The Business of WiMAX

Deepak Pareek
Resource4Business, India

Copyright 2006

John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England Telephone (44) 1243 779777

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Contents
Preface PART One Understanding WiMAX ix 1 3
3 6 10 12 17 24 33

1 Introduction
1.1 1.2 1.3 1.4 1.5 1.6 1.7 Wireless Communication: Any Time, Any Place Wireless Networks Wireless Technologies Third-generation Mobile Systems WLAN WiMAX What Next? 4G

2 WiMAX in Depth
2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 WiMAX: Broadband Wireless Access WiMAX Revolution WiMAX: Working WiMAX: Building Blocks WiMAX Technology WiMAX Standards WiMAX ForumTM WiMAX: Regulation WiMAX Roll-out

35
35 39 42 44 47 52 59 65 69

3 WiMAX Hype
3.1 3.2 3.3 3.4 The The The The Confusion(s) Ahaa(s) Why(s) Oop(s)

71
72 73 75 80

vi

CONTENTS

PART Two
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9

WiMAX Effect

87 89
91 91 92 93 94 95 96 96 97

4 WiMAX Solutions
LOS Benets of NLOS Self-install CPE Nomad, Portable and Mobile Deployment Nomadicity and Portability Mobility Spectrum Licensed Spectrum Licence-exempt

5 WiMAX Applications
5.1 5.2 5.3 5.4 5.5 Metropolitan-area Networks Last-mile High-speed Internet Access or Wireless DSL Backhaul The Rural Broadband Problem 3 Vs: VoIP, VPLS and Video

101
102 105 110 112 114

6 WiMAX Impact
6.1 6.2 6.3 6.4 6.5 6.6 6.7 Broadband for the Masses Affordable Broadband Moore Meets Marconi: Wireless Applications Expanding Competition: WiMAX Get Ready For Disruption Catalyst to Economic Growth The Road Ahead

121
121 122 123 127 136 139 144

PART Three

WiMAX Business

159 161
161 162 168 170

7 WiMAX Markets
7.1 7.2 7.3 7.4 Market Market Market Market Dynamics Types Segment Structure

8 Economics of WiMAX
8.1 8.2 Why Wireless? When is Wireless Right?

173
173 174

CONTENTS

vii

8.3 8.4 8.5 8.6

The Economic Analysis The Business Case for WiMAX Business Considerations WiMAX Business Models

175 178 192 201

9 WiMAX Opportunity
9.1 Broadband Wireless Trends: Building Momentum

211
214

PART Four

WiMAX Strategy

225 227
227 230 234 236 237 239 244 246 249

10 Strategy for Success: Service Providers

10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 Understanding Diversity: Service Providers Strategy Development Wireline Carriers New Entrants Alternative Carriers Cellular and Mobile Service Providers New Revenue Opportunities Value Added Services The Business Imperative Recommendation

11 Strategy for Success: Equipment Vendors

11.1 11.2 11.3 11.4 11.5 WiMAX Value Chain Original Equipment Manufacturers Chip Manufacturers Dynamics of the Value Chain Recommendations

251
253 256 258 259 260

12 Strategy for Success: Government and Regulators

12.1 12.2 12.3 12.4 12.5 Making More Spectrum Available Ideal Framework for Spectrum Allocation Reducing Legacy Regulation Governments Can Make a Positive Impact Recommendations

261
262 263 267 269 271

13 Strategy for Success: Users and Investors

13.1 13.2 13.3 13.4 Wireless Investment Picks Up BWA: Industry Matures WiMAX: Bubble or Lifetime Opportunity Recommendations

273
273 275 275 277

viii

CONTENTS

Appendices A1 WiMAX Certication Process

Abstract Test Suite Process

279 281
283

A2 WiBro A3 Proprietary BWA Systems

Arraycom Flarion IP Wireless Navini Conclusion

285 289
289 290 290 290 291

Glossary Bibliography Index

293 309 313

Preface
Modern technologies are revolutionizing the way we work, play and interact. It is not an exaggeration to suggest that these disruptive technologies are altering the way we live and that, with every passing day, these disruptions are becoming greater. This trend has created new competitive threats as well as new opportunities in every walk of life. The telecommunications industry is nding itself most affected by these developments. The human behavioural trait responsible for these unprecedented but welcoming tremors is communication.

WiMAX: THE SUBJECT

When this book was initially planned, WiMAX technology was new, unproven and the subject of much doubt and uncertainty. It held promise to be sure, but then so have many broadband wireless formats over the years, with little result. WiMAX is still very new and unproven, having only just seen initial deployments (in xed formats) in service provider networks. The big difference, however, and the reason why WiMAX remains an area of technological promise is the push for standardization and equipment certication that has occurred over recent years. Even though commercial deployment and service introduction are still in their infancy, WiMAX is in a standardization and certication cycle that will potentially lower the costs of equipment production and pave the way for future iterations of the technology to be released and deployed more efciently. To truly understand WiMAX, one must wade through a mass of technical talk, market speak and plain old hype about what the specication can and cannot do. This book will outline how 802.16 technology works, how it is likely to evolve, what is driving the

PREFACE

technology, what it will realistically deliver and, just as critically, what it cannot achieve. It will also look at the equipment necessary to bring the market to life and analyse potential critics of the technology such as incumbent wireline and wireless network operators, competitive DSL suppliers and enterprises. The likely time frames for commercial availability of WiMAX products will be examined and the obstacles that stand in the way of widespread WiMAX adoption, ranging from spectrum issues to the competitive threat of 802.11 and 3G cellular technologies. This book will also look at how pricing pressures will be intense in this market, even for rst-generation products. The book will draw on some of the original research reports from a leading WiMAX analysis and research outt, Research4Business (R4B), which provide the most comprehensive and up-to-date analysis ever undertaken on the WiMAX market. Based on information from direct interviews conducted with technology suppliers, service providers and investors with a direct interest in the WiMAX market, these reports provide an overview of everything linked to WiMAX. Having a grasp on this information was vital for as an author on this subject, and I am grateful to R4B. The Business of WiMAX is a book which is a step in the direction of demystifying WiMAX. It is divided into four sections, each covering an important aspect of the subject. The heart of the book is an in-depth exploration of the business case for WiMAX, WiMAX business models and success strategies for the players.

Part One Understanding WiMAX

This section provides an overview of WiMAX landscape and consists of three chapters.

Part Two WiMAX Effect

This section provides a top-level view of solutions provided by WiMAX, their applications and the impact and consists of three chapters.

Part Three WiMAX Business

This section gives a business perspective of the subject, which includes a top-level view of the market, opportunity and economics of the subject and consists of three chapters.

PREFACE

xi

Part Four WiMAX Strategy

This section discusses Strategies for Success for various stakeholders and players in the WiMAX economy; it consists of four chapters, each covering a specic player. Some detailed readings are also included on different topics that have been touched upon in the main text but not covered in full so as not to limit the audience. The Appendix provides a behind-the-scenes look at the process for certication, from technological tests right down to how the gear will be labelled once it is certied, as well as present proprietary broadband technologies and key market players. Get Ready The WiMAX is coming. . .

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