WiMAX Struggles to Find a Foothold in Western Europe
February 25, 2009
Its an uphill climb for WiMAX in the land 3G created. In the second installment of our look at WiMAX around the globe, we focus our attention on western Europe.
Will WiMAX become an orphan technology? Has the big push from 3G in the last two years and the prospect of 4G pushed WiMAX to the margins?
It will be a different story when we turn to Eastern Europe (next), Africa, and the Far East in future installments. But in the rest of Western Europe, which we explore here, the picture is much as in the UK and Ireland.
I think the industry is just looking somewhere else right now, its not looking at WiMAX, says Emma Mohr-McClune, German-based principal analyst for wireless services in Europe at Current Analysis, a U.S. firm.
There are plenty of examples in our industry of great technologies, which didnt get the support in time to make it into the mass market and I have a feeling thats whats going to happen [with WiMAX].
The reasons are simple. Established service providers are committed to 3G network solutions based on legacy GSM technologywhich means High-Speed Downlink Packet Access (HSDPA), and in the future, LTE (Long Term Evolution).
Beaten to the punch
After five years of deployments, HSDPA is a mature technology in Europe. Urban and suburban areas of most countries are saturated with coverage. Networks deliver theoretical peak download throughput of 3.6 megabits per second (Mbps), even when the device is mobile. Many users are deciding they dont need anything more.
Mohr-McClune guesstimates the percentage of the Western European population left uncovered by 3G at 10%. And as you go north, penetration gets better and better. Theres just not much of a business case for WiMAX.
Meanwhile, WiMAX lacks standardization, device compatibility, and increasingly, a clear roadmap, she contends. While it has a theoretical head start over cellular technologies in wireless broadband, the cellular technologies are catching up.
Why would [cellular providers] go with a whole new technology when their legacy technology is continuing to evolve, and getting very fast? The faster cellular networks get, the less incentive there is for them to go with a different technology.
This may be an excessively mobile-centric perspective, though. Howard Wilcox, a senior analyst at UK-based Juniper Research, doesnt see WiMAX competing head to head with 3Gor at least not yet.
I think if you talk to a selection of WiMAX and 3G operators, they would say that they are not competing with each other, that they view it as more complementary than competitive, Wilcox says. I think its horses for courses.
In other words, whats suitable for some isnt necessarily suitable for all. WiMAX, he suggests, could still find a market among users, even in urban centers, who need higher-speed connectivity while mobile than they can get from 3Garchitects who need to transmit large blueprint files, for example.
For now, though, WiMAX competes primarily in the fixed wireless access space, with some providers offering nomadic servicethe same modem you use to get access at the office or at home, also gives you access anywhere else within the providers coverage area.
Even there, WiMAX does not have an easy time. In most markets, DSL providers can and do compete hard on price and service levels, notes analyst Cintia Garza, team leader of the WiMAXCounts program at Maravedis Inc., a research firm focused on WiMAX.
In France, for example, DSL providers offer triple-play packages that include Internet access starting at 30 a month, while WiMAX providers offer relatively low-speed connectivity (1 to 2 Mbps) for a higher price, 55.
So WiMAX, to this point, has been confined mainly to supplementing wireline service to reach rural and other underserved areas. Its very much a niche proposition in this region, Mohr-McClune says.
This is reflected in roll-out strategies of some of the major players in the region.
Telenor in Norway, for example, which announced its WiMAX-based (16d) service in late 2007, plans to deploy first in cottage country along the Trøndelag coast. It will use wireless primarily in areas where it cannot provide ADSL service. DBD Deutsche Breitband Dienste GmbH in Germany is also explicitly targeting underserved areas.
Its not clear how many live commercial WiMAX deployments there are in the region. WiMAX Counts says more than 80 providers are active across Europe (including the UK, Ireland, and Eastern Europe), of which an estimated 70% are in Western Europe. Information at the WiMAX Forum site suggests a smaller number are actually offering commercial services.
Certainly the number of commercial providers is far fewer than the number of licensees. Indeed, in some jurisdictionsFrance, for oneregulators are investigating apparent breaches of contract by licensees who have not launched service according to schedule and may be subject to fines or revocation of their licenses.
According to Maravedis, the current aggregate number of WiMAX subscribers, again for all Europe, is about 550,000, with an estimated 85% concentrated in Western Europe. The subscriber base is growing at about 20% per quarter, Garza says.
Juniper last year predicted the subscriber base in Europe would reach about three million by 2013but those numbers are under review, Wilcox hastens to point out.
The majority of deployments, such as Telenors, use older 802.16d WiMAX technology, which can only deliver fixed and nomadic service. A smaller number, like Worldmaxs Aerea, use newer 802.16e technology. Its capable of delivering mobile service, but not over 3.5 GHz spectrum, which lacks optimal propagation characteristics.
Linkem S.p.A, an Italian company that started out offering hotspot services, but has begun a national roll-out of 802.16e technology, does bundle Internet access with VoIP service over the same connection. Linkem so far offers service only in some parts of Lombardy in the north and Puglia in the southeast.
Linkems value proposition is similar to Xohms in the U.S [aka Clear]. It promises peak download throughput of 7 Mbps, and upload of 1 Mbps, both significantly faster than 3G can offer.
Basic all-you-can-eat Internet service is 20 a month. For 30, Linkem throws in unlimited VoIP calling to landline numbers anywhere in the country, and for 45, adds 300 monthly minutes of calling to mobile phones. (As in most of Europe, Italian mobile users receive calls at no costthe caller is charged.)
But this is not mobile telephony or even true mobile broadband. Linkem offers modems for desktop and laptop computers and makes no claims about viability of connections when the device is mobile.
Except in parts of Scandinavia, where there is some 2.5GHz spectrum in use, WiMAX in Europe is primarily in the 3.5GHz band. Licensed providers using 16e say they will offer mobile service, but that may depend on their acquiring spectrum in the 2.6GHz band in future.
And therein lies one of the other challenges for WiMAX providers. Although Norway and Sweden jumped the gun by allocating 2.6GHz spectrum in 2007 and 2008 respectively, other Western European countries have yet to assign spectrum in this crucial band, and some have delayed announced auctions.
Austria, France, Germany, and the Netherlands are all expected to allocate 2.6 GHz spectrum in 2009. According to Maravedis, Italy, Portugal, and Spain are also preparing for auctions in 2009 or 2010.
As Wilcox notes, though, there is no guarantee that WiMAX providers will get any of it. The allocation process is technology agnostic.
And the delays and uncertainty put WiMAX providers in a dilemma.
On the one hand, they dont want to wait too long to deploy their networks in their current 3.5Ghz spectrum, Garza says. On the other, they dont want to invest huge amounts of money in building an infrastructure and deploying a technology that is likely to change in two years.
WiMAX providers faces other obstacles as well, she says. There is no ecosystem (of devices and ancillary service providers). Most available devices work in the 2.5GHz band, while providers are operating in 3.5GHz. And there is no true interoperability.
And to top off the bad news, a global recession hits. It will almost certainly slow WiMAX providers down, analysts say. Since WiMAX is, as Wilcox notes, primarily of interest to new operators, and since they tend to be smaller start-ups, the dearth of capital for investing in uncertain new ventures will likely have a major impact.
They could be struggling a little if they cant raise that capital, Wilcox says. So the current climate could be a bit bearish for WiMAX.
And that may end up being one colossal understatementat least as it applies to Western Europe. In other parts of the world, as well see next month, its a different story.
Gerry Blackwell is a veteran technology journalist and frequent contributor to Wi-Fi Planet. For more on WiMAX in Europe, read "WiMAX Faces Tough Competition from 3G in UK."