WiMax gets big league interest: AT&T and Covad join forum, but are they only on board to watch?

America's Network, Feb 1, 2004 by Dan Sweeney

AT&T and Covad recently became the first top tier service providers to join the WiMax Forum, signaling, at the very least, a new round of optimism over the resurgence of wireless broadband. This time the winner could be the new IEEE 802.16 standard.

In the past, major carrier support for broadband fixed wireless has been sporadic at best in the US, and most big company forays into broadband wireless have been disappointing to catastrophic. Efforts on the part of large independents such as Winstar, Advanced Radio Telecom, Teligent, and the McCaw backed XO Communications to launch ambitious LMDS wireless networks ended in bankruptcy court, while WorldCom's and Sprint's MMDS networks failed to achieve commercial success, with WorldCom's operation being disbanded entirely and the spectrum being sold to Nextel. Qwest Communications set up a pilot network in Denver operating over unlicensed frequencies at the turn of the decade but quietly shut it down, and an even earlier effort by PSINet in the late 90's to build wireless networks in second tier cities across the Sun Belt was also discontinued.

WiMax supporters are confident that history will not repeat itself, however, and that AT&T and Covad will shortly be followed by many others.

"We're in discussions with somewhere between a half dozen and a dozen big carriers," notes Carlton O'Neal, vice president of marketing for Alvarion, a founding member of the forum and one of the leading vendors of wireless infrastructure equipment.

Margaret LaBrecque, president of the WiMax Forum, concurs. "I believe that other major service providers will follow."

NOT A CELEBRATION

The very existence of WiMax and an industry standard for broadband wireless argues strongly that things could be different this time around. So too does the introduction of nonline-of-sight propagation technologies for the lower microwave regions where most analysts see the major deployments occurring. But the two new WiMax members themselves have revealed little of their plans regarding actual use of wireless broadband in their networks.

"AT&T is investigating network access alternatives for both its business and customer base," says Christopher Rice, director of broadband networking technology at AT&T Labs Research. "We are looking forward to participating in WiMax, working with their members, and providing carrier insight into how broadband wireless solutions can be used to cost-effectively deliver network services."

Covad is similarly noncommittal. "We're in a watching mode," says Ron Marquartdt, technical director at Covad. "We're looking at alternative access means, but we're not restricting ourselves to WiMax. We're monitoring powerline carrier and two-way satellite as well. We have no immediate plans for WiMax deployments."

If the service providers themselves aren't prepared to speak at any length regarding their motives, others are not so reticent.

"In the short term, large entities such as AT&T clearly want to play a role in standards development," says LaBrecque. "The existing standard mainly concerns the physical layer. For them to proceed, they need standards regarding network management, particularly roaming."

Andy Fuertes, a principal at Visant Strategies, an analyst firm with an emphasis on wireless broadband, offers a different rationale for the Covad declaration.

"They're essentially resellers right now. WiMax would give them the opportunity to own their own infrastructure."

ANALYZE THIS

The WiMax announcement occurs in a larger context where industry interest in wireless data is significantly elevated over what it has been in recent years, though the deployment situation is not much altered.

Part of that interest centers on the related but somewhat different business of Wi-Fi hotspots that do not use 802.16 equipment but instead are based on the 802.11 wireless LAN standard, and part on renewed efforts to promote 3G mobile services and applications, but apparently fixed point broadband wireless is benefiting from the overall favorable publicity. "The venture community is certainly giving a lot of attention to WiMax," notes LaBrecque.

At the same time, the situation facing major carriers seems reminiscent of earlier challenges. In as much as most relevant licensed spectrum is owned by two entities, Sprint and Nextel, anyone wishing to deploy will have to do so over unlicensed frequencies which are not conducive to the same kind of availability and service-level guarantees associated with traditional telcos. And although the throughput speeds and geographical coverage of current radios are ostensibly superior to those of the past, there are virtually no widescale deployments of such equipment that conclusively demonstrate long-term profitability or even that wireless broadband networks are significantly less expensive to set up than are their wireline counterparts--a claim commonly made on their behalf. Nor are there applications specific to broadband wireless that would position it as a unique solution. This being the case, wireless broadband bids to remain largely what it has been in the past, a service office for tertiary markets that will not challenge cable and DSL where they are already established.