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The Wireless Edge: Sprint Nextel, WiMAX and the Mobile Broadband Conundrum

Sprint Nextel announced on August 8 its choice of WiMAX technology for its mobile broadband network that will operate in its 2.5 GHz Broadband Radio Service (BRS) spectrum. Every other wireless pundit is going to have something to say about this, and I have so much to say that the constraints of this column will be a challenge. First, I'm going to make some general comments about the company's technology choice and early claims. Then I'm going to zoom in on the crux of the challenge that Sprint Nextel will have to address: managing capacity and performance expectations while finding a way of charging for service that enables a successful business model. This will be a conundrum, which according to one definition I just read means "a paradoxical, insoluble or difficult problem."

To begin with, it's clear that Sprint Nextel's choice of Mobile WiMAX (based on the IEEE 802.16e-2005 standard) is a huge win for Intel--especially in conjunction with Clearwire, which also recently chose WiMAX. The technology has now achieved some credibility. Mobile WiMAX embodies many radio innovations and, on paper at least, has impressive capabilities. I do take exception, however, to labeling WiMAX a 4G technology. First, there is no official 4G standards work. But people have been researching 4G approaches for quite a few years, and commonly accepted requirements include 1 Gbps peak speed and 100 Mbps average speeds--50 times faster than what Sprint Nextel will be able to provide. However, there is some karmic balance in all of this, because Qualcomm, a WiMAX opponent, has been promoting CDMA2000 1xRTT for many years as 3G. 1xRTT has a peak network speed of 153 kbps. If 1xRTT is 3G, then that would definitely make Mobile WiMAX 4G. But the fact is, Mobile WiMAX will only yield a modest improvement over 3G systems of today, and the aggressive 3G roadmaps I described in my column three weeks ago will allow these systems to largely match Mobile WiMAX performance.

Now, let's get to the conundrum of capacity/performance/pricing. The first aspect is one of capacity. Regardless of how fast the radio technology is, most cell sites today in the United States are backhaul constrained by T1 circuits. A network architect commented to me last week, "Mobile WiMAX. That's just another fast airlink. When will people realize that the real issue is the wireline network?" Think about it. If a Mobile WiMAX system uses 10 MHz radio channels, and assuming 7.5 MHz is allocated to the downlink (this is a time division duplex system) and using a spectral efficiency value of 1 bps/Hz/sector (an optimistic value in itself for a loaded network with lots of interference), this is 7.5 Mbps of throughput per sector. With three sectors in a cell, this would require a whopping 15 T1 circuits. Clearly, this is not going to happen any time soon. Eventually, yes. 2008? No. This takes me to the next issue, which is performance. Sprint Nextel has indicated 2 Mbps to 4 Mbps average throughput. I view this as a very aggressive claim. First, the company will need all the backhaul capacity I described to support these rates. But even if Sprint Nextel had it, how many active users in a cell sector (one mile is typical cell site spacing) could the company support? Simply divide 7.5 Mbps by 2 Mbps to 4 Mbps, and you end up with a small number. Granted, not everybody is downloading at the same time, so the network can be oversubscribed, but only by so much before things slow down below the promised rates.

These are the same types of issues that cellular operators face. But what's different with 3G is that much of the data use is with bandwidth-efficient applications such as SMS and RIM BlackBerries. Business data users tend not to consume under 100 megabytes per month on average, so capacity has not been as much of an issue. But Sprint Nextel is emphasizing the consumer front, which is multimedia driven. I've seen dimensioning exercises for Mobile WiMAX with figures of 1 gigabyte per subscriber per month. Compared to 3G, this is lots of capacity--in fact, about 10 times the amount of a 1,000-minute voice user. But the problem is that 1 gigabyte is less than one DVD-quality movie download, even using MPEG4 compression.

And that's the conundrum. 3G networks can easily support voice and pictures, so phone service, e-mail and Web browsing are no problem. But throw in multimedia, and you rapidly start using up all your capacity. 3G operators have dealt with this in their unlimited-use pricing plans by disallowing these bandwidth-hogging applications in the fine print of their service agreements. But those are the very applications that consumers want. Usage-based pricing is one solution, but the market has spoken against this approach. Sprint Nextel is going to have to solve the problem of how to make money while providing sufficient bandwidth to users in a network that has relatively finite capacity. Yes, the company has some 100 MHz average capacity per market, so that 10 MHz radio channel I described could eventually become 10 radio channels. But that doesn't change the fact that there will be a certain dollars per gigabyte that it costs to deliver capacity as well as a certain number of gigabytes that users will expect to access and only so much they will be willing to pay. Bottom line: The technology choice was easy compared to what Sprint Nextel will face in the business equation. Success could allow the company to establish a leadership position in mobile broadband in the United States, but it will be a high-risk undertaking.

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