Report: Low Cost Will Spur WiMAX Assault On 3G

Much of the coming war between 3G and WiMAX will be fought on spectrum battlefields and it's becoming clear that WiMAX will have a major advantage based on the very low cost of its spectrum, according to a new study by market research firm Maravedis, which specializes in broadband wireless analysis.

In an interview Wednesday, Adlane Fellah, senior analyst, noted that 3G currently has an edge over WiMAX, because it has a significant head start in the market. But, he added, "The low cost of WiMAX spectrum compared to 3G is a clear driver for service providers to enter the field of wireless services with WiMAX."

The situation is particularly acute in Europe where average 3G spectrum cost per Hz is 1,000 times higher than WiMAX spectrum, Maravedis reports. Even so, with 394 WiMAX licenses, North American providers have more than double the number of licenses than Europe.

Fellah noted that U.S. deployments are underway in small fits and starts with the most prominent so far being BellSouth's pioneering rollout of WiMAX. The largest holder of WiMAX-capable spectrum is Sprint/Nextel, which also is a major player in the 3G market.

"For the WiMAX market to really take off, you need Sprint/Nextel to start deploying," said Fellah. "They could use a combination of bands to provide different services."As an example of a WiMAX network taking off, Fellah pointed to Australia's Telco Unwired Group, which has some 40,000 WiMAX subscribers in the Sydney metro area. Unwired has received major funding from Intel, which is a prominent promoter of WiMAX.

"3G remains a threat to WiMAX, because of timing," said Fellah. "It will probably be as much as 24 months before (WiMAX) chip sets can be included in laptops. And 3G data rates, which are now low, will improve in the next two years."

Fellah said the low cost of entry for WiMAX providers will likely result in a "crowded environment (that) will result in a highly fragmented, unpredictable, and more competitive marketplace with smaller and cost-aggressive players. On the other hand, a low-cost spectrum has also attracted players with more modest pockets than large mobile operators."

The Maravedis report notes that service providers are still unsure of the future of the broadband wireless market. Fellah predicted that a substantial amount of convergence between 3G and WiMAX will also take place.

The report lists major trends that will ease the way for WiMAX to become pervasive that include the following expected developments: Regulatory action will make spectrum available, semiconductor and device advances will mitigate differences among spectrum regulations, IP/SIP protocols and IMS network architectures will converge, and service providers will have a "full arsenal of solutions" including WiMAX. Most of the advances will harmonize the use of spectrum across international boundaries and thereby promote the spread of WiMAX.0