WiMAX Gets Down to Business

Chasing the Consumer Is Not the Only — or the Safest — Play

There’s also an opportunity for WISPs tapping the business market to leverage applications. For instance, consider a digital signage opportunity: A pixel screen mounted on the side of a food cart could be rented out as a billboard.

“We foresee the ability to deliver an entirely new user environment,” explained Paul Brody, a partner with IBM Global Business Services and the leader of the global electronics industry strategy practice at IBM. “But the business models need to change incrementally.” That said, change they must, because what’s the point of building a 4G network unless you’re going to change the business models fundamentally.

The Trouble with the Consumer Market

This fall the first commercial 4G market on the Sprint-Nextel Corp. WiMAX network went live in Baltimore, and with it began an era that many have been feverishly hoping will be application- and consumer-electronics focused. That’s the idea, anyway: that a blanket of pervasive wireless broadband — and an accompanying universe of WiMAX-ready devices that you can buy in any retail electronics store — will completely change how consumers use communications. For operators, business models will become about third-party applications, leveraging network and subscriber information for value-adds, and advertising.

But there are problems with that coming to fruition anytime soon, which leaves glaring issues in the business model for now. For instance, Sprint’s deployment of WiMAX is actually not very different at the moment — aside from offering higher speeds — than the subscription and application approach taken with its 3G counterpart, EV-DO Rev. A, because WiMAX devices other than laptops and handsets (like cameras, gaming devices, televisions, outdoor billboards, cars, digital photo frames, personal digital signage panels, refrigerators, sunglasses, watches, etc.) aren’t even close to commercial. It’s still a flat-rate data plan for basic broadband access.

Then there’s the uncertainly involved from a technology perspective. LTE and WiMAX are the de facto 4G options left out there since the official demise of Ultra-Mobile Broadband. While In-Stat expects mobile WiMAX ultimately will outpace LTE over the next few years due to timing of network rollouts (next year would be the absolute earliest for any commercialization of LTE), the research firm finds that neither are quite gelled, as it were, considering that already the ITU is working on LTE Advanced and 802.16m WiMAX, both of which are being specially crafted to offer 100mbps mobile throughput and 1gbps stationary throughput.

A lot is riding on what happens beyond Baltimore. The success of the Sprint/Clearwire mobile WiMAX rollout is expected to have a huge effect on whether or not large worldwide operators will roll out mobile WiMAX, In-Stat noted, predicting that mobile WiMAX and LTE regardless will represent only a miniscule portion of the total 4.8 billion mobile subscriptions in 2013.

Meanwhile, the 3G network technology known as HSPA remains a strong, growing area of development, with 10mbps downloads to make an appearance next year and some vendors demonstrating 20mbps, 40mbps and 100mbps in the lab now. HSPA, noted In-Stat, may turn into WiMAX's true competitor, and also may delay LTE rollouts. It also might make WiMAX more of an island technology in a sea of GSM.

In other words, the Sprint model, which relies on the deployment of a large WiMAX connectivity footprint, to in turn give consumer electronics companies enough of a target market (economies of scale, you know) to justify building things like WiMAX-enabled cameras, or televisions, may or may not have legs.

And when it comes to the applications themselves, there’s the host of technical backend issues to consider, which are the same for any mobile application business model. Interoperability for Web applications is a key to consumer uptake, but with a fractured connectivity landscape and a range of devices running different OS, how can the industry enable that? How can it manage those applications and content from a DRM and security perspective? How can the user interface be crafted to give a consistent experience regardless of device? How can operators balance the cost of delivering data and a flat-rate ARPU model? How will all the stakeholders ultimately get paid?

The bottom line: the consumer play is a wild and wooly place, rife with opportunity, excitement and uncertainty. All eyes will be on Sprint as we see how things develop.

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