By Gerry Blackwell
February 25, 2009
It’s 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?As we saw in the first installment of this multi-part series, which covered the UK and Ireland, WiMAX is indeed in a difficult position, at least in the developed world.
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, it’s 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 didn’t get the support in time to make it into the mass market and I have a feeling that’s what’s going to happen [with WiMAX].”
The reasons are simple. Established service providers are committed to 3G network solutions based on legacy GSM technology—which 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 don’t 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. There’s 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, doesn’t see WiMAX competing head to head with 3G—or 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 it’s horses for courses.”
In other words, what’s suitable for some isn’t 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 3G—architects 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 service—the same modem you use to get access at the office or at home, also gives you access anywhere else within the provider’s 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. “It’s 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.
There are exceptions. Worldmax in the Netherlands launched its Aerea service as a city-wide hot zone in Amsterdam.
Other major players in the region include Iberbanda and Banda Ancha in Spain, Clearwire in Belgium and Spain and Danske Telecom in Denmark. Most are targeting underserved areas.
It’s 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 jurisdictions—France, for one—regulators 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 2013—but those numbers are under review, Wilcox hastens to point out.
The majority of deployments, such as Telenor’s, use older 802.16d WiMAX technology, which can only deliver fixed and nomadic service. A smaller number, like Worldmax’s Aerea, use newer 802.16e technology. It’s 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.
Linkem’s value proposition is similar to Xohm’s 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 cost—the 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 don’t want to wait too long to deploy their networks in their current 3.5Ghz spectrum,” Garza says. “On the other, they don’t 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 can’t raise that capital,” Wilcox says. “So the current climate could be a bit bearish for WiMAX.”
And that may end up being one colossal understatement—at least as it applies to Western Europe. In other parts of the world, as we’ll see next month, it’s 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.”