SAN FRANCISCO (Dow Jones) -- The next-generation wireless technology, known as
WiMax, is full of potential to drive cheaper, high-speed wireless data, voice
and video communications, or a dismal failure, depending on who you talk to.
On the one hand, rumors have surfaced that several cable and technology giants
are poised to make a multi-billion dollar investment in the nascent technology.
Last week, The Wall Street Journal reported on talks to resuscitate the failed
joint venture between Sprint Nextel Corp. (US-S) and Clearwire Corp. (CLWR), a
venture formed to build out a WiMax wireless network in the U.S.
Those talks reportedly include efforts to raise at least $3 billion from cable
operators Time- Warner Inc. (TWX), Comcast Corp. (CMCSA), and Bright House
Networks, along with tech firms Intel Corp. (INTC) and Google Inc. (GOOG).
And on the other hand, there is Garth Freeman, the chief executive of a
little-known Australian Internet company called Buzz Broadband. A few weeks ago,
Freeman spouted off at an industry conference in Thailand, where he lambasted
the technology his firm had put into place, calling the episode a "miserable
failure."
At face value, the viewpoints seem to be at the opposite ends of the spectrum.
One dismisses WiMax, while a new venture, backed by big names and big bucks,
could bode well for the adoption of the technology.
But both seem to confirm the increasingly skeptical view that WiMax, once
touted as a lower-cost, wider-range wireless technology, is taking longer to
deploy, is more expensive than previously estimated and it may not be the
wireless panacea once predicted.
"Anyone who is going to spend the money better make sure they do due diligence
to make sure it works," said Phillip Reedman, a Gartner analyst. "Like any
construction project, it always costs more and takes longer than you originally
anticipate."
In February, Andrew Parkin-White, principal analyst of Cambridge, U.K.-based
Analysys wrote a critical report of the technology. He said 2008 will be a
decisive year for WiMax after the serious setbacks suffered last year, when the
plug was pulled on the venture between Sprint Nextel and Clearwire -- a company
founded by cellular pioneer Craig McCaw.
As of Monday, no one was willing to confirm the reports that Comcast may be
investing as much as $1 billion into a new joint venture operated by Sprint
Nextel and Clearwire and that Intel is reportedly willing to put in as much as $
1 billion or more.
Kari Aakre, a spokeswoman for the Santa Clara, Calif.-based chip giant
declined to comment on rumors and speculation. But she added that Intel remains
bullish on WiMax, saying the technology is definitely "ready for prime time."
She declined to discuss the Buzz Broadband CEO's comments, since Intel was not
involved in that installation. Intel plans to launch chips that will turn
laptops and other mobile gadgets into WiMax-enabled devices.
"A WiMax network is not just WiMax equipment, there are a lot of things that
have to go into it. You can do it well or you can do it poorly," said Chad
Parelle, vice president of marketing at Airspan Networks (AIRN), a WiMax
equipment supplier. "In the case of Buzz Broadband, they did it poorly and they
refused to accept our help, or even the help of a third party to fix the
issues."
Buzz Broadband's problems appear to stem from an inadequate backhaul network,
a high-capacity line used to transmit data from the wireless network to a wired
one. The company may have underestimated the number of users, and its pipe was
likely not big enough. Freeman did not respond to email and phone messages to
discuss his firm's experience.
"This is what happens when you try to cut costs to the bone," said Ronald
Gruia, principal telecom analyst at Frost & Sullivan. "You should always give
yourself some wiggle room."
Perhaps Intel's success with another wireless technology is partly to blame
for the great expectations surrounding WiMax. Some in the industry had anointed
WiMax as the next generation of WiFi, the now-popular wireless technology mostly
used by mobile warriors on laptops to access the Internet via public hotspots,
or at work or home. Intel was a big proponent of WiFi and its chipsets that work
with their microprocessors, or brain chips, let laptop users easily connect to
WiFi networks. Intel's cheerleading and work setting standards, plus the ability
to buy computers with built-in WiFi capability, helped fuel widespread adoption
of WiFi by consumers and corporate America.
"With WiFi ... there is really not a lot of complexity to it," said Francis
Sideco, a senior analyst at iSuppli.
But with WiMax, he noted, "the devices aren't there yet ... The devices ...
have to be there, the infrastructure/actual network has to be there, and the
applications have to be there as well. Until those three things start to gather
momentum, it's going to be this slow trickle."
The cable companies want to use WiMax to be able to better compete with the
telecommunications giants like AT&T Inc. (T) and Verizon Communications Inc. (
VZ), which are gearing up to offer consumers more services that need more
capable networks: home telephone service, high-speed Internet access, cell phone
services and high-quality video.
Some analysts see WiMAX as competing with the emerging next generation data/
cell networks, such as Long Term Evolution (LTE) and the High Speed Packet
Access (HSPA).
"Even though there has been a lot of hype around WiMax, it's just another
cellular technology," Qualcomm Inc. (QCOM) chief executive Paul Jacobs said last
year at the big wireless show called CTIA, which is going on this week in Las
Vegas.
Sprint had planned to invest $5 billion in building out the WiMax network by
2010, a hefty sum that activist investor Ralph Whitworth took issue with when he
launched his fight with the company.
But just because big companies such as Comcast, Time-Warner, Intel, and others
want to throw lots of money at a technology, doesn't mean it's going to succeed.
One of the big reasons the U.S. lags behind Europe and Asia in cellular
technologies is due to the fact that the U.S. is an alphabet soup of competing
networks and technologies, and not enough standards. Perhaps WiMax will only
split the market even further.
(END) Dow Jones Newswires
04-01-08 0018ET
Copyright (c) 2008 Dow Jones & Company, Inc.