21. And another important improvement of this layer is to adopt QoS feature to support continuous grant real-time variable bit rate and non-real-time variable bit rate with best effort. QoS enables low latency for delay-sensitive service such as VOIP applications, and optimal transport for Variable bit rate (VBR), for example, video applications.

� 802.16e-Mobile WiMAX22

The IEEE 802.16e standard is an amendment to 802.16d base specification. It makes a target of the mobile market by supporting portability and full-scale mobility for mobile clients with IEEE adapters to connect directly to the WiMAX network. Mobile WiMAX standard was ratified in 2005. WiMAX forum has conducted the second plug test of mobile WiMAX on Feb, 200723. Some of the equipment vendors like Intel are developing relative products right now. So it will not take so long before we can find this application in the market. 802.16e offers mobile wireless broadband service as well as fixed wireless service. It works on 2-6GHz licensed frequency bands which are appropriate for mobility usage. But the transmission speed is around 15Mbps with maximum coverage around 3miles radius. Compared with 802.16d, this version has lower transfer rate and shorter coverage as the cost of mobility. 802.16e is expected to be backwards-compatible with 802.16d since the infrastructure design of features is based on 802.16d system. These two standards have similar PHY layer infrastructure. The main difference between 802.16d and 802.16e is that 802.16e extend the OFDM to Orthogonal Frequency Division Multiplex access (OFDMA)24 to be able to assign some sub-carriers to different users, in order to carry out efficient usage of bandwidth resources and improve the system capacity. OFDMA supports both TDD and FDD operations and also enable QoS mechanism. On the other hand, OFDMA could adopt Multiple-input multiple-output (MIMO) for foundation infrastructure. MIMO refers to the use of multiple antennas both at the transmitter and receiver. It significantly increases in data throughput and link range without additional bandwidth or transmit power25. Moreover, an improved version - scalable OFDMA (SOFDMA) is introduced to 802.16e as well. It is a multi-carrier modulation technique that uses sub-channelization to achieve even higher spectrum efficiency in broad channel and lower cost in narrow channel, while holding the same anti-jamming and mobile ability as OFDMA.

21 “Business of WiMAX” by Deepak pareek 2006 22 Ibid 23 “WiMAX” http://en.wikipedia.org/wiki/WiMAX & the news of wimax froum. 24 Ibid 25“MIMO”, http://en.wikipedia.org/wiki/Multiple-input_multiple-output_communications#History_of_MIMO access on 03/01/2007


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3.3 Why WiMAX?

Besides the technology advantage of WiMAX that has be discussed, I would like to present below some other factors for the emerging of such technology. First, DSL and cable mode access is extremely expensive for current and potential subscribers. It is highly costly and time consuming to set up connections by laying the land-based facilities to exurban or backland. Moreover, the deployment speed is very low with high investment venture and limitation of terrain. WiMAX can be applied as a better choice. Low cost and easy deployment of WiMAX are considerable features for most of wireless operators. On the other hand, the emerging of 3G has shown great advantage to mobile communication market for providing personal voice and data service to customer through mobile phone. But the development situation of 3G is not ideal as we expected. The majority of services are still concentrated on voice and SMS applications. One of the reason is that 3G is not enforced in providing high speed data service. WiMAX can support very high bandwidth solutions with various spectrum deployment choices. Third, Wi-Fi application has been serving wireless broadband market for a few years and has been widely spread around the world, due to the feature of low cost and easy deployment. But Wi-Fi aims for the connectivity in local area network. It has limitation of coverage to support long distance services. It could only transmit data up to a few hundreds feet. WiMAX provides wide range coverage and quality of service (QoS) capabilities for applications. One of the reasons that we should pay attention to WiMAX is that it gives an answer to mobile applications. It provides broadband wireless access in metropolitan area which fills the gap between wireless wide area network (WWAN) and wireless local area network (WLAN).This allows operators to have special market segments for WiMAX, for instance, the wireless broadband access service in rural area as an alternative of DSL and cable modem. At last, it is a trend of telecommunication industry, rather than a technology that presents at the market transitorily, because of the strong backing of WiMAX forum, which is formed by around 400 market players. The dedication of many market actors brings in tons of opportunities to this both now and in the future. All this factors promote the development and emerging process of WiMAX.


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Chapter 4 Competitive Technologies

4.1 Fixed WiMAX & DSL

In fixed broadband access area, the emerging of WiMAX becomes a strong competitor of DSL access mode. WiMAX is also considered as wireless DSL. It is wireless broadband wireless access solution that offers not only high performance and cost-effective wireless broadband access service to customers, but also an influential revolution that could solve the “last mile” access problem. DSL (also called xDSL) refers collectively to all types of digital subscriber lines. Two main categories are ADSL and SDSL. DSL delivers high-speed broadband Internet access using existing copper telephone line which has already been widely installed in millions of homes and office buildings26. Comparing WiMAX and DSL technology, both have advantages of themselves. From access mode point of view, DSL is used for wired broadband access only, while WiMAX focused on the wireless broadband access. Free from wire, as a common advantage of wireless technology, WiMAX provides easier solutions for deployment and maintenance than DSL does. Meanwhile, the system benefits from the scalability of OFDM, which allow providers to dynamically reallocate spectrum based on the number of subscribers. DSL is difficult for upgrade for sake of the complex infrastructure and high expense. As a result, new coming fixed WiMAX service providers could consider to deploy WiMAX system to the place where lack of the fixed telephone line. First, from the coverage range point of view, DSL can only cover farthest range of 2,3mile27, and WiMAX enables access connectivity up to 6 miles. All the users within one sector share the same data transfer rate in WiMAX, whereas, every user could get their bandwidth exclusively in xDSL. As a result, when there are huge number of users, xDSL could supply a better performance than WiMAX. WiMAX is an appropriate technology to install at rurban area or remote villages where DSL has difficulty to reach by high expense and long term deployment. It only needs just a few wireless base stations and some small CPE mounted on the building or home to provide coverage in the surrounding area. Second, from cost point of view, before we compare the solutions in wired and wireless broadband for the cost of “the last mile”, one thing we need to know about is how the last mile is supplied in DSL and cable Internet. Take DLS for instance, it is supplied in manner of ADSL, which could be transmitted on traditional telephone

26 “DSL” http://en.wikipedia.org/wiki/Digital_Subscriber_Line access on 03/12/2006 27 Ibid


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network. Telephone network posses a vast number of users in developed region. Also, in developing region, the popularity of telephone connections is relatively high. But, the qualities of network at some places are not suitable to support ADSL. Take cable Internet for example, it utilizes the basic infrastructure of cable TV, which most developing regions are lacking in. The newly installed broadband Internet would take more effects in developing regions than in developed ones. However, even though there are fundamental infrastructures to support wired broadband, the optical fibers are still needed to be laid down to achieve a high speed Internet. The major cost of the last mile is deployment of fibers. If we take laying down new fiber for an instance, we need to setup fiber from access point (PoP) to the end user. In such circumstances, PoP might be digital subscriber line access multiplexer (DSLAM), ADSL or cable Internet hub. The cost of laying fiber includes two parts: one is the cost of fiber itself, another is the cost of installation, which is consists of labor and construction costs28. The above cooperation shows that WiMAX seems to present more advantage than DSL. WiMAX could provide wireless access service to subscribers with high speed and large coverage range just the same as what customer can get from wired access model. On the other hand, DSL technology is based on the existing copper telephone line. The wired technology could ensure the security of data transmission and keep always-on connection with good copper line condition of transmission channel. The transmission quality of wireless technology highly depends on the strong or weak of signal in uncertain transmission channel. Also WiMAX is a new technology, it needs the participator to spend time in order to improve its power and overcome some performance barriers. Anyway, WiMAX absolutely hold the opportunity to struggle with DSL especially in developing country. Once the WiMAX technology gets more and more matured with fast cost descending, it will become the biggest threats of DSL.

4.2 WiMAX, Wi-Fi and 3G

WiMAX, Wi-Fi and 3G can be regarded as three different types of wireless access technology according to the coverage area of data transmission as shown in figure,

28 “ the comparison of WiMAX and XDSL” http://www.cww.net.cn/WiMAX/2007/3/60075.htm access on05/12/2007


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Figure 6 Wireless Access Mode29 Source: “Fixed and Mobile Application” by Senza Fili Consulting

Wi-Fi----Wi-Fi is Wireless Local Area Network (WLAN) technology, which enables customers to set up wireless connections within a certain local area such as home, office building, airport, etc. It only focuses on fixed and portable wireless access applications, as shown in the figure. WiMAX-----as I mentioned before, is Wireless Metropolitan Area Network (WMAN) technology that enables users to establish wireless connections between multiple locations within metropolitan area such as the connectivity between central office building and branch office, or campus. It covers all the kinds of applications by fixed and mobile WiMAX. 3G-----3G is Wireless Wide Area Network (WWAN) technology. It enables user to connect to the high speed mobile Internet through mobile device, like mobile phone and PDA. It provides ubiquitous applications and supports various types of multimedia communications.

4.2.1 WiMAX & Wi-Fi

� Introduction of Wi-Fi

Wi-Fi is the short name of wireless fidelity, designed based on IEEE802.11 standards. It is a big family with various versions, and generally refers to 802.11b and 802.11g which is widely used in the current market. 802.11b uses 2.4GHz ISM band frequency which is universally adopted by most of the countries around the world. This makes 802.11 spread rapidly and widely. 802.11b could offer high speed data transmission at a speed up to 11Mbps. There are 14 channels available in 2.4GHz with only three non-overlapping channels. It could offer coverage of maximum 300 feet in the outdoor environment and 100 feet in the indoor environment. Wi-Fi provides reliable data transmission and network bandwidth by using kinds of connective protocols and data package validations that are similar to Ethernet. The design of 802.11g version is based on and backwards compatible with 802.11b. 802.11g imported security enhancements to work at the same frequency band as 802.11b. It adopted OFDM modulation scheme technology to support the data transmission at a speed up to 54Mbps30. The standard was certified by Wireless Ethernet Compatibility (WEC) Alliance which was renamed as well-know Wi-Fi alliance in 2003. This alliance is organized by leading wireless equipment and software providers like Nokia, 3COM and so on. The initial motivation of Wi-Fi alliance is to focus the solution of interoperability challenges and testing of Wi-Fi system. Wi-Fi Alliance holds the Wi-Fi CERTIFIED logo, a registered trademark, which is permitted only on compliant equipment. Since the start of this certification in March 2000, more than 3300 types of products have

29 Figure reference from http://www.senzafiliconsulting.com/downloads/SenzaFili_CTIA.pdf access on 04/12/2007 30 “Wi-Fi” http://en.wikipedia.org/wiki/Wi-Fi access on 03/12/2007


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been granted with Wi-Fi CERTIFIEDTM31. This has strongly prompted the fully expansion of Wi-Fi products and services in consumer and enterprise market.

� The similarity between WiMAX and Wi-Fi

Both WiMAX and Wi-Fi are technologies for wireless broadband. We could consider WiMAX as a big brother of Wi-Fi. They have some similarity if we compare them with each other.Both of them are designed to run with IP network, and mainly targeted for data transmission. WiMAX and Wi-Fi standards both belong to IEEE wireless standard. Both of them are supported and promoted by the alliances which are formed by numbers of industry actors. WLAN and WiMAX alliances are promoting the development of these two standards in nearly the same way. They are addressed to handle interoperability and take prevision testing by the contribution from hundreds of members. The products for Wi-Fi and WiMAX could be respectively compliant with each other by certification procedure from these two organizations. Some members of WLAN alliance have become the member of WiMAX forum.

� The Difference Between WiMAX and Wi-Fi

The comparison (superposition) between WiMAX and Wi-Fi standard is mainly focused on the comparison of IEEE 8021.16d and 802.11a/b/g standards.

(1) Technology Difference

The first difference is transmission range. As mentioned, Wi-Fi enables connectivity in local area. WiMAX addresses on the wireless access in metropolitan area. Wi-Fi is basically designed for preferable indoor environment wireless access. While, WiMAX have both LOS and NLOS access performance, it has promised remarkable connectivity in both indoor and outdoor environment. IEEE802.16d promises to offer wide range wireless connection up to 30 miles with expected transmission rate around 75Mbps from a single station. While, 802.11g could provide a wireless access around 300feet with speed up to 54Mbps. Wi-Fi hotspots could typically reach about 1000 feet (300m) outdoor or 328 feet (100m) indoors due to the network interference. The difference is mainly because they have different design idea and technology adoption of PHY (physical layer) and MAC (Medium Access Control layer) layers. The technology adoption of 802.11 in MAC layer is not appropriate to use of long distance transmission for the WMAN environment. The bandwidth used in PHY structure has limitation of transmission power. WiMAX was defined with more robust PHY and MAC technology than Wi-Fi.32 The second difference is bandwidth. 802.16d provides wider bandwidth than Wi-Fi since it works on both licensed and licensed-exempt frequency bands. WiMAX network operator could feel free to allocate channel bandwidth. 802.16g system uses unlicensed bands of 2.4GHz frequency with a few non-overlapping channels, which

31 “get to know the Wi-Fi alliance” http://www.wi-fi.org/about_overview.php access on 05/12/2007 32 “Understanding Wi-Fi and WiMAX as Metro-Access solutions” Intel white paper 2004


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means that traffic jamming could happen if many users use it at the same time33. The third difference is number of users per network. WiMAX MAC protocol is designed to support thousands of subscribers; contrastively the design of Wi-Fi MAC protocol could only support around 10’s users according the 802.11g specification with 8-10 non-overlapping channels34. The last different point is the support to QoS. Both of the standards have defined QoS into their feature list. Wi-Fi although introduce QoS at 802.11e version, the specification is still not standardized by now. QoS is designed into 802.16 from the beginning, and has been differentiated into different service types. It is much matured in WiMAX then in Wi-Fi. Figure 13 shows the main technology feature between 802.11 and 802.16.

Table 2 Comparison of 802.16x and 802.1135 Source: by Intel

(2) Business and Application Difference

The most fundamental difference between WiMAX and Wi-Fi is that they are designed for different application mode. The idea of Wi-Fi focuses on the wireless connectivity within smaller area than WiMAX. It provides broadband wireless access for home and office local area network. WiMAX mainly is used for the service of high speed data access in both fixed and mobile environments. Wi-Fi only focuses on the connectivity of fixed wireless access.

33 “Understanding Wi-Fi and WiMAX as Metro-Access solutions” Intel white paper 2004 34 Ibid 35 Figure reference from Intel presentation


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The mobility design wasn’t introduce into Wi-Fi standards.

� WiMAX and Wi-Fi in the Future

Well, it seems that all of the discussion is praising WiMAX, actually as we know, Wi-Fi has been developed and served in the wireless market for some years earlier than WiMAX, and the application scale is much greater than WiMAX by low price and simple equipment advantages. WiMAX has referenced the design from Wi-Fi. It has extended the coverage and enhanced the system capacity. From the market and operator point of view, WiMAX couldn’t end the use of Wi-Fi. Wi-Fi market involves the benefits of many vendors. These vendors will not give up the development of Wi-Fi. From long term development landscape of wireless technology, WiMAX and Wi-Fi will coexist for a long time. WiMAX could help data transmission between Wi-Fi hotspots. But WiMAX is not able to replace the more agile but low-cost Wi-Fi, which is used at home and office. WiMAX is designed for MAN with both licensed and licensed-exempt frequency bands; Wi-Fi is designed for LAN with only licensed-exempt frequency bands. WiMAX and Wi-Fi are complementary to each other, and could be composed for an entire MAN/LAN solution.

4.2.2 WiMAX & 3G

3G network is a global digital network which contains various types of services. It integrates diversiform technology functions in mobile communication system including cellular, cordless. Personalized voice and data services are provided through mobile phone. Nevertheless, WiMAX focuses on high-speed data transmission in metropolitan area. It supports wide range of terminal equipments such as laptop, PDA and WiMAX phone by embedded WiMAX chips inside. This technology is designed to stand the place between Wi-Fi and 3G. It is not an alternative to current wired technology, and does not directly compete with current DSL and Cable access service.

� Technology Comparison

Mobile WiMAX is based on the advanced technology OFDM which is considered as the core technology of 4G. The technology offers scalability in both radio access and WiMAX network architecture; it provides flexibility of network deployment and good service offerings. WCDMA and CDMA2000 are widely used 3G standards in the current mobile communication market. To compete with WiMAX and upgrade the system performance of 3G technology, 3GPP has developed the HSDPA enhancement for WCDMA. 3GPP2 has developed 1xEVDO-Rev 0 and 1xEVDO-Rev enhancement for CDMA2000 to provide throughput improvement for data traffic36. WiMAX has some advantages to 3G, such as the larger coverage and higher 36 “A Comparative Analysis of mobile WiMAX” by WiMAX forum


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transmission speed. The transmission coverage of a WiMAX base station is around ten times of the coverage as a 3G tower. WiMAX support scalable channel bandwidth to efficiently utilize spectrum. WiMAX support smart antenna technology to eliminate multi-path propagation to offer better quality of service. WiMAX offers QoS control for each service flow over the air interface. QoS in 3G is limited to priority system on all the service flows. During heavy load period of network, high priority traffic might starve the low priority traffic in 3G, but this will NOT happens in WiMAX. The Spectral Efficiency and Sector Throughput of WiMAX are better than 3G. The figure shows the comparison of spectral efficiency and sector throughput between 3G standards and mobile WiMAX. As we can see from figure, mobile WiMAX presents the obvious advantage over the enhancement standard of 3G in both sector throughput and spectral efficiency in both downlink and uplink directions. The sector throughput or WiMAX are even 2 times better than other two 3G standards.37

Figure 7 Spectral efficiency and sector throughput comparison of HSPA, EVDO-Rev B, and Mobile WiMAX under the same user traffic conditions38

Source: WiMAX forum white paper • Market Possession Comparison 3G technologies have been serving the mobile market around many years. It was designed for the universal mobile communications. The development market is more mature than WiMAX. Especially, along with the development of WiMAX technology, the evolution of 3G standards becomes threats to the success of WiMAX. Mobile operators have present less passion to deploy WiMAX and more willingness to upgrade their 3G network which they have already spent lots on. HSDPA technology is standing on more advantage position than mobile WiMAX in the mobile market. It was launched to the market at later 200539, while mobile WiMAX are still not commercially roll-out to the market. HSDPA was depending on the strong technology and market support by the strong standard background. The change from WCDMA to HSDPA could be easily achieved by upgrading the relative software. The growth of Mobile WiMAX technology will need an uncertain period to get mature

37 “A Comparative Analysis of mobile WiMAX” by WiMAX forum 38 Ibid 39 Ibid


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after launching to the market. Mobile WiMAX and 3G will coexist for some years. These two technologies will finally get converged and integrated together towards 4G. Mobile operators could deploy WiMAX as overlay network to help 3G reduce the network congestion. They also could combine 3G and WiMAX network to offer high quality cellular backhaul service to increase user ARPU.

� Spectrum Cost and Operating Cost Comparison

Mobile operators who owns 3G network have not only spent hundreds of billion dollars on acquiring 3G operating licenses. But also, they are spending tens of billion dollars in order to operate the network. Whereas, WiMAX license fee is much lower comparing with 3G. Take example for the situation in Germany, at the end of last year, Germany government has auctioned a few WiMAX licenses to operators. The result is 360 million euros per licensee. It is quite a bargain to 50 billion euros bill spent for UMTS licenses.40 One of the advantages of WiMAX standard is that the system can work on the licensed-exempt frequency bands. This could highly reduce the initial capital expense. At the same time, high performance of system helps to lower down the deployment expenses. WiMAX network has larger coverage than 3G. One base station could transmit signal up to 30 miles, which is ten times of the transmission coverage through a 3G tower. This means broad coverage with deploying fewer base stations. Until now, there is no clear IPR (Intellectual Property Rights) policy for WiMAX standard. WiMAX IPR fee would be divided into several minor segments. WiMAX is an open standard and have healthy ecosystem. The core technology will be hold by different vendors. As benefit from the result, there would not be any vendors to monopolize the core technology and ask for a high price as happened in 3G.

4.3 Analysis of Fixed WiMAX Cost and

Techno-Economic

The fast rising demanding of broadband wireless service brings many revenue opportunities for telecom market players. To estimate whether a technology is successful or not, two factors must be taken into consideration. One is technical advantages, the other is cost issues. Big operators may firstly deploy WiMAX technology without too much concern about expense, since they have solid economic strength and pre-empt the first place in the market. However, small service providers would not take this risk for themselves unless there exists the anticipation of economic

40 “German WiMAX license auction details” by http://mobilesociety.typepad.com/mobile_life/2006/12/german_wimax_li.html access on 07/03/2007


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feasibility for such service. High-speed and wide coverage from little investment and low-cost CPEs becomes a significant attractive point to both fixed-line and mobile operators, who want to go with WiMAX.

� Cost Analysis of CAPEX and OPEX

The Techno-economic analysis of WiMAX service is to estimate the economic feasibility of such technology. We use this analysis to find out whether or not WiMAX networks are competitive with other technology and to discover the optimal technologies and systems for different environments. The main issues of techno-economic analysis that need to be taken into account are CAPEX and OPEX.

Figure 8 Typical Percentage of Network Cost41 The considerations of OPEX will probably be less than CAPEX as shown in figure. CAPEX includes both equipment and sites cost. It defines the initial deployment anticipation and directly affects the future operational benefit for operators. CAPEX for building up WiMAX system mainly includes:42

• Costs for implementation of the base station infrastructure, including site acquisition, p2p radio link equipment, antennas, modem and switch transmission control system, installation expense and so on.

• Relative equipments expense

• Indoor and outdoor CPEs

The OPEX of WiMAX related to the network roll-out includes the maintenance and administration of network elements, antenna sites, and installation costs of base stations and CPEs and so on. 43Among them, the installation of outdoor CPEs is considered as an important part due to more complex technical considerations than others during initial operations. In order to have a glancing experience about the cost, here we could make an assumption of CAPEX and OPEX for WiMAX network deployments, from the view 41 “Cost Drivers and Deployment Scenarios for Future Broadband Wireless Networks” by KTH 42 Ibid 43 “Competitive potential of WiMAX in the broadband access market” by Timo Smura, Helsinki University of Technology


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of network operator. As I have mentioned before, the network operator who intend to deploy a WiMAX network will pay more attention to the investment of initial CAPEX and the main part of OPEX. The OPEX cost issues such as billing, marketing and customer care, are not taken into account in this assumption44.

Table 3 CAPEX and OPEX Assumptions for WiMAX Network Deployments45

Source: by Timo Smura Helsinki University of Technology From the table we could see, CPE cost (300~400 €) is not the dominant part of overall costs, but the base station site construction, rental and deployment cost (around 16800€) are the major parts. WiMAX network includes two types of most costly elements, which are base station and P2P transmission link equipments. But, along with the competition of equipment suppliers and the development of technology infrastructure, these two components are expected to drop down 10%-15% per year. Especially, the price of indoor and outdoor CPEs will be reducing 20% per year due to the development of interoperability, and the fact that more and more new suppliers will enter the market to compete with each other. For WiMAX, cost is a crucial factor for network operators and service provides to choose this technology as their strategic consideration. WiMAX uses NLOS air interface technology solution and remarkable system infrastructure design to achieve the techno-economic goal. In fact, it is very new with just around one year operation. It is difficult to evaluate the real costs for overall operations of WiMAX network from operator and service provider’s database, because cost issue is regarded as somewhat strategic secrete plan for the holders, and there is no real business case available for it.

The utility design of WiMAX system varies and the CAPEX is different from vendor to vendor. For instance, the cellular operators could adopt WiMAX as adjunct overlay network service to improve their system’s capacity. The wire line operator could deploy WiMAX network outside the range of DSL or cable infrastructure. While, there are some new entrant WISPs who could establish their own service framework to attract current 3G and cable users, or provide wireless access backhaul on customer side, such as WiMAX and Wi-Fi hotspots backhaul. Different solutions determines different investment cost and capacity performance.

44 “Cost Drivers and Deployment Scenarios for Future Broadband Wireless Networks” by KTH 45 “Competitive potential of WiMAX in the broadband access market” by Timo Smura, Helsinki University of Technology


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� Cost Difference by Region

WiMAX deployment cost differs by regions. From figure9 we can see the difference of WiMAX deployment cost by different types of regions. In urban and suburban area, the high household density and many other available network and hardware resources sharing drop the deployment costs down. The deployment cost by demography is shown bellow. As we could see, for rural region, the initial WiMAX deployment costs are extremely high, since the deployment of rural area would need high density of base station to achieve high transmission and wide coverage capacity. Fewer base stations could not achieve ideal performance due to the complex landform and dispersive residential CPEs.

Figure 9 WiMAX Deployment Cost by Demographic46

� Deployment Cost of WiMAX Network Compared with DSL Like

WiMAX technology is expected to provide cost-effective and higher speed solution than DSL and Cable access service through wireless transmission network. The deployment model is different from wired infrastructure. As we can see from the figure10, we assume that the network operator is the owner for operating WiMAX service, since it is the most likely actor with solid economic power. The deployment model of WiMAX and DSL are nearly the same at service operator (or ISP) side. While the most comparable part is the path from switch centre to the customer premises place.

46 “Cost analysis for WiMAX” http://icttoolkit.infodev.org/en/PracticeNote.aspx?id=2976 access on 06/03/2007


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Figure 10 the Comparison of WiMAX Network Deployment Architecture and DSL47

Source: by Timo Smura Helsinki University of Technology

Figure10 shows an example of fixed WiMAX network structure. As mentioned, WiMAX supports PTP and PMP access model, and utilizes NLOS radio signals in the range from 2GHz to 11GHz to provide a "wireless local loop" without the needs of copper line. This feature greatly reduces the deployment cost and exhibits higher flexibility and easier maintainability of WiMAX than DSL. However, DSL has served as national and backbone broadband access service in telecom market for many years. The market and the equipment are matured enough. And the current deployment cost is less expensive than before in urban and suburban areas. The deployment cost comparison between DSL kind and WiMAX should be divided into three different areas according to demographic characteristics, which includes Urban, Suburban, and Rural. From the following figure we can see, the deployment costs of ADSL are lower than WiMAX infrastructure in urban and suburban areas where wired infrastructure exists. This is due to the low cost of DSL equipment. Moreover, existing large building in such area might block the signal transmission of WiMAX network, which means fewer base stations may not achieve as good quality as DSL access mode. This also increases the deployment cost of WiMAX.

47 “Competitive potential of WiMAX in the broadband access market” by Timo Smura, Helsinki University of Technology


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Figure 11 Comparison of Deployment Cost between WiMAX and

Wired Broadband Access Model48

While, in rural area with poor wired infrastructure, WiMAX deployment costs are equal to ADSL but lower than other wired access mode. The cost of wired broadband access not only includes copper line, but also involves a more expensive and lengthy process of trenching and cabling to target building. In a word, in areas with existing wired infrastructure and matured well-penetrated broadband markets, DSL remains to be a more cost-effective option. While, for the underserved market with poor wired infrastructure such as rural areas, WiMAX is more required for lower investment than rolling out a new wired access infrastructure.49

� Cost of License

WiMAX system could work on both licensed and licensed-exempt frequency bands. The use of licensed-exempt band could help WiMAX operators to reduce considerable spectrum expense. From the above we could see that license cost still plays an important role in the initial capital expense. The cost of licenses are various according to different frequency bands. As we know, the spectrum resources are very limited. Some congested and common use bands are more expensive than loose bands. The license fee would rise from a few hundreds million to a few billions of euros. The charge of license depends on the attitudes of government and the development situation in different country. The latest report from Pyramid research says that WiMAX spectrum costs are higher in developing market. The cost of spectrum is influenced by several factors including population characteristics, buying power of potential customers, broadband and mobile penetration, spectrum allocation and the competitive landscape.50

48 “BROADBAND in Europe for All: A Multidisciplinary Approach” - Techno-economy study, by Falch Morten. CICT, DTU. 2006 49 WiMAX: The Last Mile Winner? by Capgemini, 2006 50 “WiMAX spectrum more expensive in developing market” by http://www.cellular-news.com/story/22370.php access on 07/01/2007


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Chapter 5 WiMAX Applications and Usage

According to the specification from WiMAX forum, WiMAX supports many types of wireless broadband connections, and thus, can be used for broadband applications in public, fixed and mobile networks. It can handle the services that Wi-Fi offers, since they have similar technology infrastructure beneath. WiMAX supports smart antenna technology which utilizes frequency band in efficient manner. The typical usage that WiMAX can address involves last mile problem, backhaul and some other application for private and public network. For personal applications, WiMAX could handle VOIP, IPTV, Video conference, online gaming, and so on.

5.1 Applications Focus

WiMAX provides very high capacity of connection and at the same time supports Ethernet, IP and many other advanced protocols. The high performance WiMAX network with high QoS can be used for many real-time applications. As shown in the table, these applications include interactive gaming, VOIP, Video Conference and streaming media, for example IPTV. Meanwhile, high-speed Internet and media content download, such low time and QoS demanding services are also covered in the application range.

Table 4 WiMAX Application Services51 Source: WiMAX Forum

5.1.1 VoIP over WiMAX

VoIP application is expected to be one of the dominating WiMAX services in the future. The value proposition of VoIP is that this low-price service could immediately bring

51 “Can WiMAX address your business?” by WiMAX Forum, 2005


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benefit to most of users with voice and data connection solution. VoIP calls can be received or set up at a very low or zero additional cost for the customers. So that the service providers could get returns from the initial increasing ARPU. At the same time, to provide VoIP over WiMAX network will not challenge the voice revenues from mobile operators. 3G technology (CDMA and WCDMA) is designed to offer intensive coverage of voice communications which WiMAX is not able to substitute. However, mobile operator may move some voice traffic to WiMAX infrastructure and offer some high quality service to some important customers due to some performance limitations of 3G network capacity. WiMAX has QoS features built in mind at the time of design. As one of the most crucial sustainment for VoIP service, low latency and connection stability are well supported through QoS in WiMAX. After years of application among huge number of customers, VoIP becomes a big competitor of traditional voice services by offering the low price and good quality of conversation. Voice is transferred by this service as data package through personal broadband network or public Internet. This solution makes VoIP service provider able to avoid the high operation cost of PSTN by using the cheap resource of Internet. Through providing VoIP service, service providers could not only lower the cost but also cooperate with traditional telecom operator to enrich the content of service and get benefit from web-based voice and video control. Currently, VoIP can be transmitted via PC, IP network, laptop, and Wi-Fi handset. Although the highlighted application of WiMAX is to provide high quality data service across broadband wireless network, it is not out of expectation that VoIP service is still needed to be sustained as basic application, especially by the dramatically increasing demand of VoIP. In order to preempt the market of VOIP over WiMAX, at present, some service providers have already launched this service to customers. For instance Vonage, one of the leading VoIP providers, has started their cooperation with TowerStream, a WiMAX provider, to launch WiMAX VoIP service in some of the areas in American. The competitions with traditional telephony background are emerging. Some other operators are also attempted to offer such service in the near future. According to the report from IN-Stat/MDR say that WiMAX subscribers will reach 8.5 million in 2009, It is about 3% of whole broadband market, and among this number, the subscribers who order VoIP services will exceed over half.52 WiMAX accelerates the popularization of VoIP. VoIP over WiMAX solution is the combination of wireless technology and the low price VoIP. WiMAX provides extremely cost-effective and high-quality voice or video conversion with data service. It adopts point-to-multipoint air interface QoS as technique foundation, which supports a highly ensured low-latency network. This kind of network is the key to a successful VoIP deployment that requires the voice and video are transmitted in high quality, and at the same time, with low-latency.

52 “VOIP is the key of successful WiMAX” http://www.builder.com.cn/developer/webdevelop/story/0,3800067013,39348971,00.htm access on 02/01/2007


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Wireless VoIP network is much less expensive to set up, install and maintain at home than wired network. People could feel free to make phone call at the place where WiMAX has been covered with. Moreover, mobile VoIP is also not far away from us, which brings more flexibility and mobility. Even though there are some technology barriers that people need to solve, such as, lack of perfect network structure and reliability, security and authentication, the QoS problem in mobile environment, and so on. But it is the trend in the near future. Microsoft, Intel and Nokia, such leading companies have been attempting to develop relevant equipment, such as WiMAX phone and chips. Nokia has clearly announced that Nokia WiMAX phone will be put into production in 2008. And at the same time, WiMAX base stations will also be pushed into operation for broadband service providers. As forecasted, it could offer 2.5GHz bandwidth at the end of 2007, and rise up to 3.5GHz at the first quarter of 2008. We will witness this in the coming two years.53

5.1.2 IPTV over WiMAX

IPTV is streaming media service that could use Internet protocol to deliver digital television via broadband network. Users could use this service in a flexible manner and don’t need to accept TV program passively. IPTV includes multi mode applications such as: TV playing in the living room like traditional TV mode, Time-shifted TV or personal video recorder, interactive TV entertainment, and Video on demand application54. The quality of IPTV depends quite much on the QoS and bandwidth of broadband Internet underneath. The high bandwidth capacity of WiMAX system with least expensive infrastructure and operating cost is very attractive for service providers to set up IPTV business on it. Normally it requires around 2Mbps for compressed MPEG 4 stream to deliver standard TV program, while XDSL and cable could only provide around 1Mbps download bandwidth. The initial WiMAX products are based on a 3.5 MHz channel width, and they can be used to reach cell-specific transfer speed from 11 to 13 Mbps at maximum. With a wider range of channels from 7 to 20 MHz, 55 WiMAX could provide more channel-specific capacity, and could solve the “last mile” problem. Both of these features are just what IPTV needs. Using WiMAX technology in the future, service provider can offer a triple play of voice, video and data to their customer. Subscribers will receive converged services via a single pipe and interface with a single provider for all communication needs. So the service provider could improve customer service by easy maintains and streamline billing.56

53 “ Nokia will have WiMAX handset in 2008” http://www.phonescoop.com/news/item.php?n=1918 access on 07/01/2007 54 Reference from book “WiMAX handbook” by Frank Ohrtman 2005 55 Ibid 56 Ibid


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5.2 Usage Scenarios

WiMAX shows strong competence in various technical aspects, which indicates a wide range of usage in the coming future. The figure below illustrates many important usage scenarios which should be targeted by WiMAX operators and service providers. Different usage needs diverse aspects of performance sustentation. The high capacity, quick deployment and cost-effective characters of WiMAX system make this technology itself a better choice for cellular and WISP providers to build up high speed point-to-point backhaul transmission. This application does not need high level support such as high security and QoS due to the simple implementation. However, last mile usage needs more than backhaul. The transmission coverage of WiMAX could reach up to 30miles with maximum 75Mbps. Such wide coverage could fill the gap from switch centre to residential place. Also the high speed transmission allows WiMAX providers to deliver multi-level services to the customer. WSP access network and public safety usages need to be guaranteed from high security and WiMAX QoS feature. These two performances could highly ensure the real-time voice transmission and low latency which are required by WSPs and Public safety network. Rural connectivity is also an important target usage for WiMAX. Currently speaking, wide coverage of WiMAX could hardly be achieved by any other broadband access technologies. In the coming part, we are going to discuss in detail about private and public network usage scenarios.

Usage

Performance

Backhaul

Last Mile

WSP Access Network

Public Safety

Rural

Connectivity

Flexible Architecture

▲ ▲

High Security

▲ ▲

WiMAX QoS

▲ ▲ ▲

Quick Development

▲ ▲ ▲

Multi-Level Service

▲ ▲

Interoperability ▲ ▲ Portability ▲

Mobility ▲

Cost-Effective ▲ ▲ ▲ ▲ Wide Coverage ▲ ▲

NLOS ▲ ▲ ▲ High Capacity ▲ ▲

Table 5 WiMAX Usages Scenarios57 Source: Reference from WiMAX Forum

57 Figure Reference from “can WiMAX address your business” by WiMAX forum 2005


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5.2.1 Private Networks

Backhaul

Backhaul refers to both the connection from access point (or cell site) to switch center and the connection from switch center to core network, i.e., from a remote site to a central site. Backhaul is used to transmit data through backbone system. Backhaul network is the intermediate of telecom network infrastructure; it is deployed between access points to core network and provides fundamental connection for them. For instance: the customer intends to set up a connection to Internet through WI-FI, but WI-FI equipment must connect to service provider side for further connection. This connective role could be played by WiMAX system. By adopting such technology, service provider could cut back operating cost and provide better quality, wide range and high speed connections. There are several driving factors that could propel relative operators to move towards WiMAX. First of all, the amount of customer demands for wireless broadband and cell network is increasing progressively. WI-FI WLAN applications are kept on expanding. More and more operators need backhaul mode to enhance the interpretability. Second, WiMAX joints several base stations to one another by using high speed backhaul microwave links. This allows subscribers to roam from one base station to another in the covered range of network, like the way that cell phone roaming in mobile network. Third, the cellular operators could consider using the WiMAX NLOS connection between base stations to extend network coverage range when they intend to deploy wireless access network in bigger range. Fixed WiMAX is an appropriate choice to use for three backhaul application areas - cellular backhaul, WI-FI hotspots, and WI-FI mesh network. WiMAX backhaul have advantages like high bandwidth, long distance transmission, high speed and reasonable cost. It can provide point-to-point links with the coverage up to 30 miles. With the data rates capable of support multiple T1/E1 service, cellular operator will have opportunity reducing the cost of T1/E1 backhaul by using WiMAX equipment and build up backhaul base station traffic to their network operation and Switch center.58Another feature of WiMAX that I need to mention is WiMAX QoS feature. Cellular traffic is a mix of voice and data. The QoS defined in WiMAX is helpful to ensure the quality of voice and data transmission for cellular backhaul traffic. Wireless service providers (WSPs) could use WiMAX equipments to build wireless backhaul traffic from base station in their access network. The access network may be based on WI-FI, WiMAX or any proprietary wireless access technology.59 The benefit of using WiMAX as access network is because WiMAX system is easy to deploy and

58 “Business of WiMAX” by Deepak Pareek 2006 59 “Can WiMAX address your applications?” by WiMAX forum 2005


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cost-effective compared with high expense of DSL sort. Especially, it enables QoS which could prioritize and optimize the backhaul traffic. In USA and Europe, the situation of backhaul operation is different. Internet backbone providers lease lines to third-party service providers in order to reduce the costs of wired backhaul. There are only 20% of cellular towers are backhauled wirelessly in USA. Along with the termination of lease agreement, which will probably be passed by FCC, the cellular service providers in USA would use 802.16d wireless backhaul as an economical and high efficiency alternative, such as WI-FI hotspots and point-to-point backhaul applications60. In Europe, the local exchange operators rarely lease lines to third-party competitors. Thus, service providers must find another way to offer economical solutions. The result is that there are around 80% cellular tower in Europe adopted wireless backhaul61. The existing wired and wireless backhaul services have already hold a huge number of subscriber groups. This fact somewhat limits the needs and exploitation of WiMAX backhaul solution. But there also exist lots of opportunities, in respect that it could still play a role as an overlay network which enables mobile operators to extend backhaul capacity to support wide range of new mobile services without bring the risk to the operation of existing services. The advantages of using WiMAX as cellular backhaul are: 62

• Low cost solution than traditional wired line backhaul • Widely coverage spread and high rate of data transmission • Serve multiple cell sites • High-capacity to expand for future new mobile service • QoS feature help optimize the backhaul traffic

Last Mile

“Last mile” is a commonly recognized important portion of any types of access network, and is considered as one of the heavy part in the whole cost model. “Last mile” link is used to connect residential family and office range to special services such as TV, Internet, and telephone. In PSTN and ADSL network, for instance, “last mile” refers to the link from telephone switch office to each residential subscribers or office. In Community Antenna Television (CATV), “Last mile” refers to the link from CATV hub of certain place to home or office. For DSL, Cable or T1/E1, engineers need to lay down fiber network to achieve higher speed data transmission of “last mile” access. The deployment of fiber network is extremely expensive. WiMAX is designed from the beginning to provide “Last mile” broadband access in the Metropolitan Area Network with the competitive performance 60 “Business of WiMAX” by Deepak Pareek 2006 61 Ibid 62 Ibid


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and cost-effective to or better than DSL, Cable or T1/E1 land line service. WiMAX is easy and low cost to deploy without the burden of laying down any land lines. It is also called wireless DSL. The benefits of such type of access mode are fast deployment, zero line expenses and low price for customers. Meanwhile, the service could be delivered to remote zone and available for more customers. There are many access scenarios to solve the last mile problem. They are shown in figure12, and we will look into them one by one63. � Large and Medium-size Enterprises WiMAX system is useful for large-scale enterprises and institutions. The technology enables these organizations to interconnect with each other at several locations that spread across one metropolitan area. DSL access could typically operate at 128kbps to 1.5 Mbps speed,64 and it takes around three months or more to provide a T1 or E1 line for business customer, in case there is no broadband access in the building. WiMAX could eliminate the expensive leased-line cost of wired line service. The project mainly requires deploying several CPE and BS equipments. In the meantime, it provides as stable wireless broadband access and even faster transfer rate than DSL. In this scenario, WiMAX presents to the end user with lower cost and shorter project period, comparing with leased-line solution.

Figure 12 WiMAX Multiple Access Mode65 Source: “WiMAX application” by cyberhome.com

� Small and Medium-Sized Business

Currently, most small and medium-sized business are still limited to dialup Internet 63 “Business of WiMAX” by Deepak Pareek 2006 64 “the business of WiMAX” P106, by Deepak pareek 65 “WiMAX technology application” http://www.cyberhome.cn/wireless/tech_WiMAX.htm access on 07/01/2007


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access. This market segment is very often underserved in areas other than highly competitive urban environment. WiMAX could provide alternative DSL or cable solution with low price, high data transmission speed to meet the requirements of small and media size businesses in lower density environment.

� Wi-Fi Hot Backhaul

Wi-Fi hotspots are being installed widely around the world. WiMAX could be utilized in a cooperative way with the widely deployed Wi-Fi hotspots, in order to form a whole MAN/LAN solution. Wi-Fi hotspots are deployed at one region, and the long-distance connection between hotspots and Internet could be accomplished by WiMAX. Thus, the usage of hotspots is extended. From application and marketing angle, even though WiMAX could be used for data transmission between Wi-Fi hotspots, it could not replace the agile low-cost Wi-Fi at home and office. All in all, WiMAX and Wi-Fi complement each other to supply data access services to end users. Actually, since both are designed to transmit data through IP network, WiMAX could be easily deployed for Wi-Fi hotspots backhaul solution. The base station which connects to Internet/MAN could transmit data by air to terminal station CPE through WiMAX wireless link. Then transmit through CPE to Wi-Fi hotspot, in order to accomplish the last 100 meters coverage.

� Residential and SOHO（（（（Small Office Home Office））））High Speed Internet Access

This market segments primarily depends on the availability of DSL or Cable access. DSL and Cable are poor to build up connectivity in the rural or even suburban area. In most of developing countries, the deployment of DSL and Cable is very expensive. Less cost and high capacity of WiMAX solution will revolute the way of wired access. WiMAX operators could economically address the market segment which DSL and Cable doesn’t have an advantage of operating.

5.2.2 Other Usage for Private Network

WiMAX is a highly flexible technology that holds dramatic and various value propositions for different type of users. Many usages could be included in the usage scenarios of WiMAX technology in private network. Fixed WiMAX-like solutions could make impression in public safety. Government public safety agencies, such as police, fire, and search and rescue could use WiMAX network to support response to medical and other emergency situations. WiMAX supports QoS mechanism which could ensure the voice and video data transmission. WiMAX network not only could provide two way voice communications between the dispatch and on-site emergency response team. It also relay video images and data from site of the accident or disaster to the center control office.66 Recently, Alvarion and IBM have announced a new public-safety network deployment in Fresno, Calif. This system could allow police officers to send and receive text messages, still images and even full-motion video over 66 “Can WiMAX address your application” by WiMAX forum 2005


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a 900 MHz network using mobile data terminals and their hand-held personal digital assistants (PDAs) located in their vehicles67. WiMAX also hold the opportunities for other types of connectivity, such as campus connectivity, offshore communications, and education network and so on. The advantages of WiMAX solutions such as low cost, quick and easy deployment, high system capacity, QoS support and long range coverage have made WiMAX an excellent solution in the above scenarios.

5.2.3 Public Networks

WSPs Access Network

Wireless service providers (WSPs) could use WiMAX network to provide cost-effective connectivity with ubiquitous coverage to both residential and business customers with multiple applications. WSPs could build up public access network within certain area and provide the application for multiple places. For example, the figure has shown a possible WSPs network, which can include residential, enterprise, school and so on, sharing the same base station.

Figure 13 WSPs Access Network68 Source: “Can WiMAX address your business?” by WiMAX Forum Cellular operators could also apply WiMAX system in their network. Integrated with existing base station and billing infrastructure, WiMAX system could be utilized as an

67 “IBM, Alvarion develop public-safety WiMAX”, http://www.physorg.com/news66569755.html access on 04/01/2007 68“can WiMAX address your application” by WiMAX forum 2005


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overlay network to help cellular network to increase bandwidth and expand their market presence in their service area. For wired public access usage, DSL and cable access mode are not appropriate to deploy in developing country. The operators will spend lots of money and couldn’t get equal return. The place such as rural areas, small towns or even suburban area could be easily deployed and cost-effective.69

Rural Connectivity

The universal broadband access connectivity is even a problem in developed countries, due to the poor coverage in rural areas. Rural areas typically are defined as small city or towns that are located far from a metropolitan area. These areas are typically underserved or have not been deployed with wired infrastructure. The complex landform and physiognomy of rural area is difficult and extremely expensive for telecom operators to deploy wired broadband connection. While, wireless technology is the best choice for them from economical point of view. Other early emerging wireless access technology such as LMDS、MMDS、Wi-Fi does not offer wider coverage which is indispensable for rural environment. WiMAX solution could offer up to 30miles coverage, and the base station sectors could cover numbers of residential in town or village. WiMAX provides opportunities for many wireless Internet service providers. These big or small service providers could provide backhaul service for rural area or suburban outskirts of cities. As illustrated in the figure, the residential CPEs could receive data from subscribers or directly from the centre base station according to the situation of different locations.

Figure 14 WiMAX Solution in Rural Areas70

69 “can WiMAX address your application” by WiMAX forum 2005 70 Figure reference from http://www.netkrom.com/sol_rural_internet.html access on 03/04/2007


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Source: Netkrom Technologies The deliver of rural connectivity is critical in many developing countries and underserved areas of developed country. WiMAX QoS feature ensures the real-time voice transmission and low latency, so that WISPs can even offer VoIP service and IPTV services to the rural areas.

5.3 User Perspective

According to WiMAX specification, it has a very big user target group, since it covers both fixed and mobile access and has remarkable advantage in the communication world. The potential users could be classified into three groups: residential users, business users and mobile users.

� Residential Users

Residential users is of course the target of fixed WiMAX application, since fixed WiMAX solution could be the potential replacement of DSL and Cable mode access, and could solve “last mile” problem. Fixed WiMAX could provide basic voice service and low cost domestic and international calls, also could offer bundled voice data services. The connection speed is more than 1Mbps higher than basic dialup service.

� Business Users

WiMAX technology imports QoS mechanism to meet the highly-demanding business requirements. It could be utilized as transmission application between 2G/3G network base stations. Meanwhile, it could also be served for CPN (Customer premises network) as access service. The target on business users mainly includes enterprise, campus and SOHO,etc, subscribers. WiMAX, which connects CPN and metropolitan network, could attract large-scale enterprise users. At the same time, WiMAX system supports special lines lease service for enterprise network customers. It could build wireless network bridge to set up connection between enterprises. This solution avoids the difficulty and cost of time for laying down land lines. WiMAX could provide basic data connectivity (from dial-up to T1) for small business, advanced data services to medium and large business and also could offer rich-feature, low cost voice service, such as VOIP.71

� Mobile Users (Mobile WiMAX Only)

The emerging of mobile WiMAX makes flexible connectivity to customer who has portable equipment access to the Internet anywhere on the move. The WiMAX mobile solution enables mobile users to access Internet with high speed broadband connection on the move in metropolitan area. It could build up data connectivity for mobile workforce and internal visitors. The data transmission speed is higher than 3G service. The usage spectrum is not limited to mobile phone and PDA. The mobile WiMAX

71“WiMAX” white paper by Alvarion http://www.oecd.org/dataoecd/28/49/33864397.pdf access on 01/12/2007


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chips could be integrated in vast variety types of portable devices. Currently, Intel is devoted into the WiMAX chips development. They are focusing on the WiMAX and Wi-Fi chips which are integrated in laptops. If this becomes true, in the near future, mobile users could enjoy high speed Internet surf with Intel WiMAX mobility technology laptops, just like the way of mobile phone does.


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Chapter 6 Global Market Status Analysis of

WiMAX Service

6.1 Overview of WiMAX Market

At the beginning of 2006, WiMAX forum issued its first certificate which is used to mark products that comply with 802.16-2004 wireless standard. From then on, fixed WiMAX market starts to get rapid market growth all over the world. The investments in global WiMAX market have reached up to nearly six hundred million dollars in 2006, most of which are used for fixed WiMAX market. On the other hand, mobile WiMAX system could provide mobility solution and at the same time support fixed and portable connectivity. In year 2007, mobile WiMAX market will be rising quickly, for the reason that the operation of mobile WiMAX service could bring more revenue for operators and vendors than fixed WiMAX. The statistic of TeleGrography shows that there are more than 200 operators in the world, 72which are planning their WiMAX strategy. They are either planning WiMAX rollouts or have already deployed trial or commercial systems.

Figure 15 WiMAX Development by Region 73 Source: TeleGeography

72 “TeleGeography update” http://www.telegeography.com/cu/article.php?article_id=14034&email=html access on 27/03/2007 73Ibid


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As shown from the figure, WiMAX is rolling out all over the world. Most of the deployments and plans for WiMAX network are concentrated on developed country. It is also apparent that Asia-Pacific area presents a huge market potential by a high percentage in both deployment and applied trial. Companies in Europe and Asia-pacific have already launched commercial services over fixed WiMAX network, such as WiMAX telecom in Europe, Yozan in Japan, and Enforta in Russia. Around the world, there are 24 WiMAX networks built in the phase of commercial use. The licensed WiMAX network deployment is mainly concentrated in Europe. According to the statistical report from In-star, there are around 22.2 thousand subscribers using WiMAX network by the end of 200674.

6.2 WiMAX in Developed Countries

In developed countries, operators have represented strong passion for carrying out WiMAX network. The situation in these countries is that the density of DSL or cable modem broadband accesses has already been very high. 3G mobile networks are widely deployed in such markets. There actually exists high competition and limited market opportunities for WiMAX, but it doesn’t mean that there is no development room for WiMAX technology. It can be adopted as a complementary technology for 3G network. It is also a cost-effective wireless technology for operators which aim to provide services in sub-urban area. Besides the advantages of WiMAX standard itself, there are some reasons impacting the development of WiMAX in developed countries: First, the landscape of seamless mobile and converged network has shown the future of telecommunication industry. A big portion of considerations from operators and governments in developed countries is how to realize the connection at anywhere, anyplace and anytime. WiMAX is needed to achieve this goal, which fills the gap between LAN and WAN. It makes the idea of wireless connection with long distance and high-speed transmission become true. Second, loose regulatory policy of telecom gives operator, service provider and new entrants more opportunities to plan and deploy WiMAX network as an alternative of DSL or as potential competitive technology of 3G. The government allows technologies to compete with each other in order to optimize communication environment, and support the development of advanced and newly emerging technology by oriented policy. Third, WiMAX could work on license-exempt frequency bands. This means some small service providers can survive by offering niche WiMAX backhaul service and other applications through these bands, without the expenses of buying licenses.

74 “TeleGeography update” http://www.telegeography.com/cu/article.php?article_id=14034&email=html access on 27/03/2007


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6.2.1 U.S

The government actively opens some frequency bands to WiMAX standard in US. Some Telecom operators and service providers have started to offer or make a trial of cost-effective WiMAX service to business users and residential users. FCC has announced to open some frequency band for WiMAX standard. First they allow WiMAX standard to use 2.5GHz-2.7GHz band in 2004. One of the top 5 telecom operators, Sprint Nextel, holds 80% spectrum resources of this band after combination. It is the first company who has planed to roll-out WiMAX (802.16e) technology as their strategic plan towards 4G in 2007. Sprint Nextel cooperates with Intel, Motorola and Samsung to build up mobile WiMAX network. The company is going to invest about 3 billion dollars for launching WiMAX service in the next two years and will struggle with 3G operators in US market. They expect to implement a trial application of mobile WiMAX by the end of 200775. Wireless service provider Clearwire is another company that shakes hands with WiMAX technology. The evolution path of WiMAX service in Clearwire is distinct from sprint. Clearwire currently provides fixed WiMAX broadband access service for 29 metro market and covers more than 200 cities and towns in US. Recently the company gains 9 hundred million dollars investment from Intel and Motorola. Their plan is to use these investments to expend their fixed WiMAX network to mobile WiMAX application. In the near future, the competition between Sprint Nextel and Clearwire will become intense for mobile WiMAX market in US. In the later chapter, in form of case study, we will discuss their strategic plans and partnerships between respective actors of WiMAX in detail. So that new entrants and other operators could have reference for their WiMAX operation. The sharp motion of these two companies on WiMAX is significantly influential for the development of WiMAX service in US, and also becomes a classical reference for other developed markets such as Europe.

6.2.2 West Europe

The DSL and Cable access rate are highly similar to US in West Europe. Wired broadband market has been matured enough. Enterprise and residential users could get satisfying broadband access services, except for some scattered villages. There are very limited opportunities for fixed WiMAX to become alternative of DSL and Cable compared with the lower Internet access rate in developing country. But to achieve the goal of universal connectivity, WiMAX service has been deployed to a certain extent in some European countries. As for mobile WiMAX, the evolution of WiMAX technology quite much depends on operators' attitude. In Europe, operators seem not to be very passionate to deploy WiMAX network. Most of the mobile operators strongly support 3G since they have spent lots of money for purchasing and developing 3G licenses. It is also because 3G is national wide technology of personal network and has

75 " the deployment of WiMAX in sprint " http://news.ccidnet.com/art/1032/20070328/1047083_1.html access on 06/03/2007


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clear revenue model for mobile operators. Mobile operators are standing on the dominant position of profitable 3G operation. They would prefer to upgrade their 3G system instead of building a new network. By these reasons, the development of WiMAX market in Europe will concentrate on the fixed deployment of WiMAX network within a certain period. We can actually see this from the deployment strategy of some countries. UK has adopted WiMAX access service early in 2005. British Telecom has first started a trial in some sparsely populated areas where cable installation is difficult. After getting success, the company launched “wireless city” service which combines WiMAX, Wi-Fi and VoIP support all together, in order to provide 24 hours wireless connection in some cities. At the same time, another operator, Pipex plans a strategy for rolling out WiMAX network in some underserved areas where the access rate of broadband network is lower than the average level of UK. German Telecom has decided to adopt the similar strategy as UK, which popularize the broadband access in rural areas and build connection between WiMAX and Wi-Fi in urban areas to extend the broadband wireless connectivity. France Telecom has dissimilar focuses. The company mainly aims to provide fixed WiMAX service for medium or small enterprises. WiMAX network is deploying in other European countries as well, and mainly focuses on fixed WiMAX application.76

6.2.3 Korea

WiMAX service has been dramatically spread out in Korea. Korea Telecom should be nominated as the vanguard in this revolution. They are so aggressive about this technology that they even skip the fixed part and directly head towards launching WiBro, which is the localized version of mobile WiMAX. After that, the biggest mobile operator - SKT and the second-biggest broadband operator - Hanaro Telecom have joined with KT and build partnerships to push the spread of WiBro. WiBro is pre-mobile version of WiMAX which provides high speed transmission for nomadic and portable users and works on 2.3GHz frequency band. Currently the service could only offer wireless connectivity through laptops. In theory, WiBro service can provide 20~50Mbps throughput with mobility at maximum speed of 120 km/h77. There are some issues for the operation of WiBro78: KT actually is a large fixed telecom operator in Korea. By providing mobile WiMAX services, the company finds a fast way to join in the mobile communication competition. In fact, most of the operators who are firstly interested in mobile WiMAX deployment in Korea are fixed operators. Fixed operator considers it as the way to evade the high expense of 3G network construction. Additionally, when utilizing WiMAX, they can bypass some policy and regulations in 3G market to get more freedom of development. 76 “ the nine issues towards WiMAX” http://www.ccidcom.com/Technology/Expert/200607/13136.html access on 04/05/2007 77 “WiBro” http://en.wikipedia.org/wiki/WiBro access on 04/03/2007 78 “ The development of WiBro” http://media.ccidnet.com/art/2617/20061027/934915_1.html access on 03/04/2007


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Korea government has given some subsidy to these operators, so the monthly fee of WiBro is just a little bit higher than ADSL. This price is very attractive for some medium to high level users.79 The entrance of mobile operators into the operation of mobile WiMAX implies that WiBro is going to develop together with 3G in synergetic direction within the coming years.

6.3 Developing Country

The average of economic development in developing countries is distinctive from one to another. GDP in most of such countries is increasing rapidly by impact of dramatic development in IT and telecom industry. On the other hand, the coverage of telecom infrastructures in these countries is not balanced because of different economical level between regions. In developing country, such as South American, Latin American, Eastern Europe and some countries in Asia, many areas are underserved or lack of the broadband network. WiMAX is well-suited technology for such environment in developing countries where there exist huge bases of potential customer group that is currently served with no or limited broadband access service. Often in such countries, competitions from other technologies (such as DSL) are enervated, since WiMAX provide more flexible and economical advantages, especially fast deployable solution for these areas.

6.3.1 Latin American and South American

The development of WiMAX service has shown much forceful market potential than neighbor North American. From figure15 we can see that the percentage of subscribers in Latin American is higher than North American. In recent years, the amount of broadband subscribers increases rapidly, but the average rate of wired broadband adoption is much lower than other countries due to the exorbitant price of DSL service. For such developing countries with raising demands of broadband access, the government encourages operators to deploy WiMAX service as the way to increase the broadband access rate. In Argentina, Brazil and Mexico, some powerful suppliers such as Alvarion, Motorola and Intel have associated with local telecom companies to carry out WiMAX service in large or even countrywide region.80

6.3.2 China

China has become the second biggest economy by highly increasing GDP and the amount of consumers. Moreover, it starts to have stronger impacts on the development of world economy. Chinese operators have already started to test WiMAX in some cities. Among these operators, China Railcom is the most possible operators that will widely deploy WiMAX services at the end, since they might not be capable to get 3G

79 “ The development of WiBro” http://media.ccidnet.com/art/2617/20061027/934915_1.html access on 03/04/2007 80“Latin America first great battleground for WiMAX http://www.wimax.com/commentary/spotlight/spotlight11-15-2005mw access on 04/04/2007


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licenses finally, and would use WiMAX as an alternative. 3G licenses may be issued to China Telecom, China Mobile and China Network. China Railcom holds the most of 3.5GHz frequency bands for WiMAX81. If they are capable of getting 3G license at the end and join in the 3G operation in the future, they would locate WiMAX as the complementary network for 3G network. Otherwise, WiMAX would become their main operation network and be integrated with Wi-Fi. Other three operators somewhat are compelled to find a way out through WiMAX network, since 3G licenses have not been issued until now by the government delay . Although other operators have started to test the feasibility of WiMAX network in some cities, but they seem to be still waiting for 3G licenses. Once 3G licenses are ready they will for sure leave WiMAX behind and move for 3G. The way of developing WiMAX service depends highly on the Chinese government attitude and spectrum allocation for the operators. If the government issues 3G licenses to those three operators, and permit WiMAX to work on 3.5GHz band, then WiMAX network will somewhat compete with 3G. Otherwise, WiMAX may become the complement of 3G network.

As for equipment suppliers, Huawei and ZTE are two biggest equipment vendors in China. They support the development of WiMAX products and participate in R&D of mobile WiMAX technology for Chinese operators. Also, they cooperate with actors in other countries to exploit the market outside China to get additional experiences and revenues.

81“ The hope of WiMAX is in ChinaRailcom” http://media.ccidnet.com/art/3053/20051114/371305_1.html access on 04/04/2007


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Chapter 7 the Analysis of WiMAX Business

Model and Value Chain

7.1 WiMAX Service Concept

7.1.1 Value Proposition

The main value proposition of fixed WiMAX is “access value with flexible and economic solution”. WiMAX technology is designed to meet various access modes. These modes present flexible and optimal wireless broadband solutions for different types of users. The fundamental value proposition of fixed WiMAX does not introduce much alteration from the existing fixed broadband wireless technology, but rather highlights and extends the value of similar technology like DSL. WiMAX provides low cost potential wireless DSL solution for users in the place with underserved DSL access or zero broadband access. Currently, it mainly targets on the residential FBWA (fixed broadband wireless access) and business customers for high capacity access demands. Future more, this technology expects to deliver universal broadband connectivity. The value proposition of mobile WiMAX is the ability to access the Internet anywhere, anyplace and anytime within metropolitan area. The technology could be combined with 3G technology to enhance the capability of 3G services.

� Value Proposition in Developed Market

Actually in developed country, WiMAX can not have that many opportunities to substitute DSL access mode. The value proposition of WiMAX in these markets mainly concentrates on extending the coverage of WLAN network to metropolitan area connectivity. WiMAX provides large range wireless connectivity and high speed transmission which WLAN could not achieve for residential customer. Another focal point is for 3G users, WiMAX aims to provide extended value of 3G network by high capacity network infrastructure, thus 3G users could get access to Internet with higher speed on wide bandwidth than what the current service offers. Additional value proposition of WiMAX is that the network can provide high level and flexible services with voice and Internet bundle service for seamless customer experience and business use.

� Value Proposition in Developing Market


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The value proposition of WiMAX technology is especially to provide an economical, flexible and fast deployed solution for developing countries to improve the Internet access rate in this market. For rural area with poor access of DSL and cable, WiMAX could help end users in this area to solve the broadband Internet access problem.

7.1.2 Target Market Structure by Demographics

Demographics are the key role for determining the business viability of WiMAX service, since WiMAX is a very much global initiative wireless standard. Traditionally, demographic regions are divided into urban, suburban and rural areas. The initial deployment of WiMAX network focuses on the fixed connectivity. As mentioned many times, WiMAX could be considered as the alternative technology of DSL and Cable access mode. For this landscape application, the deployment strategies of WiMAX services highly depend on the different characteristics of demographic regions. Operators and service providers prepare appropriate and various deployment plan according to the different characteristics of region.

� Urban areas

Urban areas are the central city areas with highest density of potential WiMAX customers. In developed country, many residential buildings and commercial offices are served by universal DSL and Cable line underlying services and overlay of the mobile wireless connectivity. The deployment of WiMAX will encounter strong competition from universal DSL and Cable access service and other similar technologies. This factor can lead to excessive investment risk and low customer acquisition for operators to roll-out WiMAX service in the urban area of developed country. On the other hand, there are many individual customers and business users with various increasing requirements for mobile applications. They are willing to pay for the services which could bring additional and more advanced utilities. In these areas, WiMAX could be considered as complementary service of 3G. Mobile service is more desirable than fixed ones for these users. Wireless service providers and operators would seek to optimize their wireless infrastructure by adopting mobile WiMAX solution to achieve ubiquitous connectivity, and thus reduce their operating costs. The profit of mobile WiMAX will be higher than fixed WiMAX in this area due to multiple types of personal multimedia applications. The licensed spectrum would be a better choice to reduce the channel interference under the multi technologies coexisting environment. In developing country, many cities at medium economical level and low DSL network infrastructure make fixed WiMAX network have good potential to replace the expensive DSL access service since the high capacity of WiMAX system and fast development advantage will quickly increase the average of broadband access without large-scale civil working. It is also easy to offer low cost mobile WiMAX service based on the fixed ones. The deployment on the customer side can adopt indoor CPEs that could be flexible and easy for self-installation. On the other hand, it requires more


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of the initial CAPEX for the operators and service providers to develop WiMAX in urban areas. More base stations are needed to achieve good coverage of customer’s CPEs in dense urban areas due to the fact that high buildings and large mansions that might block the signals.

� Suburban Areas

In suburban areas, the situations of developed and developing country are similar. These areas have medium density of population and higher percentages of residential households. Many people who live in these areas are commuters to urban and suburban areas. These areas have many computer and cell phone users, but fewer business users. They require getting high-speed broadband access as good as the urban does, but DSL and cable data services are not available hear. The existing broadband access sometimes can not provide reliable service and lacks for quality with the increasing demand. Many industrial manufactories or small-to-medium business companies are located in these areas as well, and are often underserved than others in urban environments. WiMAX has great capability to break into these market segments. It could offer high-speed Internet access and lower cost solution for these business districts which do not have high quality DSL support. Operators and service providers have both fixed and mobile WiMAX market potential to achieve high market penetration. Lower and dispersive buildings are located in such areas than in urban areas. Even the total numbers of buildings is much fewer. With less WiMAX base station, operators could still obtain satisfactory coverage. Indoor and outdoor CPEs can be combined to use together to fit into different environmental situation at customer site. As a result, end users are able to enjoy the high-speed and stable quality wireless services with a good price.

� Rural Areas

The challenges of implementing broadband connection in rural areas have been bothering many operators and service providers for a long time. Rural connectivity is still a problem for deploying universal connectivity in developed country. Small town or village locates far away from central city. It is near unfeasible to lay down cable to the village due to the complex landform. And more importantly, the expense of labor force and material resources for operators is much higher than urban and suburban areas. The operators could not get considerable return on investment; indeed, they could not even get enough earnings from this to cover all the expenses by reason of low population density with substantially lower buying power than the national average. In rural areas, some single residential households and small businesses are distributed in various forms of communities as shown in figure. These houses are either centralized or dispersed. The flexible WiMAX network architecture is easy and cost-effective to deploy wireless DSL network according to different landform and population pattern for service provider.


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Figure 16 Population Patterns in Rural Areas82

Source: Results from the BROADWAN project

Wireless service providers could either adopts PMP or Mesh access measure to provide optimized wireless access services and efficiently utilize the network resources. Properly deployed design could especially help service providers to reduce the initial costs. For the customer in these areas with highly pent-up demands for Internet access, WiMAX services will first bring voice and data applications to them. Outdoor CPEs can provide better transmission effect and may dominate such areas in complex environment. To boost the process of outspreading, service providers or operators may pay most part of the cost for the CPEs, so that the customer may not need to pay all the cost for their outdoor CPEs. Also they may only need to pay lower subscriber fee (at least lower than DSL service) due to the saving of cost at service provider's side.

7.2 Technology Architecture of Target Access Model

To turn the value proposition of “getting access” into reality in dissimilar market environment and various user demands, WiMAX technology is designed to meet different user requirements by diversified access models. Operators and service providers can select or combine these access modes together to offer customized configuration in various situations.

� Point-to-Multi-Point (PMP) Access Mode

The most common service model is PMP access mode. It is considered as the basis access model of many advanced access applications. PMP mode is based on start network topology by taking the core role of base station. Numbers of subscriber stations (SS) connect to base station (BS) to get access to backbone network. Simplicity and scalability are the two significant advantages of such topology. Since 82“ affordable broadband for rural areas” by Telenor R&D http://www.telenor.no/broadwan/BROADWAN_CD/Presentations/Braten_BROADWANWorkshopNov2005.pdf access on 11/04/2007


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there is only one point in such mode that needs the connection to backbone network, deployment and maintenance expenses of connection to backbone is reduced to the lowest level. Base station can adopt directional antenna, Omni-directional antenna or multi-sector technology to maintain sufficient signal transmission quality from diverse areas. Furthermore, base station can dynamically allocate different bandwidth based on the total amount of users. The disadvantage of such mode is that the transmission between subscriber station and base station has to be carried out through line of site connection.83 The coverage of such mode is limited by obstacles in urban area.

Figure 17 PMP access model

� Mesh Access Model

Mesh access model, as shown in the figure, can overcome the LOS limitation of PMP mode. There are two classes of stations: mesh base station (MBS) and mesh subscriber station (MSS). MBS connects to the backbone network. MSS functions as service access point for subscribers, and at the same time, a relay station that delivers packages from other MSS through NLOS connection. This indicates that MBS and MSS can setup connection between each other though other MSSs. In mesh network, every station has routing ability, and only has direct connection with the neighbor stations. The advantage of such network is larger coverage of network, with high efficiency of spectrum and bigger network capacity. Another advantage is that the availability and flexibility are increased because of the routing mechanism. Whenever a certain path is broken, subscriber station can choose an alternative path.84

83 “the discussion about WiMAX access mode” http://news.ccidnet.com/art/1907/20050630/277887_1.html access on 05/04/2007 84 Figure reference from https://william-baldwin.com/home.htm access on 04/04/2007


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Figure 18 WiMAX Mesh Network85

� Hotspots Access Backhaul

Backhaul is one of the major usage of WiMAX technology, can could be regarded as a kind of access mode. WiMAX tower can send Wi-Fi hotspots service back to the core network and thereby build up the intercommunication between Wi-Fi network and backbone network. In WiMAX backhaul network, the base station still plays the role of service access point, while subscriber station is utilized as wireless access point that bridges the base station and Wi-Fi hotspots. Wi-Fi access point then connects wireless terminal by using WLAN standard.

Figure 19 Hotspots Access Backhaul86

This model combines PMP and Mesh mode to provide “WiMAX+Wi-Fi” mesh connection. The advantage of this model is that the capacity of these two standards can sufficiently exert their strengths through this combination. For mobile operators, they can also use this access model to build up cellular backhaul network in every cell domain. Wi-Fi hotspots backhaul through WiMAX network focuses on the service backhaul application with NLOS transmission model. This mode has potential to replace or complement the current wired access mode.

� Terminal Access Mode

Within terminal access model, customers could directly get access to backbone network to Internet through base station by using the terminal equipment such as mobile phone, PDA, laptop and so on. The mobile (or portable) user attempting to access network must use a terminal device with embedded WiMAX wireless processor chips. WiMAX supports high-speed access, but to achieve the large coverage, the transmission speed might be dropped a little bit. But, it is better for customers to connect Internet with low-speed from long distance, than having no connected ability at all. No need to mention mobile users could roam with always-on connection within metropolitan area. As for VOIP service through mobile phone, QoS feature ensures the

85 Ibid 86 Figure reference from http://www.awbnetworks.com/wireless.htm access on 06/04/2007


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quality of real-time transmission of voice data. If this application is implemented, the customer could use multi device to access internet with high access speed on the move.

Figure 20 Terminal Access Mode

� Customer Premise Network Access Mode

Customer premise network (CPN) access model mainly focuses on group customers such as enterprise, campus, government network, SOHO, and so on. These group customers could connect metro access network through WiMAX tower. The basis structure is similar to other modes. Subscriber station still plays the role of wireless access point. The difference is that the connection between subscriber station and CPNs uses wired line and adopts Ethernet switch center or E1 line, for the reason that the subscriber station need to carry massive network traffic from CPN side.87

Figure 21 CPN Access Mode88

This mode is also suitable for the group users with weak needs of access bandwidth, for the reason of the advantage of fast deployment comparing with wired access mode.

87 “the discussion about WiMAX access mode” http://news.ccidnet.com/art/1907/20050630/277887_1.html access on 05/04/2007 88Ibid


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7.2.1 Technology Framework Design of Operator’s Business Model

WiMAX technology framework is not attempting to describe the principle of technique adoption. Instead, it describes how the advantage of PHY and MAC layer design would affect the delivering and support of various WiMAX applications for different users. It is obvious the cost of base station establishment is the major expense for deploying WiMAX network. The important innovation of WiMAX technology is that the design is targeted to different kinds of user scenario with specialized access mode (AM). These access modes are optimized with minimum number of base stations in order to offer cost effective solutions. Different type of application should utilize corresponding access mode to optimize resources.

Figure 22 Possible Technology Framework of Operator/Service Provider Business Model

The upper figure shows the architecture of relationship between different access modes and corresponding target user groups.

Currently WiMAX technology is still not personalized for different types of users, but it is designed to satisfy different user requirements. From the user perspective, it can either provide secure wireless DSL solution or become complementary network to extend current capacity of wireless access. Current WiMAX application is mainly used for data communication, but mobile WiMAX network in the coming future is expected to achieve personalized rich content service such as VOIP, IPTV and other streaming media applications.


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Figure 23 WiMAX Service Delivery Process89 The above figure shows the service delivery process through WiMAX network. The deliver process is differing from certain types of user. To satisfy different user needs, the CPEs and devices at the user side are designed into various types of devices, which include indoor CPEs, outdoor CPEs, and Laptops with emended chips, WiMAX smart phones, and so on. If residential or enterprise subscribers intend to access Internet by using WiMAX network, they should be managed through a common service platform of a certain service provider with unique billing and customer data system. Whereas, if a mobile user intends to communicate with others through WiMAX network, the customer should be managed by a customized service platform with corresponding billing platform and customer data platform. All these applications eventually access the backbone network through corresponding optimized access mode.

7.3 Organization Arrangement

7.3.1 WiMAX Industrial Ecosystem

WiMAX is a global wireless standard profitable for many vendors and market actors. No one could monopolize this technology by themselves. Industry actors must cooperate with each other to establish a healthy industrial ecosystem. This is the only way that industry players can come to win-win model by providing WiMAX service. The WiMAX ecosystem is a common platform created by all industry players in the WiMAX value chain. They come together to influence the WiMAX evolution and enable thousands of the future wireless network worldwide.90 A successful BWA 89 Figure reference from book “ Heterogeneous network and services” by su-en tan, CICT, DTU, 2006 90 “The business of WiMAX” P253,


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business depends on a stable and comprehensive industrial ecosystem. To build a healthy ecosystem, there are three primary elements need to discuss---good standards, cross industry cooperation and widely available devices.91

� Well-developed Standards

Standardization is essential to enable the widespread adoption of any technology. Wi-Fi applications have got satisfying market acquisition. WiMAX not only adopts nearly the same evolution path as Wi-Fi but also extends the value proposition of standards. Getting support from different actors, it will get success finally. IEEE has defined the standard, while WiMAX forum promotes the development of WiMAX profile and undertakes the certification of the products to ensure the interoperability of equipment from different vendors. The two standards behind WiMAX have different value proposition. 802.16-2004 focuses on the fixed wireless access, while 802.16-2005 extends the capability of fixed access application and expects to offer true mobile connectivity to the customers. For operators and service providers who intend to deliver mobility connection by using 802.16-2005 standard, this will also allow them to provide fixed access. However, the operators providing fixed services would somewhat encounter difficulties to upgrade to mobile application, unless they have planed to add mobility into their system at beginning.

� Cross-industry Cooperation

Cooperation across WiMAX industry is the key element that WiMAX could get wide adoption and satisfying market acquisition. Under the promotion of leading actors, such as Intel and Motorola, WiMAX forum has gathered many famous vendors from diverse industry area to join in the development of WiMAX equipment and enhance the interoperability for various products. Major vendors are investing the development of chipsets, network equipment and other system components, while small players are working together to provider accessory hardware and other products such as antennas. Vendors are cooperating with each other to reduce the cost of products and optimize the quality of the products. On the other hand, vendors also cooperated with operators and service providers to provide complete WiMAX solution for certain needs.

� Widely Available Devices

From the customer point of view, a direct result from a healthy ecosystem is how convenient the customer can get service from such technology, and furthermore, service value could be offered without large-scale engineering at customer side. WiMAX solution adopts the easy-to-install CPEs and base station connective model, which brings convenient application to customer, while operators could flexibly control the amount of base stations according to the requirements of users. For the customer using fixed WiMAX network, the indoor and outdoor CPEs could be installed by user themselves. Mobile user will have widely adoption of WiMAX

91 “Making the case for mobile WiMAX” by Nokia


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service by using certain mobile device. Mobile WiMAX CPEs will be embedded into the laptop or PDAs to give users the benefit of nomadic mobility. Future developed smart WiMAX phone will be available for customer to make VOIP calls on the way to move. It is safe to say that at customer side, the devices are widely available for them to purchase and setup to use. Most of the equipment vendors and manufacturers comply with the WiMAX evolutional plan by WiMAX forum, who concentratedly issues certificates to certain series of products within a short period. As consequence, WiMAX products are rolled out to the market nearly at the same time. Thus, the cost and the price of WiMAX products will soon drop down after a period, for the market saturation. Operators and service providers will have much broader choices when finding appropriate and cheaper OEM equipments for themselves. The corresponding deployment process of WiMAX network would also be accelerated by this factor. Consequently, WiMAX can be delivered to the customer with a fast speed.

7.3.2 WiMAX Service Ecosystem Stakeholders

The development of ecosystem is the main driver for the development of WiMAX service in wireless market. Interdependent relationship by survival and value proposition is needed to build up among the entities in ecosystem. Once any of them get affected by some reason, others will also be influenced as a consequence. The whole ecosystem will lose its balance once certain relationship between them is destroyed. For example, if one type of entities who hold a certain important technical invention exits the market, then other related suppliers will lose their support from such vendors. As a result, the production of related products would be slowed down, and end users might not receive the value as they expect and would eventually cause the decline of the whole WiMAX market.

Figure 24 Current WiMAX Service Ecosystem Stakeholders

WiMAX Forum


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The figure has shown the main stakeholders in WiMAX ecosystem. Extensive ecosystems have been established to push and ensure successful value delivery to end users. The ecosystem is open and dynamic which allows new players such as content and application providers and retail providers to join in the process or value creation, as long as they can provide certain value or needs for this ecosystem. Moreover, service providers and operators have opportunity to create their own ecosystem for serving their specific market in such open ecosystem environment. As for an example, let’s have a look at Sprint Nextel’s ecosystem. Sprint Nextel mainly has three motivations for building their own WiMAX ecosystem. First, the company expects to enter mobile WiMAX market first through the interoperability of this ecosystem. Second, ecosystem could help Sprint to achieve economical choice of device and deploy WiMAX network. Last point is that Sprint can dominantly create a compelling business model which the company actually control the revenue arrangement in its ecosystem.92 For these purposes, Sprint Nextel has built up its own strategic WiMAX ecosystem to develop advanced mobile WiMAX multimedia network as shown in the figure. After the evaluation of equipment from some vendors, the company has established a device ecosystem; they have chosen Samsung as supplier of PC card for both single WiMAX mode and dual CDMA 1xEV DO/WiMAX mode,93 since the company intends to converge 3G and mobile WiMAX network. Another partner within Sprint Nextel is ZTE which is one of China’s largest telecommunications manufacturers and key WiMAX developer to supply various 802.16e devices including PC card and other advanced modem solutions. Additionally Sprint Nextel also has chosen ZyXEL Communications Inc. for modem products.94The reason that sprint chooses these three device suppliers is because their products are proved and regarded as the best suitable devices for mobile WiMAX through the evaluation of Sprint. Figure 25 Sprint Nextel’s Ecosystem for Mobile WiMAX in US

92 “ spring release more wimax system” http://www.intomobile.com/2007/03/27/sprint-releases-more-wimax-ecosystem-details.html access on 04/30/2007 93 Ibid 94 Ibid

Sprint Nextel

Samsung

Motorola

ZyXEL

Nokia

ZTE


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Sprint Nextel later on cooperates with three strong network equipment vendors Motorola, Samsung and Nokia for building up WiMAX network in US. Each partner is responsible for the deployment of WiMAX network at some cities. Building such ecosystem could help Sprint Nextel ensure the interoperability of various device and network equipments from these vendors. Their ecosystem could also optimize system costs and performance. Through this well-arranged ecosystem sprint expects their mobile WiMAX service could be deployed fast to meet the market at the end of 2007.

7.3.3WiMAX forum

WiMAX forum plays the key role for building up the industrial ecosystem. The forum aggregates many influential vendors and operators in the world together to promote the evolution of WiMAX standards. When we talk about WiMAX standard, we can not mention without WiMAX forum. It is an industry-led, non-profit organization, which was formed at April 2002 by some leading companies. Intel, Motorola, Fujitsu, Samsung are key technology centric board members. KT, Sprint, AT&T and BT represent operator interests. Other key suppliers include Huawei, Nokia, Siemens, Alcatel, Lucent, Nortel and so on. The companies that have already joined the WiMAX Forum represent over 75% of revenues in the global BWA market. These members include leading equipment manufacturers, component suppliers, service providers and systems integrators. Among them, telecom operators hold 1/4 of all the organizations. The WiMAX forum is composed of eight work groups.95 These groups focus on different aspects of WiMAX development, which embrace technology, authentication, marking, applications, spectrum, network, global mobile roaming and service providers working group. In 2003, Intel Corp became a major supporter of WiMAX forum.

Figure 26 356 WiMAX Forum Member Companies in WiMAX Ecosystem96

Source: By book “Taking wireless to the WiMAX” This forum pushes the industry-wide adoptions of the IEEE 802.16 and ETSI/HiperMAN wireless MAN air interface standards to support various feature of WiMAX development. It helps to ensure the capability and interoperability between related access equipments of different manufactures through the development of 95 “Take wireless to the WiMAX” by Deepak Pareek 2006 96 Ibid


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detailed system profiles as well as the test certification procedures. These operations were conducted in 2.5GHz, 3.5GHz and 5.8GHz frequency bands, which are typically licensed by various governments. 97 WiMAX forum gathers relative members and conducts conformance and interoperability testing to ensure that different vendor systems work seamlessly with one another. All the products that pass the tests of WiMAX forum are marked with “WiMAX Forum Certified™” label. These tests only focus on the conformance and interoperability of base station and subscriber station products. There is no testing or certification of chipsets, semiconductors, or network. The WiMAX products developed outside of WiMAX forum are not allowed to use “WiMAX Forum Certified™” label. It means that those products might not be able to fully conform and interoperate with WiMAX Forum Certified™ products. But the forum does not control when WiMAX will launch to the market.98This motion highly ensures the cooperation cross the industry and the WiMAX ecosystem.

7.3.4 Value Chain Structure

The relationship between suppliers in the ecosystem model can be represented by value chain in business model. The value chain of WiMAX is a modeling tool to model the process of delivering service value to the users through its ecosystem. Through the cooperative operation inside value chain, related market players could build up profitable value delivery process and cash flow from one to another. WiMAX is the technology that could provide both fixed and mobile solution for operators and vendors. It fills up the gap between fixed telecom industry and mobile industries that is brought because of different operation scopes. Furthermore, the emergence of WiMAX boosts the process of convergence between fixed and mobile networks. The value chain can dynamically embrace various new operators and service providers. Currently, Fixed WiMAX value chain is primary formed and organized by WiMAX forum to promote the development of WiMAX products.

Figure 27 WiMAX Value Chain

The WiMAX value chain includes operators, service provides, silicon/component

97 WiMAX forum website 98 “FAQ” from www.WiMAXforum.org

Content/ Application Providers


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suppliers, equipment manufacturer and other players. The wide usage of WiMAX technology in both fixed and mobile applications has attracted both fixed and mobile operators. Especially the emerging of mobile WiMAX will have a deep impact on the value chain. Service provides or WISPs may first consider deploying fixed WiMAX service and then upgrade their network to mobile WiMAX network. Actually, some service providers have already provided fixed WiMAX services in US and Europe. The service provider could also provide bundle service or stand-alone products to retail service providers. The arrangement of this WiMAX value chain is to put both operator and service provider at the central position for WiMAX service operation. Large-scale service providers, such as wholesale service provider, might share considerable profit from mobile operator. The analysis of different vendor’s position and their roles in value network includes the following aspects: � WiMAX service can work on several licensed bands by different holders. Mobile

operators may be lacking in the dominant position to build national WiMAX network. Or they might not be able to build it in some regions where there is no spectrum left for them. Instead, these operators prefer to build their own network, and secure their revenue streams in their new target markets. They may either play the role of wholesales service providers or establish the roaming relationship with other wholesale service providers that focus on specific vertical market to increase their network coverage and revenues.

� WiMAX vendors can be classified into various company profiles, which include

equipment, chips, OEM, antenna vendor, and so on. Powerful equipment, system and chip vendors make significant impact on the deployment of WiMAX network. Vendors like Intel, Motorola, Samsung and Alvarion, invest a lot on research and develop compatible hardware and software for WiMAX utilities. Especially, they provide various integrated network solutions for service providers to make it easy and fast to deploy niche network.

� The relationship between operators and service providers is competing as well as

cooperating on WiMAX service operation. Operators might need to extend their network coverage and capacity by using service provider’s WiMAX network. While service providers need to lease spectrum resources from mobile operators when they attempt to offer mobile services.

� The value chain is still not matured enough, for sake of the absence of some

content/application providers and other intermediate players. It may be because of the lack of clear revenue model and short of start-up period for deploying WiMAX network.

Partnership Analysis

WiMAX value chain is developing along with the evolution of wireless technology. The close cooperation among major players, infrastructures shared by multiple service


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providers, and other entities may accelerate the development of value chain. Especially this kind of relationship could help to reduce the costs and speedup the standardization progress of WiMAX products.

� Cooperation between Operator and Service Providers

Operators and service providers may either build up cooperative relationship to provide WiMAX services or provide different types of WiMAX services separately. Operator who owns the fixed network could help service providers to build the connection between backbone network and central base station. Mobile operators could lease their spectrum resource to service provider so that service provider can offer high quality service to customers. Meanwhile, service providers can provide wireless network infrastructure as complemented service for operators.

� Cooperation between Equipment and Component Vendors

The interoperability testing process of WiMAX forum has gathered a mass of equipment and component vendors. These vendors cooperate closely in various forms. The fixed WiMAX system and component vendors work together to develop 802.16d base station system. Mobile OEM and chip vendors cooperate to achieve the interoperability and interconnection of mobile devices. Actually, many partnerships of WiMAX vendors have already been established widely by the equipment and component vendors to offer large-scale integrated solutions. The cooperation between Intel and Alvarion is one of the examples. Intel and Alvarion are the biggest chip vendor and system vendor of WiMAX standard. They are also the major players in WiMAX forum. They have signed an agreement of cooperation for the development of WiMAX. Alvarion needs Intel’s chips to integrate into their CPE’s solution. While Intel can proves and achieves the strong performance of their chips through Alvarion’s CPE system. Now the market share of Alvarion has increased from 20% to nearly 50%. Such cooperation probably is one of the reasons for the market growth of Alvarion99.

� Cooperation between Vendors and Service Providers

Vendors no longer stand behind the providers. They still offer equipments and chip products to operators. But more importantly, they start to exert influence on the strategic decision-making of operators. The cooperation among Clearwire, Intel and Motorola has presented a good example. Around July 2006, Clearwire has accepted 0.9 billion dollars investment from Intel and Motorola for building WiMAX network which expects to cover the entire region of U.S. However, the deal of course has conditions. Motorola acquired the NextNet wireless sector of Clearwire. Clearwire also announced that the president of Intel Capital and the vice-present of Intel Mobility Group join in its directorate.100 This example reveals the ambition and power of major

99 “Alvarion demonstrates Intel's new WiMAX chip in action” http://www.invictusnetworks.com/faq/WiMAX%20Information/Alvarion-Intel%20WiMax.pdf access on 27/04/2007 100 “Clearwire gets USD 900 million from Intel and Motorola”


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vendors. And it also has shown that such cooperation can highly enhance the power of service provider. Service provider can get economic and technology support from WiMAX vendors. While vendors can obtain opportunities to stand in front and participate in the decision-making process.

7.4 Finance Arrangement

7.4.1 Share of Investment by Providers

WiMAX brings the opportunities and benefits for service providers, operators, government and enterprises. They invest WiMAX service for different needs and competitions. Providers are the main power to deploy WiMAX network and deliver WiMAX service to the customer. Especially the licensed providers have invested a lot on deploying WiMAX. According to research of Rethink Research, Global WiMAX infrastructure spending is expected to rocket from $655 million today to $7.36 billion by 2009101. Just in three years the investment in such area will rise up for TEN times! It is so fast that we can not help asking the question like who are the entities of the investment, and what are the purposes of their investment. The coming discussion is targeted to answer such questions.

Figure 28 Share of investment by Multiple Providers (2006-2008)102 http://www.nordicwirelesswatch.com/wireless/story.html?story_id=4875 access on 26/04/2007 101 Figure from http://www.xchangemag.com/articles/06deccover01.html access on 15/04/2007 102 Ibid


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� The highest investment on WiMAX is from new providers and traditional BWA providers. These providers have specifically set up to build networks in 3.5GHz or 2.5GHz licensed bands. The former type of providers may be considered as newcomer moving into WiMAX market from another related industry. The latter type of provider is the companies that have been providing fixed wireless services using some proprietary technology and now moving towards this market. They use WiMAX either to build new network or to extend their existing network. For these providers, most of their spending is concentrated on deployment of base stations and set up initial connectivity of WiMAX network. After the initial highest expenses on WiMAX network, the future investment will drop down reasonably. The drop is not because they lose the interest for WiMAX operation, but is because they only need to spend money on maintaining the network and add a few base stations to satisfy the increasing demands of users.

� T1 telcos , also called ILECs , are traditional wired telecom carriers who own

the legacy of telephone network within a certain geographic area. They offer local telephone service, Internet access, international and broadband service. Their investments are aimed to build up complementary service to DSL mode in remote areas through the cooperation with wireless vendors. To establish WiMAX network in remote areas, ILECs can get benefit from easy, low cost and fast deployment advantage of WiMAX. Since they have experience of operation and strong incumbent power to handle such business, ILECs may have a better chance to gain the revenue because of good foundation of trust from their customers. They can operate WiMAX service either by their own network, or resell their WiMAX network to retail providers and WISPs and allows them to handle some niche business. We can expect that their investment will increase fast in the coming two years.

� WISPs and Government/public sector also present relatively higher spending on

WiMAX deployment compared with others. WISPs are considered as some small companies which are independent network operators or of the subset of ILECs (Incumbent local exchange carriers). They deploys WiMAX network in rural areas or provides Wi-Fi backhaul services specifying work in license-exempt bands such as 5.8GHz. Their investment path of WiMAX is similar to new providers.

The government and public sector have been using proprietary technology to provide municipal projects, public safety and martial applications. And now these technologies seem to be put away by using WiMAX mesh network for public usage. Public utility such as gas, water and transport companies also has been funded for building networks.

� Cellcos (cellular phone Companies) actually mainly refers to mobile operators. As we can see from the figure, the spending on WiMAX is obvious low at 9% compare with the new providers and other providers, except wire-line providers. That is because the feasibility and performance of mobile WiMAX system is not proven by WiMAX forum and lack of the support from other supplier in the


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value chain. It is also because most mobile operators are busy with deploying and upgrading of their 3G network, and have not much interest on WiMAX operation. But we also could find out that, along with the development of WiMAX mobile terminal and chips market, Cellcos will invest a lot in the coming years to deploy WiMAX network as supplemental network or converged network with their existing cellular network in urban and suburban areas.

� Some enterprises are also interested to use WiMAX technology to build their

own network. The campus coverage of university using wireless connection is also included in this group. The emerging of their investment is only a little, since only large scale enterprises have the ability for building their own network. Small companies still use WiMAX services as normal customers of service providers.

7.4.2 Risks for Providers

WiMAX technology has shown remarkable advantage and market potential in broadband wireless market. But the development of WiMAX technology are yet stand at primary phase, there still exist some risks and uncertainties which affect and fluctuate the investment of operators and service providers. The investment risk of new technology is higher than the existing technology, since the lack of proven and successful business case. Moreover, some major risks and uncertainties need to be considered for providers such as uncertain user demands, legal and regulatory uncertainties and uncertain market status. These uncertainties may also be considered for other new technologies that are in the same situation as WiMAX.

� Uncertain User Demands

Even though the analysis shows that the WiMAX service could focus on both developed and developing countries, the market covers urban, suburban and rural areas, it does not mean there already exist thousands upon thousands of users who expect this service right now. For a new technology, target user and the acceptance degree of users are totally different two things. The former one defines the service type and market potential. The later one indeed reflects the survivable rationality of WiMAX technology. The acceptance degree of users normally is difficult to calculate before the service is launched. Service providers and operators could only imagine and ante to such advanced technology itself. The providers need to investigate and analyze the amount of users to get user demands which is quite close to the real needs of users. They also need to prepare enough for the uncertain risks.

� Uncertain Legal Policy and Regulation

WiMAX is a new technology and need new legal and regulatory policies. The advantage of WiMAX has remarkable potential to compete and replace traditional DSL access mode. Thus presents threats to the incumbent operators and decrease the needs of wired service. Regulators may need to re-examine how universal service funds are


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allocated and what role WiMAX technologies will play. Even governments and regulators present active attitude on WiMAX efforts, there are lots of legal and regulatory works needs to do. And the results of these works would be very complex and uncertain. Uncertain legal policies and regulations may stifle the innovation in the WiMAX industry. Hence bring risks for operators and other market players. On the other hand, as I have mention before that VOIP will become the most popular WiMAX service and will bring high ARPU for end users. Providers except to offer VOIP service to increase their revenue. But the legal and regulatory VOIP policies are still unclear for providers. Once the restricted VOIP regulatory policies come out, providers will meet the risk to offer attractive applications. The success of VoWiMAX needs an open and flexible oriented regulation.

� Uncertain Market Status

Most risks in the market are related to the new or improved technology and services, also related to the strategy plan of major vendors and operators. During the development process of WiMAX services, other wireless technology also accelerates the development to pursue and compete with WiMAX, such technologies include HSDPA and IEEE802.20 standard. There exist risks that the advantages of WiMAX might not be more attractive for end users than others. Thus these risks could be transferred to providers. On the other hand, if the major providers or vendors turn to support other technologies, other players will meet the risk of losing the support from them.

7.4.3 Revenue Potential

The deployment of WiMAX service just has been set up for short period, and the cash flow on WiMAX is the investment from various market players. There is no truly ROI (Return of investment) appear in the past years. However, the investment of many players in many countries around the world will present a positive ROI trends, since the built-up of WiMAX network already start to serve the customer in many developed and developing countries. The research from NSR shows that the past period investment would expect get truly return from 2007, and WiMAX ROI for providers will increase fast in the next five years as shown in figure29.


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Figure 29 Global WiMAX Service and Equipment Revenue 2007-2012103 Figure29 indicates that WiMAX service revenue will expect to increase from 2.6 billion dollars of 2007 to 32.3 billion dollars. The WiMAX solution such as Backhaul, last mile especially rural connectivity provides the new opportunities for many operators and service providers. The initial trails and commercial launch of WiMAX service drives the increasing of equipment revenue. The increased equipment revenue makes more and more equipment vendors join in the development of WiMAX technology, and thus drop down the cost of equipments. The downtrend of equipments cost and high user demands attracts the operators and service providers to widely deploy WiMAX network and thus boost the revenue growth of WiMAX service.

� Climbing Revenue Potential for Operator and Service Providers

From my opinion, when we evaluate revenue potential of operators and service providers for a new technology in telecom market, there are some factors that need to be taken into account. First, we should look into the technology performance to assess whether this technology has innovational technology feature and future proof. Second, providers should previously realize whether certain technology could provide additional future value or extend current value for customers. Third, to deploy low cost, high quality and fast deployment service, whether there exist strong support from powerful vendors and the economic of scale for equipment production, especially, the supplier industry need to be open which allows providers to have more choices and freedom to choose the most suitable solution and products for their application. Last, weather certain technology is standard-based and have good support from regulatory policy. 103 Figure reference from http://www.wimax-industry.com/mk/mrv/skyresearch/mksky1a.htm access on 04/04/2007


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Figure 30 Climbing Revenue Potential for WiMAX Operators and Service Providers From the corresponding analysis between those factors and WiMAX service, figure30 shows the climbing revenue potential for WiMAX operators and service providers. As indicates from the figure, WiMAX adopts OFDM technology which have been consideedr as 4G technology and will also be used in future version of 3G technology. The early adoption of OFDM technology could make WiMAX get first experience from market operation and easy to evolve to 4G. WiMAX presents the extended value of Wi-Fi and 3G technology. Incumbent wired operators (ILECs) and mobile operators (Cellcos) have the most likelihood and economic power to promote the wide area of probation and commercial trial for WiMAX services within certain national geographic region. The traditional fixed telecom operator will have opportunities to set up wireless network. They can get increased revenue from providing wireless DSL solution through the cost-effective WiMAX network. Mobile operator could get revenue through providing less expensive backhaul service to cell sites, especially 3G cell sites. They can reuse their existing radio sites and backhauling equipments to facilitate the development of WiMAX service.

WISPs specialize in providing high-speed internet services using fixed or mobile wireless solutions. These companies tend to be small and operate normal in unlicensed bands. Many WISPs have been offered with Wi-Fi hotspot access. WISPs view WiMAX-standardized equipment as a way to realize stronger economic benefits, lower customer acquisition costs, and broaden their menu of equipment suppliers. Many wireless ISPs are willing to use unlicensed band for WiMAX operation because of the free of charge for the frequency acquirement. This can not only save the cost of network deployment, but also economize time, since the licensed band need time to be issued by the government. The cost saving of WISPs could be transferred to the customer as well. Wireless ISPs also could otherwise provide alternative of DSL and Cable mode service to the place where the network infrastructure is underserved. The wireless internet technology based on IEEE 802.16 is currently the best choice for the rural community and remote areas. In these areas, WISP could provide WiMAX service together with local public institution and government. As statistics from the newest research, currently, there are about 2500 WISPs offering service to more than

Technology represent by OFDM

Extend value of Wi -Fi, 3G and alternative of DSL in rural areas

Intel, Motorola, Samsung, Alvarion……..

Standard-based/Promote by WiMAX forum

Revenue Potential


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6000 markets by license-exempt spectrum.104

� Climbing Revenue Potential for WiMAX Equipment and Chips Vendors

The development of WiMAX related equipments is the highlight to promote the evolution of WiMAX technology. WiMAX equipments play a key role in providing long-range fixed wireless connectivity in rural community and remote areas, also in the operation of mobile connectivity over shorter distances. The equipments suppliers no longer are just regarded as the back support for WiMAX operators and service providers. Instead, they get revenue from various ways.

In WiMAX market, the revenue potential for equipments and chips vendors is climbing due to various ways of revenue acquirements. Figure31 shows that there are mainly three ways that could gradually increase revenue opportunities of vendors. First, Vendors can get revenue from the initial vendition of scattered WiMAX component products, such as CPEs, chips, antenna. Secondly, vendors could increase revenue through providing integrated network solution or deploying WiMAX project as an undertaker. Furthermore, during the development of healthy ecosystem, the rising partnership opportunities on WiMAX deployment make vendors get additional revenue from cooperation relationship with service providers, operator as well as the partnership between vendors.

Figure 31 Climbing Revenue Potential for WiMAX Equipment and Chips Vendors

In vendor’s domain, Intel dominates chipset market share. Motorola, Samsung and Nokia dominate the mobile device market. Motorola presents notable market share in US due to the acquirement of NextNet operation right from Clearwire. Samsung has devoted into the development and support of WiBro in South Korea and also join in the WiMAX deployment project of other operators such as Sprint Nextel. Alvarion dominates the network equipment market share. The company closely cooperates with IEEE, ETSI and WiMAX forum to promote the standardization of WiMAX system. The increasing revenue would attract more and more new market actors come and join in the supply chain. The increasing of total amount of market actors leads to the expansion of WiMAX market capacity, which indicates further evolvement of this technology in the whole telecommunication market.

104 “maxing out on wimax”http://www.computerworld.com.au/index.php/id;1044277208 access on 05/04/2007

Sell products

Integrated network solution

Partnership revenue

Revenue potential


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Chapter 8 Regulatory Environment

8.1 Standardization

Standardization is the key issue to promote the development of WiMAX service in the worldwide market. WiMAX has well-developed standardization process. Through the standardization process, more and more WiMAX participants involves in the developing value chain to accelerate the industrialization progress and form the mass market. Standardization efforts can also help to gain trust from customers in the fast evolving technological context and promote the competition of various vendors, thus lower down the price of product. The standardization efforts of WiMAX technology include the technology development standardization and the industry push standardization by WiMAX.

� Technology Standardization Efforts

The technology standardization efforts are the harmonious result of IEEE802.16 and ETSI HiperMAN standard. The initially IEEE802.16 standard was designed to cover 2-66GHz frequency bands. While ETSI HiperMAN is the European version of WiMAX addressing spectrum access in ranges under 11 GHz. To carry out the technology standardization, IEEE802.16 working group has initially built up very close cooperation relationship with ETSI (European Telecommunications Standards Institute) on amalgamation of technology infrastructure. Both 802.16 and ETSI standards are designed with the interoperability used for fixed broadband wireless access in metropolitan area.

Figure 32 IEEE 802.16 <=> ETSI HiperMAN Correspondance105 Source: ETSI Presentation

The 802.16 working group and ETSI have exchanged over 50 liaison documents for the harmonized specification. The upper figure has shown the harmonized correspondence between IEEE802.16 and ETSI HiperMAN. Nearly every version of 105 Figure reference from ETSI presentation 2006


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802.16 in PHY and MAC layer has achieved correspondence with ETSI HiperMAN standard. The harmonized specification finally decided to use narrow bands below 11GHz that can efficiently avoid channel interference. And they also ensure that the future ETSI HiperMAN specification will be compliant with IEEE standard 802.16. Through this association between standardization organization, 802.16 gets more support from international standardization entity, and builds up solid joint standard to support procedure of WiMAX technology standardization106. The technology standardization does mean “sameness”, IEEE802.16 working group and ETSI have mainly defined the PHY and MAC layer specification. This standardization profile allows vendors to customize to meet specific or localized market needs, or to develop their own solution with value-added features. Besides these two standardization entities joint together, ITU has also given the recommendation and confirmation of how 802.16 becomes a legal international standard. Especially, ITU also attempts to bring WiMAX into 3G standard to eventually achieve the standardization of converged network.

� WiMAX Forum Standardization Efforts

WiMAX forum is the consortium behind standardization. Within WiMAX forum, there are nine working groups that have been arranged for different direction of WiMAX towards standardization. These nine working groups include technique, application, certification, network, regulation and so on. The forum did not participate in the establishment of IEEE802.16 technology standardization. Instead, the forum aims to build up a unified standard-WiMAX in form of creating system profile by using IEEE802.16 and ETSI HiperMAN standard. WiMAX forum has built cooperative relationship with ETSI and on the other hand gathered multi-wide players of WiMAX industry to join in the interoperability testing and certification process. They also make great efforts to harmonize future evolutions of standards. More importantly, they utilize unique label to mark the products that are standardized and have passed the series of testing procedure. Certain product that is compatible with 802.16 does not mean that it is certified by WiMAX forum and could interoperate with other WiMAX products. But if the certain product can interoperate with WiMAX products, then it can actually work together with other certified products. Certified WiMAX means standardization that creates numerous opportunities for chipset vendors and equipment suppliers, also brings low-cost certified equipments, cheap CPE and network gear. Hence, WiMAX could provide wireless DSL solution by low cost product adoptions and fast installation profile. Interoperability is the key objective and foundation of standardization of the WiMAX Forum. Through the well-arranged interoperability testing by using the products from multiple vendors, network operators are able to select network components which are the best appropriate to their requirements. Interoperability also could ensure the

106“ IEEE STANDARD 802.16 FOR GLOBAL BROADBAND WIRELESS ACCESS”

http://www.itu.int/osg/spu/stn/spectrum/workshop_proceedings/Background_Papers_Final/Francescso%20Troisi%20-%20ITU%20meeting_rev2.pdf


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operator with fast access WiMAX technology regardless of the vendors.107

� Strong Associations between Major Powerful Manufacturers Push Mobile WiMAX Standardization 108

The exciting news from “WiMAX World Asia 2007” says that there are five major manufacturers who will strongly push equipment standardization of mobile WiMAX. These five major vendors include Intel, Nokia, Motorola, Samsung and ZTE. They intend to achieve the interconnection and interoperability of their equipments in Sprint Nextel’s network and expect to finish the standardization process at the end of this year. This cooperation brings far-reaching influence for the standardization of mobile WiMAX and fast commercial application.

Figure 33 CPE and End User Device Standardization Roadmap109 The association and other types of cooperation across vendors boost the development of equipment, and also help to drop down the cost through such standardization. The result of sharing common platform creates a big amount of CPEs for different usage as the figure shows. This platform reduces the investment risks and costs through the development and production of scale. Since the technology of equipments is not locked into a single vendor and equipments have interoperability between each other, mobile operators have more choices to select better quality and low price equipment from many vendors. Now, thanks to the standardization process, lower-cost equipments, better prepared business solutions and clear product standardization roadmap are provided by multiple standardization organizations and market players. Some operators such as Sprint, Clearwire and other license holders have widely deployed real WiMAX network in their market, due to standardized devices.

107 “ build end-to-end WiMAX network” http://www.senza-fili.com/downloads/SenzaFili_for_Alvarion_BuildingWMXE2E.pdf, April, 2007 108 Five powerful vendors strong support the standardization of mobile WiMAX http://dig.17tech.com/vote/11200.html 109 Figure reference from http://www.nokia.com/NOKIA_COM_1/Press/Press_Events/Nokia_Technology_Media_Briefing/Mobile_WiMAX_white_paper.pdf access on 06/04/2007


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8.2 Licensing

Wi-Fi service was designed only for license-exempt frequency band, since Wi-Fi network address on the wireless local connection within small range. While the operation of WiMAX network combine the difference of license characteristics between Wi-Fi and 3G. It could either work on the license-exempt or licensed frequency band. WiMAX service is designed for metro network access and can provide both national wide network infrastructure and private network. Two types of licenses are needed to achieve the value of WiMAX applications.

The governments around the world recognize the value of innovation combination of WiMAX open standard and license-exempt solutions. Most of the country’s governments have allocated some licensed and license-exempt frequency bands for use by WiMAX standard. These frequency bands allow WiMAX technology to work for different usages.

Each geographic region regulates its own licensed and license-exempt bands. To make use of different spectrum bands and allows providers to have a wide choice of available spectrum within these bands, the IEEE802.16-2004 standards was defined to support flexible choice of channel bandwidth between 1.25 and 20MHz size. WiMAX network could cover the range of spectrum below 11GHz of NLOS transmission. The available bands between 2GHz-6GHz is shown below. As we could see, the very initial WiMAX licensed bands is centralized between 2.5GHz-2.9GHz and 3.5GHz-3.7GHz.110

Figure 34 2 to 6GHz Centimeter Bands Available for BWA111

Source: White Paper of Fujitsu The unlicensed bands are mainly centralized at the upper part of spectrum between 5.7GHz-5.85GHz, and the future potential spectrum of WiMAX is going to be allocated at the adjacent frequency bands of these segments. We also could see that WiMAX is not the only standard that is allowed to work in these bands. The Unlicensed National Information Infrastructure (U-NII) bands have three major frequency bands - ISM, WRC and low or medial U-NII bands which are used for Wi-Fi service. They also work in these bands.

110 “RF Spectrum Utilization in WiMAX” http://www.fujitsu.com/downloads/MICRO/fme/wimax/whitepapers/wpbwaRF_wp04.pdf access on 16/-4/2007 111 Ibid


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Licensed and license-exempt both have advantages and disadvantages to run WiMAX service upon. Operators need to spend lots of money to get license spectrum for WiMAX. While the capacity of license-exempt bands is less controlled and matured than licensed ones for providing some high quality services.

Figure 35 WiMAX Primary Deployment Bands112 Source: www.ti.com

The current addressed deployment bands is shown in the figure, every region has shown the great effort for building harmonious and uniform frequency band for WiMAX standard to achieve the global interconnection. The most discussable spectrum is the 2.5GHz and 3.5GHz for licensed application, 5.7GHz for license-exempt application. These bands have been initially considered and deployed in most of countries for different usages. The trials of technology function and interoperability by WiMAX forum also mainly operates in these bands. Today, there is no single same piece of spectrum that is allocated for WiMAX. The status of spectrum usage is different by geographic region. Even 2.5GHz and 3.5GHz bands have been used widely in the world, but none of them become uniform band until now. In North American, 94% of licenses go to 2.3-2.5GHz for sake of the biggest 2.5GHz owner - Spring Nextel, while most of 3.5GHz already has been allocated for other usage and difficult to use for WiMAX. And the rest of 6% licenses of 3.5GHz are only used in Canada. In Europe, there are 141 licenses allocated in 3.5GHz, in the contrary only 45 licenses in 2.5GHz band. However, most of European regulators only allow 3.5GHz to be used for fixed BWA services currently. In Asia, most of licensed bands concentrate on 2.3-2.5GHz since South Korea have use this band for WiBro standard, and Japan also allocated 2.5GHz for WiMAX use. Even though Chinese government hasn’t decided WiMAX spectrum bands, most likely the licensed bands will concentrate on 3.3-3.5GHz.

112Figure reference from http://focus.ti.com/general/docs/bcg/bcgviewnewsletter.tsp?templateId=6116&navigationId=12072&contentId=25573 access on 05/04/2007


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8.2.1 Licensed Spectrum113

From the above discussion, we can see that each country has allocated different frequency bands. Some countries allow WiMAX work on 2.5GHz and 3.5GHz licensed bands, some others allocate licensed range bands between 2.3GHz-2.395GHz, such as Japan. The licensed bands mainly focus on 2.3GHz-4.2GHz, but less considerable 2.4GHz, since this band has been used for Wi-Fi service and cordless telephone. Currently, the most likely licensed spectrums are 2.5 GHz and 3.5GHz. The 2.5GHz frequency band has been allocated as licensed band in most of countries in the world, such as Unite state, Western and Eastern Europe and part of Asia-pacific. Another frequently discussed licensed band is 3.5GHz which is available in many European and Asian countries except Unite States, because 3.5GHz is the most congested frequency band in US. In Europe, the ETIS has allocated 3.5GHz to use for licensed WiMAX solution. � Advantage and Disadvantage As we know, licenses are controlled by the government. Some country’s government has decided different way to issue wireless licenses. To deploy a WiMAX service, operator normally needs to purchase a spectrum license from the government. In some countries, the licensing process is complex and may take months. Government needs to assess the capability of operators and issues the WiMAX licenses to appropriate operators from the political and economical point of view. While in some other countries, licenses auctioning could drive up the price and also delay the time for deployment, especially, high price will bring more financial pressure for operators during a long period after the start of service operation. Even though the price of WiMAX licenses is lower than 3G, operators still need to spend considerable resources on it. Those disadvantages and strict entrance process on the other hand enables service quality enhancements and reduces the channel interference. So that operators can provide stable and high quality services for large metropolitan deployments and mobile usages. The 802.16d has changed the frequency bands from 10-66GHz to sub 11GHz; the reason of changing is that lower bands can provide better NLOS connectivity, better radio frequency penetration and improvement of QoS. High capacity does not mean WiMAX service could work ideally without any interference. The licensed spectrum is not only used for operating WiMAX service, but is approved for other usage as well. So the governments require operators who intend to deploy WiMAX service to pay more attention to the resistibility for interference. Pertinent design and deployment could avoid interference in a certain degree.

� Deployment in Licensed Bands114

Licensed bands offer better control with large areas, enhanced scalability, QoS and

113 “taking wireless to the WiMAX” by Deepak pareek 2006 114 Ibid


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flexibility for use of mobility applications. The applications could target the follow usages: Large areas communication deployment and PMP applications, in urban areas where Wi-Fi service has been deployed widely, WiMAX could provide larger coverage than Wi-Fi, and also it could cooperate with Wi-Fi to provide mesh network. WiMAX solution can be expected to realize the universal broadband mobile service as a complementary service of 3G network. Licensed bands are important for the operators who want to offer business class WiMAX service, because only in the licensed bands could offer better QoS guarantee mechanism. Operators could provide high quality service with less consideration of the charging issue for high level customers, such as multimedia service and VOIP for enterprise and 3G customers.

8.2.2 License-Exempt Spectrum

WiMAX is not the first technology, to which the government allocates the License-exempt or Unlicensed frequency bands. As mentioned before, the operation of Wi-Fi technology has been permitted to use 2.4GHz unlicensed band for WLAN connectivity. Different from Wi-Fi, WiMAX service is targeted for longer coverage of metropolitan area applications, thus it needs higher power output level. Many countries allow 5.8GHz as unlicensed bands to provide higher power output for the operation of WiMAX. The frequency bands between 5.25-5.85GHz have been designated to unlicensed communication in many countries. These bands segments can provide higher bandwidth, but are vulnerable from high interference. So, this band is not suitable for the business operation and mobile WiMAX usages. But it could be use for low-end QoS applications such as rural connectivity. Using License-exempt bands does not mean that such behavior is unregulated for the service providers. Operators and service providers still have the responsibility for maintaining a no-interference communication channel, thereby ensuring an optimal utilizable spectrum environment. The government thus can easily take back and reuse the spectrum resources, once they are not needed.

� Advantage and Disadvantage115

The rapid progress of Wi-Fi service has shown the advantage of using unlicensed bands. The advantages between licensed and unlicensed bands comparing with licensed bands are shown below. For the unlicensed bands such as 2.4GH and 5.8 GHz the entry to market is free of charge. Service provider could easily use the spectrum to begin offering cost-effective WiMAX service without the barrier of strict license permissive procedure. They can catch the opportunity to launch WiMAX service in their market by this advantage. Especially, the expensive cost of license acquirement 115 “Deployment license-exempt WiMAX solutions” white paper from Intel


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makes small service providers and other new entrants to consider license-exempt solutions. The license-exempt bands also present more worldwide options to the service provider. The government can easily allocate the same commonly unlicensed bands as other countries, as a result, allows internationalized connectivity.

Table 6 Advantage of licensed and license-exempt solutions Source: Intel white paper The disadvantage of unlicensed choice is the limitation of the usage of WiMAX service. First, an unlicensed band is available for only a few standards, such as Wi-Fi. Bluetooth and cordless telephone. There is no single standard that could dominate the unlicensed bands due to the different usage of various standards. They need to share the unlicensed spectrum resource with limited control. Several different RF standards with co-channel or adjacent channel indicate high probability of interference. Second, the non-cost frequency bands assigned by government actually has limited amount of transmission power, with smaller signal coverage and lower sending/receiving quality. WiMAX systems working on unlicensed band provide less high-quality service than licensed ones. Third, since unlicensed band choice is free, it may increase the competition probability for service providers. Service providers need to face other entrants to compete the use of spectrum resources.

� Deployment in Unlicensed Bands

In the matured market, the service provider and new entrants can deploy last mile access or backhaul service as a complementary network for their existing licensed or wired network in urban and suburban areas. For service providers who do not have wired network infrastructure, such as Wi-Fi service provider, they can cooperate with wired operators to offer unlicensed supplement service. The service provider gets more benefit from the initial lower costs by fast deployed unlicensed solutions in the emerging market, the developing market and the underserved area in developed market. WiMAX license-exempt solution can offer PTP and PMP connection in rural community environment. It can be deployed in the area where the interference in the unlicensed band can be controlled within certain domain, such as large enterprise and the campus. It can also focus on the place where needs lower power output services compare to the licensed bands. To provide such services, service provider needs take into account the QoS and the potential spectrum competition with other operator and service providers. The proper


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network design according to the characteristic of unlicensed band can reduce the risk and offer certain service level for their specialized market.

8.3 Spectrum Management

All the spectrum resources in different regions are managed and controlled by governmental telecommunication supervisory institution in each country, for instance FCC in unite state. The radio spectrum is used by various usages for the users ranging from television, aircraft radar to satellite communication and military application. Now, more and more spectrum resources are used for data communication. To control the use of various frequency bands along with the development of wireless communication, national regulations requires to allocate some frequency bands which have good condition of signal transmission as licensed spectrum to the operators. These licensed bands are important for high power and long range radio transmission with significant interference control. Many national regulators also have defined license-exempt bands for some types of usage, such as Wi-Fi and unlicensed WiMAX services. It is not appropriate and cumbersome to enforce the licenses to such services. But the regulators still need to manage the efficient utilization of these bands. They have rules to limit the transmission power in these bands to reduce the high interference probability, since the providers are expected to be able to either use these bands without mutual interference or controlling the interference among themselves with the governmental legal help.116

8.3.1 Technology Neutrality

For the condition that new wireless technology emerged and thus more and more spectrums are needed to meet the increasing user demands. The old spectrum management approach which spectrum was allocated for specific uses with specific technical attributes of limited technologies in certain bands needs to change. For example, Wi-Fi service has been operated in 2.4GHz band in some countries. But many of other countries governments, like France and Japan, think that Wi-Fi (802.11g) does not meet certain technical attributes which has been required for 2.4GHz. And they also think the share of the same band between two telecommunication protocol versions (802.11b and 802.11g) is not proper at 2.4GHz, because 802.11g does not comply with some requirements . Hence, they do not allow the fully usage of 2.4GHz band for Wi-Fi and not allow fully operation of new version Wi-Fi until the country changed its rules. These restricted spectrum management approach delayed the introduction of new Wi-Fi technology.117

Learnt from the lesson of Wi-Fi, many governments and regulators have recognized that the spectrum management and regulation should be more flexible and technology neutral which allows the license holders deploy the most appropriate services in their market, as long as the new technology, such as WiMAX, can adhere to the 116 “Deployment license-exempt WiMAX solutions” white paper from Intel 117 “Global Spectrum Assessment and Policy” http://www.ncc.tw/consult/Intel.pdf access on 04/04/2007


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requirements of technical and regulatory for certain spectrum bands and to support compatibility of services and deployments. Technology neutral policy means that no advantages must be given to a particular technology in allocation of spectrum frequency. This method can promote the flexibility of spectrum allocated without designate technology that can be used.118While new technology can compete freely with existing ones, operators and customers can therefore get more benefit from the market force and more choice of technologies.

8.3.2 Liberalization or Harmonization

To efficiently utilize limited spectrum sources, regulators have different opinions. Some regulators claim harmonic spectrum allocation and management. Some others think that they should make spectrum management liberalized. As the gradually emerging of new wireless technologies, global harmonization on spectrum management is more and more difficult to realize since every country have different spectrum policies. While under such situation, liberalized spectrum management in the national level would be a better choice that can greatly enhance the ability of market mechanism to efficiently promote the usage value. Liberalization is allowing the market to decide how spectrum could be used and what kinds of usage could be targeted. However certain bands need to be obligate for the national security usage. Harmonization proposal on the other hand mainly consider the international roaming, standardization and economical scale for the equipment industry. Both of these propositions have advantages and disadvantages.

Figure 36 Compare between Liberalization and Harmonization Source: Siemens As we can see in figure, liberalization brings more benefit for the new innovation technology such as WiMAX and strongly promotes the intensive use of spectrum. Moreover it increases the competition of technologies which can boost the development process of new technology. But liberalization reduces the interoperability and compatibility and thus reduces the value of international roaming. Harmonization

118 “Global Spectrum Assessment and Policy” http://www.ncc.tw/consult/Intel.pdf access on 04/04/2007


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is more suitable for existing technology such as 3G. It takes advantages of technology standardization, and can generate more value from international roaming and other values of harmonized spectrum. However this proposal is time consuming and limits spectrum trading, thus it not appropriated for the launch of current WiMAX technology. The comparison reveals that liberalized spectrum management method is suitable for WiMAX service, since it is already designed to use multiple bands. And this method also facilitates the cooperation between operator and service provider that provide multi-level and various services in both licensed and unlicensed mode. Operator could lease or resell part of their licensed spectrum resource to service provider for specialized usage. Operator not only could somewhat release the pressure of license fee, but also could get additional revenue from service provider. Service providers can setup part of their services on licensed spectrum with a good price. On the other hand, we should not forget an important harmful effect of liberalization. Liberalization will cause high interference of channels due to the share of spectrum and complex of spectrum environment. WiMAX advocators should certainly pay attention to such weakness, and find out how to solve this problem as soon as possible before the real clash. As a strong advocator, WiMAX forum proposes liberalization spectrum management approach, which adopts flexibility of usage mode in spectrum allocation and management polices. This approach can essentially create an appropriate spectrum environment for providers to access to the new technology and accelerate the development of WiMAX technology. Of course, the regulator and certain technology advocator like WiMAX forum have their start point to support either harmonization or liberalization. Regulator mainly considers the long run of utilization for spectrum resource. While, WiMAX forum mainly consider the fast increasing of technology and market. Whatever which proposal will be adopted and how regulators balance these two methods, their common purpose is to promote the development of healthy and rapid progress of the whole WiMAX telecom industry.


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Chapter 9 Analysis of WiMAX Market Potential

Based on the discussion from above chapters, we are going to analyze the market potential of WiMAX in this chapter. SWOT methodology is used here as an analysis tool due to the reason that we need to find out the strategy of deploying WiMAX in different markets as the result of analysis, and this method is good at deriving strategy at the end. We will not go through the strategy analysis for all the market players, on account of the limitation of this report. The analysis will mainly study the strategy for operators and service providers, since they are the forerunner and key players of WiMAX market.

9.1 WiMAX SWOT Analysis 119

The SWOT analysis of WiMAX service should be divided into developed market and developing market due to the different external market environment. The strengths and weaknesses may be the same in these markets since the internal factors are fixed, while the opportunities and threats are different by market. The division of market is not based on the development degree of economy. It mainly depends on the access level of network infrastructure, especially the consideration of access level of broadband network infrastructure. The developed markets refer to the urban and suburban areas in developed and developing country. The developing markets refer to the rural areas in developed country and the underserved areas in developing country.

9.1.1 Strengths and Weaknesses

Internal Strengths Weaknesses � Support high bandwidth and QoS

guarantee mechanism for low latency IP application

� Based on proven OFDM techniques � Low cost potential to deploy and operate,

especially for rural areas � Higher throughput per base station (75

Mbps) and larger coverage (30 miles) than other BWA technology

� Support NLOS and LOS connection with

flexible network infrastructure

� Security issue still need to be considered � Immature revenue and profit share model � Currently, fixed WiMAX network could not

be fully compatible with mobile WiMAX network

� Non intentional uniform spectrum resource

119 “Brief Introduction to UWB, Wi-Fi, WiMAX” by Shyam Shetty, CTO, Adamya Group of Companies


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� Could work on both licensed and

unlicensed band, also support multi bands � NEW technology without the history

background problem as 3G � Smart antenna � Standardization of CPE

Table 7 Strengths and Weaknesses

Strengths

As listed in the table, WiMAX service has many advantages due to the adoption of advanced technology and the well-defined value proposition. The main advantage of WiMAX technology is the well-design of PHY and MAC layer, especially the adoption of OFDM and OFDMA technology as I have mentioned in the former chapter. Besides this strength, other strengths include: � The adaptation of MIMO smart antenna technology could efficiently eliminates

the adverse effects of multi-path propagation and thus improves the service quality of WiMAX network.

� WiMAX technology supports both LOS and NLOS connection, and can be

deployed with multiple access mode by its flexible network infrastructure. These access modes include Wi-Fi hotspots access, mesh access and so on. WiMAX network could either combine other wireless network to provide services or provides its own network solution. These flexible designs also provide cost-effective solution in some markets.

� Mobile WiMAX system supports scalable higher bandwidth (mobile WiMAX:

1.25-20MHz, 3G: 5MHz) and higher throughput than 3G network. Fixed WiMAX also provides larger coverage than other BWA technology such as Wi-Fi today.

� It support QoS guarantee mechanism to ensure low latency IP connection such as

VOIP service. This advantage also makes good sense in transmitting real-time multimedia data such as for IPTV streaming service.

� The development of WiMAX technology does not have expensive spectrum

problem which ever happened in 3G history. Governments have been aware that the costly 3G spectrums have blocked the operation of 3G services for operators at certain degree. So undoubtedly, costly spectrum acquirement would not possibly happen in WiMAX market. The government also present active attitudes towards flexible manage spectrum resource for innovation technology.

� The standardization of CPE can bring interoperability and low cost solutions. The

operator can get benefit from wide device availability of the new technology with multi-choice of vendors.

� WiMAX could work on both licensed and unlicensed bands, and these bands are


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already available in most of countries. Supporting multi bands allows WiMAX to provide multi-level services through different condition of frequency bands.

� Even though the deployment cost of fixed WiMAX is more expensive than DSL

in developed market, along with the enhancement of hardware and software standardization, the cost will drop down fast to compete with DSL. Especially, the cost of using WiMAX to upgrade DSL is much less expensive than using fiber network.

Weaknesses

� WiMAX secure issue is still a problem. The authentication mechanism and the quality of secret key are not good enough for operating high-secure network despite that WiMAX has security feature.

� Currently, fixed WiMAX network could not be fully compatible with mobile

WiMAX network. This will result in limitation for service providers to upgrade their fixed WiMAX network to mobile network.

� Various deployment and development path could be targeted for new innovation

of WiMAX technology. The revenue model and profit share model for carriers are complex and not matured yet. There is still no ready model for WiMAX services. Some small service providers may not invest on it before they are certain about their market position and their future vision.

� WiMAX supports multiple bands in both licensed and unlicensed frequency, this

is a double-edged knife. The advantage is that WiMAX can work on multi bands and is flexible for providing multi-level services. Disadvantage is the lack of available uniform and harmonized spectrum. This may become a barrier for international roaming and decrease the value of interconnection of WiMAX service.

9.1.2 Opportunities and Threats

External Opportunities Threats

Developed Market

� Cellular infrastructure for converged networks

� Limited WLAN wireless coverage � Various wireless application need high

speed and large coverage network � Strong promotion from industry and

especially chip equipment and network solution support

� Government push the wide deployment of

� DSL/ADSL technologies widely deployed in urban and suburban areas, also higher Initial cost of WiMAX deployment than DSL and Cable access mode

� Cellular penetration is very high, and

growing � limited support from mobile operator � Possible wide deployment of 3G with

upgrading standard--HSPDA


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fixed WiMAX

Developing Market

� Underserved DSL kind network infrastructure or no broadband access at all

� Positive attitude from government and

local providers � High Pent-up user requirements � In some countries, 3G licenses are still not

issued � Strong industry promotion, especially chip

equipment and network solution support � Market needs last mile solution for

broadband wireless access

� Restricted and immature regulation and policy environment

� limited support from mobile operator � Low penetration of population and low

ARPU

Table 8 Opportunities and Threats

Opportunities in Developed Market

� The converged network infrastructure needs the combination of cellular and broadband network, since both of them have advantages on the network performance. Wireless broadband technology is the best choice with higher transmission speed than wired access mode for developed market to achieve the goal.

� The design of short coverage Wi-Fi services limits the speed and coverage of

wireless Internet access. The laptop with embedded Wi-Fi chips could only get access to Internet within 300 feet. This limitation provides opportunity for WiMAX to extend the wireless connectivity up to 30 miles with high transmission speed.

� In developed market, such as Korea, Japan, multimedia, online gaming and IPTV

applications become more and more popular. These applications need high transmission speed and possible large area mobility which WiMAX technology could provide.

� In developed market. Most governments in US, Europe and Asia present active

attitude on WiMAX regulation aspects. They have allocated both licensed and unlicensed bands to allow operator and various service providers to develop appropriate applications.

� Under the good regulation environment, the major vendors have first promoted

the deployment of operators and service providers in these markets. Intel, Motorola, Alvarion and other powerful vendors are the advocates of OFDM technology and WiMAX advantages. Their supports drive the development of WiMAX service and push the standardization process in a certain degree. The


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support of these vendors includes development, production and research.

Opportunities in Developing Market

� Most developing countries have limited DSL broadband access or even no broadband access at all. Along with the increasing of economy scale, there exists huge market potential for WiMAX service, which would bring economical solution, flexible and fast installation for this market.

� Governments in developing market also holds active attitude from allocation and

regulation aspects. They believe WiMAX network could bring low cost and fast deployment broadband wireless solution to increase the average of broadband access and satisfy the increasing needs of customers.

� The user requirements in these markets have been highly pent-up, since

underserved broadband network infrastructure somehow impeded the increase of economy. This presents huge opportunities for deploying widespread WiMAX network.

� 3G haven’t been issued until now in some developing markets. Thus, mobile

WiMAX might have chance to become a big competitor and wide deploy in these markets due to the timing advantage.

� For WiMAX players, especially international and local vendors, developing

market have huge potential to become the major market for WiMAX, because of the high demands and poor support of network infrastructure.

� Last mile access problem has been the biggest challenges for other BWA

technologies to be the alternative of DSL and provide wireless DSL solution. WiMAX could solve this problem and thus have opportunities to be the most appropriate BWA technology for these markets.

Threats in Developed Market

� DSL broadband access widely deployed in developed market gives very limited opportunities for fixed WiMAX deployment. Especially the cost of fixed WiMAX services is higher than DSL. Also as a new comer, WiMAX could get less trust from customer than DSL.

� 2G/3G network is widely rolled-out in these markets. 3G subscribers are growing,

and the upgrading version - HSDPA has been launched to the market as well. In the contrary, the launch of mobile WiMAX is expected to happen at some day in next year. This factor will threaten the development of mobile WiMAX.

� Lack of the support from many mobile operators is another barrier for the market

growth of mobile WiMAX. Mobile operator might only consider to deploy mobile WiMAX as supplementary network or even would not deploy it at all since they regards mobile WiMAX more as a competitive technology then a complement.


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Threats in Developing Market

� Some governments in developing market perform strict regulatory policies to telecom industry. They consider telecom as the nation-related industry. In these markets, most of telecom companies are controlled directly or indirectly by the government. The emerging of WiMAX brings threats and competitions to the current wired incumbent operators. The governments may only allow wired and wireless incumbent operators to deploy WiMAX services and thus control the operation of WiMAX. And other providers might have no chance at all to enter this market.

� Mobile operators may still wait for the unissued 3G licenses. Since the operation

of 3G service could be national wide and incumbent service for personal communication which WiMAX network could not exceed. Even they have motion on trail and test WiMAX network, but WiMAX is still considered as backup network or complement network. This negative consideration may lower down the development process of WiMAX service in these markets.

� The low density of population may not bring significant ARPU to service

providers compared with the developed market. The deployment of WiMAX without suitable prepare may get negative effect.

9.2 Strategies

Strategies are derived from the above factors to give some recommendations and deployment plans for operators and service providers in developed and developing market. From the analysis of WiMAX market strategies, we could know the development potential of WiMAX services in two classes of markets. We also could find possible ways to avoid and overcome the weaknesses and threats.

9.2.1 Strategy for Developed Market

� S-O Strategies

The landscape of converged network provides WiMAX an opportunity to associate with cellular network. Mobile operators should actively deploy licensed mobile WiMAX as complement service of cellular network. Through the combination, they could combine fixed and mobile solution to optimize and enhance the system capacity of their mobile network appropriately in urban and suburban areas due to the high density of mobile subscribers. Such strongly integrated network could thereby attract high-end customers by providing various specialized applications such as B2B, real-time trading, LBS and other information services, also increase large potential of end users by adopting high-speed WiMAX access service. Furthermore, mobile operator can cooperate with service provide who provide Wi-Fi backhaul and niche business to extend the business and provide multi-level data stream applications by using cellular network and broadband wireless network, since cellular technology is


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not a very suitable platform for carrying out operations beyond voice service. Let’s have a look at an example. The deployment strategy of Sprint Nextel is a very good real life case for other cellular operators’ S-O strategies. Sprint Nextel adopts co-development strategy of WiMAX and 3G. The company has defined the long term development goal towards 4G. To achieve this goal, one decision is that the company has planed to invest substantive dollars for developing WiMAX in US. On the other hand, the company also maintains and upgrades actively their 3G network to CDMA20001XEV-DO Rev.A standard. This kind of combination strategy could provide higher flexibility on choosing technology and offering services. Spring Nextel therefore can use WiMAX to provide high speed data connection for laptop and PDA users since WiMAX has better capacity for data transmission than 3G. 3G has advantage to provide voice services for mobile users. Moreover, more and more laptops and PDAs will be available with embedded WiMAX chips by promotion of Intel. These widely available terminals of course need the support of WiMAX network. Most of the governments in this market support the deployment of fixed WiMAX and provide an open environment to allow WiMAX to compete with traditional wired access mode. The licensed band and unlicensed band are both available for the carriers. For medium and small WISPs, they should first address to provide Wi-Fi hotspots backhaul in unlicensed band for some CPNs, such as airport to extend the coverage of Wi-Fi network. Then the small WISPs could lease line from mobile operator or cooperate with operator to provide niche mobile services for their market. Such deployment not only could reduce the initial cost for service provider by using unlicensed band, but also can let service provider to start from providing niche BWA services and thus avoid the high investment for market entrance.

� S-T Strategies

Under the situation that the DSL broadband and cellular network infrastructures have been widely deployed and still growing gradually, service providers seem to have very limited opportunities to deploy national wide WiMAX network. Or even they can, the deployment will be somewhat repeated deployment. But they could find opportunities on some niche business. They can provide WiMAX service for enterprises and high-end users as I have mentioned above, since WiMAX could offer high transmission speed connectivity at business level. Even though DSL has been widely deployed, there still exist some demands from high-end users that DSL couldn’t meet their requirements. Especially the flexible, wireless and low cost deployment advantage is very suitable for the relocation of enterprise application. Their WiMAX service could work on both unlicensed bands and licensed bands. While for some ILECs who already owns DSL setup, they should deploy WiMAX network as appropriate solution to upgrade the capacity of DSL and Cable network, since WiMAX has considerable advantage of fast deployment and low cost, especially the converged potential with cellular by using WiMAX network. Otherwise, they would have to deploy extremely costly fiber network. For mobile operator, the deployment of HSDPA can somewhat reduce the interest on


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mobile WiMAX. Actually they could either deploy WiMAX complement service of 3G, or they can mainly concentrate on the development of 3G. Both HSDPA and WiMAX are designed towards 4G network. Whether or not they chose WiMAX finally, they will progress to 4G network.

� W-O Strategies

To deploy WiMAX network in cellular infrastructure for converged service, mobile operators needs high guarantee of security mechanism on account of the use of personal communication. But WiMAX currently still has some unsolved security issues. Mobile operators should first enhance the security issue of WiMAX, maybe the security mechanism from 3G network is good reference for them. Mobile operators have already had mature experience of revenue model on operating 3G services, they could also except to dominate and gain considerable revenue on WiMAX services. Service providers need to find appropriate revenue model for providing Wi-Fi/WiMAX mesh services since this service is a new combination of BWA service. There is no ready revenue mode for reference. The establishment of revenue and profit share platform between service providers and other suppliers should be various depending on different service models. This means that the revenue model of deploying Wi-Fi/WiMAX mesh network, WiMAX as alternative of DSL, or other deployment plan, should be different from each other. Currently fixed WiMAX network could not be fully compatible with mobile WiMAX network. Service providers should realize that this limitation will only exist for a short term. The barrier of compatibility between fixed WiMAX and mobile WiMAX is mainly because of the limited power of chips. Intel now is working hard on the implementation of new chips, and they have unveiled a chip called “Rosedale2” 120which is used to support mobile WiMAX and expect to be compatible with fixed WiMAX. So the problem is going to be solved soon. It only needs some time and the participation of other vendors. So service providers should be patient and confidence that fixed WiMAX would be able to upgrade to mobile WiMAX if they find out the upgrade is necessary one day. To allocate uniform bands for WiMAX seems could not be carried out in a short term, since the spectrum policies are quite different from countries. Mobile operators and service providers can not change this situation by their efforts due to the authority of governments. But for a few certain markets, there exist mainstream spectrum bands for use. For example, 2.5GHz seems to be a uniform band in US. Operators can use this band to provider WiMAX service within US, such as what Sprint Nextel does. � W-T Strategies For this situation, mobile operators should carefully evaluate the feasibility and risk for deploying WiMAX network. If only limited or non-considerable revenue benefit exists, it would be advisable to abandon this market. The security issues and non-uniform 120 “ New WiMAX chip set for launch” http://www.itweek.co.uk/personal-computer-world/news/2165878/wimax-chip-set-launch access on 29/04/2007


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spectrum band may transfer risks to their existing 3G network when the two networks are converged. However, mobile operators can concentrate on upgrading 3G network to achieve the improvement in another level and road towards 4G. While, service providers, especially small service providers should wait and see the further enhancement of WiMAX technology. Blindly investment will result in failure.

9.2.2 Strategy for Developing Market

� S-O Strategies

These markets contain huge revenue opportunities for various service providers to provide widespread WiMAX network. In these markets, DSL and Cable access have been underserved for many years. There are two reasons that fixed operators did not deploy wired broadband connection. One is the expensive deployment cost and extremely complex landform for civil engineering. The other reason is that operators could not get increased ROI (return of investment) due to the low density population. While in some rural areas of developing country, limited paying power of customers would only support low cost network access. While WiMAX has advantage to solve these two challenges, the cost of WiMAX is less expensive and faster for deployment than DSL and the costs are still low by the promotion of vendors. To solve the second problem, service providers should establish different menu to offer multiple levels of services, and thus ask for different charges from customers. This market has highly pent-up requirements for broadband along with the increasing of economy. The market needs a low cost wireless access service which could solve last mile problem to substitute DSL. To provide WiMAX in rural areas of developed countries, multiple service provides will struggle on developing WiMAX services. The powerful ILECs should widely deploy WiMAX services based on their strong economic capacity. Then they can resell the operation right of WiMAX network to the smallest retail service provide, which localize the WiMAX services for different rural communities. Thus small service providers could also enter the WiMAX market. In some developing countries, like China, incumbent operator may play both wholesale and retail role for operating WiMAX service, since such wide broadband infrastructure is indirectly controlled by the government. Some rural areas in developed market have already deployed cellular network. Mobile operators in these markets seem to be not appropriate to provide mobile WiMAX due to the low requirements of high speed mobility. The fixed operator can upgrade their fixed WiMAX to mobile WiMAX fast to compete with 3G if they need. 3G is lack in advantage on cost compared with WiMAX.

� S-T Strategies

The strict and immature regulation and policy in some developing countries such as China, becomes the barrier for operators to deploy and launch WiMAX service


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synchronous with other market. Mobile operators can consider deploying mobile WiMAX but need to carefully keep up with the regulatory direction of government. If the government allows WiMAX network to replace 3G network, mobile operators could deploy national wide mobile WiMAX network. If the government allows WiMAX as complement network of future issued 3G network, then mobile operator can provide 3G/wimax converged network. Actually the government most likely will support the second option. The strict regulation policy on the other hand provide opportunities to service providers who intend to deploy WiMAX network using unlicensed bands, since most of the developing market has allowed WiMAX to work on 5.8GHz unlicensed band. This band is somewhat uniform and free of charge. Service providers can use this band first to deploy fixed WiMAX using unlicensed band. They can upgrade fixed network to mobile WiMAX network and cooperate with licensed owners to provide mobile WiMAX in the future. According to the low population and ARPU, service providers should mainly concentrate on providing WiMAX service in centralized rural communities first, then expand gradually based on the user demands. This would be a suitable way for service providers to get expected revenue.

� W-O Strategies

Security is the main issue that needs to be considered for broadband mobile of personal communication. In this market, the advantage of WiMAX is mainly to provide fixed wireless broadband solution. So the fixed WiMAX is mostly needed for this market. The primary demands of users is to access to the Internet. However, security issue somewhat is less important than mobile network, since most of data transmission is more open than personal mobile communication. Service providers should provide fixed WiMAX as soon as possible to satisfy the highly pent-up needs of users. But they still need to find appropriate revenue model to ensure the gradually increasing of income. Security and non compatible issue between fixed WiMAX and mobile WiMAX might be solved in short period by the promotion of many powerful venders. Service provider should be able to provide mobile WiMAX service in the near future. While mobile operator who intends to provide mobile service need to first solve security problem, otherwise they should concentrate on the deployment of cellular network which is a more mature network than mobile WiMAX from both technology and market experience aspects.

� W-T Strategies

If the strict regulation policy encumbrances small service providers, the ILECs might become the exclusive service provider of WiMAX services. However, it does not mean that there is no room for survival of small service providers. They could try to become retailer to help ILECs take up WiMAX service in certain small rural community, since ILECs may not be able to manage the various wide and complex rural areas. Mobile operator in developed country should continue to develop their cellular network, since these networks have already been there and can satisfy the low-end requirements of


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mobility. Mobile operator in developing country should consider deploying low cost mobile WiMAX network when the needs of mobility increase, since these markets might not have cellular at all. The deployment cost of cellular network would be more expensive than mobile WiMAX.


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Chapter10 Conclusion

WiMAX could provide high speed, broad coverage and cost-effective fixed and mobile broadband access solution. VoIP, IPTV, backhaul, last mile and rural connectivity are the main usages of WiMAX service. The targeted users include residential, business, and mobile users. The hype of WiMAX technology says that it will replace 3G and DSL. Our analysis of technology comparison indicates that it surely have some arrestive advantages compare to Wi-Fi, 3G, DSL and Cable technology. But from short-term angle of view, WiMAX would not replace any of these services, since they are defined for different use than WiMAX and already have market-based groundwork in certain degree. Even though our cost analysis reveals that WiMAX has cost-effectiveness and high capacity advantage in rural areas compare with ADSL, WiMAX does not have obvious cost advantage in urban and suburban areas. The WiMAX ecosystem is a common platform created by all industry players in the WiMAX value chain. A successful BWA business depends on a stable and comprehensive industrial ecosystem. The stakeholders include operator, service provider, equipment vendor, system integrator, component vender, and user. WiMAX forum offers a platform of cooperation for stakeholders to build up such ecosystem. There are three primary elements to build a healthy ecosystem -good standards, cross industry cooperation and widely available devices. WiMAX has well-developed standardization process, through which can also help to gain trust from customers, promote the competition of various vendors, thus lower down the price of product. It could either work on the license-exempt or licensed frequency band. Both bands have advantages and disadvantages to run WiMAX service upon. To get license spectrum for WiMAX is very costly. While the capacity of license-exempt bands is less controlled and mature than licensed ones. Liberalization and harmonization are two methods for allocating licenses. The former one brings more benefit for the new innovation technology, in our case, WiMAX. But the cost is reduction of interoperability and compatibility for international roaming. In developed countries, 3G mobile networks are widely deployed There are quite limited market opportunities for WiMAX. It can be adopted as a complementary technology for 3G network, and a cost-effective wireless backhaul solution for sub-urban area. The value proposition of WiMAX in these markets mainly concentrates on extending the coverage of WLAN network to metropolitan area connectivity. Mobile operators should actively deploy licensed mobile WiMAX as complement service of cellular network. Also, service providers can provide WiMAX service for enterprises and high-end users, since WiMAX could offer high transmission speed connectivity at business level, with high flexibility, and low deployment cost. Even though, fixed WiMAX network could not be fully compatible with mobile


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WiMAX network, this limitation will only last for a long time. Meanwhile, operators should carefully evaluate the feasibility and risks for deploying WiMAX network. In developing countries, many areas are underserved or lack of the broadband network. WiMAX is well-suited for such environment. There exist huge bases of potential customer groups that areas currently served with no or limited broadband access service. The value proposition in such market is to provide an economical, flexible and fast deployed solution to improve the Internet access rate in this market. WiMAX is less expensive and faster for deployment than DSL without the burden of civil engineering. Also WiMAX is designed with very high scalability. For limited paying power, service providers can establish different menu to offer multiple levels of services. Mobile operators can consider deploying mobile WiMAX but need to carefully keep up with the regulatory direction of government. Service providers can first deploy fixed WiMAX using unlicensed band, then upgrade fixed network to mobile WiMAX network and cooperate with licensed owners to provide mobile WiMAX in the future. If ILECs becomes the exclusive service provider of WiMAX services, small service providers could try to become retailer to help ILECs to take up WiMAX service in certain small rural community. WiMAX technology is designed to meet different user requirements by diversified access models. The deployment strategies of WiMAX services highly depend on the different characteristics of demographic regions.


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Acronmy WiMAX: Worldwide interoperability for Microwave Access Wi-Fi: Wireless Fidelity BWA: Broadband wireless access CPE Customer Premises Equipment AM Access Mode ILEC Incumbent Local Exchange Carrier ARPU Average Revenue Per User 3G Third Generation (mobile communication) HSDPA High Speed Downlink Packet Access DSL Digital Subscribers Line ROI Return of Investment Coveraged network A single network capable of carrying

a mixture of voice (telephone), video (production and training),

and application data. 4G Short for fourth-generation

cellular communication system. CDMA20001xEVDO Rev.A next evolution of market-proven

CDMA2000 1X networks LBS Location Base Service B2B Business to Business e-commerce OFDM Orthogonal Frequency Division Multiplexing SOFDM Scalable OFDM OFDMA Orthogonal Frequency Division-Multiple Access WLAN Wireless Local Area Network WMAN Wireless Metropolitan Area Network WWAN Wide Area Network QoS Quality of Service VOIP Voice over IP LOS Line-of-Sight NLOS None-Ling-of-Sight MIMO Multi Input Multi Output RF Radio Frequency PMP Point-to-Multi-Point PTP Point-to-point ETSI European Telecommunications Standards Institute ITU International Telecommunications Union U-NII Unlicensed National Information Infrastructure ISM Industrial, Scientific, Medical

(a global, public radio frequency band, 2.4GHz) WRC World Radio communication Conference IEEE Institute of Electrical and Electronics Engineers HiperMAN High Performance Radio Metropolitan Area Network ISP Internet Service Provider


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WISP Wireless Internet service provider OEM Original Equipment Manufacturer CPN Customer premises network SOHO Small Office/Home Office CAPEX Capital expenditures WiBro WiBro is a broadband wireless internet technology

being developed by the Korean telecoms industry. In February 2002, the Korean Government allocated 100MHz of spectrum in the 2.3GHz band, and in late 2004 WiBro Phase 1 was standardized by the TTA (Telecommunications Technology Association) of Korea.

LMDS Local Multipoint Distribution Service MMDS Multichannel, Multipoint Distribution System CATV Community Access Television

(Also known as Cable Television) FCC Federal Communications Commission XDSL A generic term for DSL WCDMA Intellectual Property Rights IPR Intellectual Property Rights DSLAM A Digital Subscriber Line Access Multiplexer ADSL Asymmetric Digital Subscriber Line OPEX Operating expenditures VBR Variable Bit Rate TDM/TDMA Time Division Multiple Access FDD Frequency Division Duplexing TDD Time Division Duplex FWBA Fixed broadband wireless access


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[21] “VOIP is the key of successful WiMAX” http://www.builder.com.cn/developer/webdevelop/story/0,3800067013,39348971,00.htm access on 02/03/2007

[22] “Can WiMAX address your application?” by WiMAX forum [23] “Nokia will have WiMAX handset in 2008”

http://www.phonescoop.com/news/item.php?n=1918 access on 07/04/2007 [24] Reference from book “WiMAX handbook” by frank ohrtman 2005 [25] “WiMAX handbook” by frank ohrtman 2005 [26] “WiMAX technology application”

http://www.cyberhome.cn/wireless/tech_WiMAX.htm [27] In Brief: IBM, Alvarion develop public-safety WiMAX [28] “TeleGeography update”

http://www.telegeography.com/cu/article.php?article_id=14034&email=html access on 27/03/2007

[29] “The nine issues towards WiMAX” http://www.ccidcom.com/Technology/Expert/200607/13136.html

[30] Figure reference from https://william-baldwin.com/home.htm


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[31] Figure copy from http://www.awbnetworks.com/wireless.htm [32] “Making the case for mobile WiMAX” by Nokia [33] “Sprint releases more WiMAX system”

http://www.intomobile.com/2007/03/27/sprint-releases-more-wimax-ecosystem-details.html access on 04/30/2007

[34] WiMAX forum website [35] “FAQ” from www.WiMAXforum.org [36] “Alvarion demonstrates Intel's new WiMAX chip in action”

http://www.invictusnetworks.com/faq/WiMAX%20Information/Alvarion-Intel%20WiMax.pdf access on

[37] “Clearwire gets USD 900 million from Intel and Motorola” http://www.nordicwirelesswatch.com/wireless/story.html?story_id=4875 access on 26/04/2007

[38] Figure from http://www.xchangemag.com/articles/06deccover01.html access on 15/04/2007

[39] “IEEE STANDARD 802.16 FOR GLOBAL BROADBAND WIRELESS ACCESS” http://www.itu.int/osg/spu/stn/spectrum/workshop_proceedings/Background_Papers_Final/Francescso%20Troisi%20-%20ITU%20meeting_rev2.pdf

[40] “Build end-to-end WiMAX network” http://www.senza-fili.com/downloads/SenzaFili_for_Alvarion_BuildingWMXE2E.pdf, April, 2007

[41] Five powerful vendors strong support the standardization of mobile WiMAX http://dig.17tech.com/vote/11200.html access on 26/04/2007

[42] “Taking wireless to the WiMAX” by Deepak pareek [43] “Make Way for WiMAX Certified Products”

http://www.wsdmag.com/Articles/ArticleID/9998/9998.html [44]http://focus.ti.com/general/docs/bcg/bcgviewnewsletter.tsp?templateId=6116&navi

gationId=12072&contentId=25573 figure from this website. [45] Master thesis of DTU, “seamless mobility” by chong Li, 2006 [46] “Deployment license-exempt WiMAX solutions” white paper from Intel [47] “Global Spectrum Assessment and Policy” http://www.ncc.tw/consult/Intel.pdf [48] “Business model” http://en.wikipedia.org/wiki/Business_model [49] “Understanding Wi-Fi and WiMAX as Metro-Access solutions” Intel white paper

2004 [50] “WiMAX, opportunities and challenges in a wireless world” white paper of

signals research group ,LLC. 2005 [51]“MIMO”,

http://en.wikipedia.org/wiki/Multiple-input_multiple-output_communications#History_of_MIMO access on 03/01/2007

[52] “DSL” http://en.wikipedia.org/wiki/Digital_Subscriber_Line access on 03/12/2006

[53] “the comparison of WiMAX and XDSL” http://www.cww.net.cn/WiMAX/2007/3/60075.htm access on05/12/2007

[54] “Wi-Fi” http://en.wikipedia.org/wiki/Wi-Fi access on 03/12/2007 [55]“get to know the Wi-Fi alliance” http://www.wi-fi.org/about_overview.php access

on 05/12/2007 [56] “WiMAX” white paper by Alvarion


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http://www.oecd.org/dataoecd/28/49/33864397.pdf access on 01/12/2007 [57] " the deployment of WiMAX in sprint "

http://news.ccidnet.com/art/1032/20070328/1047083_1.html access on 06/03/2007

[58] “WiBro” http://en.wikipedia.org/wiki/WiBro access on 04/03/2007 [59] “ The development of WiBro”

http://media.ccidnet.com/art/2617/20061027/934915_1.html access on 03/04/2007

[60] “Latin America first great battleground for WiMAX http://www.wimax.com/commentary/spotlight/spotlight11-15-2005mw access on

04/04/2007 [61]“The hope of WiMAX is in ChinaRailcom”

http://media.ccidnet.com/art/3053/20051114/371305_1.html access on 04/04/2007 [62]“the discussion about WiMAX access mode”

http://news.ccidnet.com/art/1907/20050630/277887_1.html access on 05/04/2007 [63] Figure reference from

http://www.wimax-industry.com/mk/mrv/skyresearch/mksky1a.htm access on 04/04/2007

[64]“RF Spectrum Utilization in WiMAX” http://www.fujitsu.com/downloads/MICRO/fme/wimax/whitepapers/wpbwaRF_wp04.pdf access on 16/-4/2007

[65] “New WiMAX chip set for launch” http://www.itweek.co.uk/personal-computer-world/news/2165878/wimax-chip-set-launch access on 29/04/2007

[66] Figure reference from http://www.nokia.com/NOKIA_COM_1/Press/Press_Events/Nokia_Technology_Media_Briefing/Mobile_WiMAX_white_paper.pdf access on 06/04/2007

[67] “maxing out on wimax”http://www.computerworld.com.au/index.php/id;1044277208 access on 05/04/2007

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