Break-ups and Promises

( 1 Jan 2008 )

By Stephen Las Marias, Editor


It's the New Year again. While most are preparing their new year's resolution, I believe some, especially those people in the wireless industry, are now contemplating what their next steps should be this year. 2008 marks the year of "execution" for most of the projects, standards, and services that were hyped up during the past couple of years. On the other hand, there have been hurdles and other issues over the final stretch of 2007, which might greatly impact the wireless industry this coming year.

In our previous issue, I have written about some of the trends to look out for this year. This time, I would like to dwell on some of the interesting news late last year: the unexpected breakup of Sprint-Nextel and Clearwire regarding their WiMAX deal, which other industry players consider as a big blow to the technology they have been nurturing and following up on in the past couple of years; and Google's initiatives in the wireless sector, which others deemed to be the step-by- step foray of the global Internet search giant into the mobile industry.

WILL 2008 BE THE YEAR OF THE WIMAX?
About two to three years ago, there had been a lot of hype regarding WiMAX, the wireless standard which many dubbed as the main competitor of 3G—even claiming it to be the 4G wireless standard. Last year, a lot of interoperability tests and trial deployments were done and accomplished. By October 2007, the International Telecommunications Union has included WiMAX technology in the IMT-2000 set of standards, which, according to ABI Research, significantly escalates opportunities for its global deployment, especially within the 2.5GHz to 2.69GHz band, to deliver mobile Internet to satisfy both rural and urban market demand.

On the other hand, the technology suffered what some considered being a major setback early in November, when news came out that Sprint-Nextel and Clearwire—among the biggest newsmakers last year due to their optimistic and aggressive plans for the technology—have called off their WiMAX plans by mutually terminating their letter of intent to build a nationwide WiMAX network.

According to the companies, they could not resolve the complexities associated with the letter of intent and failed to reach final agreement on the terms of the transaction. Katrina Bond, principal analyst at market research firm Analysys, said that this break-up is a setback for WiMAX in that it both confirms the riskiness of a strategy to move quickly to mobile WiMAX, and it slows the momentum behind WiMAX.

Sprint-Nextel, though, is still committed to developing its WiMAX services as well as deploying a network. On the other hand, the timeline will surely be impacted, as the companies initially planned to rollout WiMAX networks by end-2008. The same thing goes for Clearwire—the company remains committed to building a mobile WiMAX network in the United States.

Therefore I don't see this as a setback for the WiMAX technology. Indeed for WiMAX to succeed, it needs the support of the overall industry—from device maker to equipment manufacturers, to telecom service providers—everyone in the wireless technology ecosystem. But one issue such as this one, I believe, is not enough to put a barricade on the WiMAX roadmap.

In fact, as I have pointed out in my previous comment, mobile WiMAX has been continuing to gather speed. The deployments, trials, and collaborations are just non-stop. Perhaps one of the biggest news that validates the mobile WiMAX market is Cisco's $330 million acquisition of Navini Networks Inc., a mobile WiMAX equipment maker based in Texas, U.S.A.

According to ABI Research, the acquisition will not only allow Cisco, a network equipment giant, to expand on its solutions for enterprise customers in developed countries, but also to continue its planned expansion into developing markets. For instance, Cisco has been increasing its focus on India. Building wireline-only networks is not cost effective where communications infrastructure is weak, noted ABI Research. Mobile WiMAX will allow Cisco to provide communications solutions in a cost-effective manner, while also leveraging mobility.

Julien Grivolas, senior telecoms analyst for market researcher Ovum, gives his insight into this acquisition in our new section, Analysis.

GOOGLE'S WIRELESS INITIATIVES
This month, the Federal Communications Commission will be auctioning the 700MHz frequency band, a part of the UHF band—470MHz to 862MHz—which is being opened in several regions across the globe, including Europe in 2010 and in Korea in 2012, as television moves from analog to digital. Meanwhile, according to ABI Research senior analyst Nadine Manjaro, the auction provides an opportunity for the licensing of another major national mobile operator. Among the potential bidders are Yahoo!, Apple and Google. But it is Google that has astonished the industry—the company has already stated its willingness to invest about $4.6 billion in the C block of the spectrum. Many analysts note that in partnership with a network operator, this might result in a more competitive wireless market, provided that Google does have plans to compete in the mobile industry.

Manjaro said that if Google becomes an operator, it will intensify the incumbent telcos' need to compete. She added that as Google has content and money, and it can do a lot with the spectrum, including taking subscribers from the incumbents.

Although these are just speculations yet, it is worthy to note that Google, together with 33 leading technology and wireless companies, have formed the Open Handset Alliance, which aims to develop technologies that will significantly lower the cost of developing and distributing mobile devices and services. As a first step in this initiative, the alliance has developed the Android platform—a fully integrated mobile "software stack" that consists of an operating system, middleware, user-friendly interface and applications. And with this development, Google has announced the $10 million Android Developer Challenge, which is designed to support the developer community and spark innovation on the Android platform.

Well, those efforts could just be so much for a Web-search company for it to be unnoticeable in this competitive industry. On the other hand, it is still too early to tell whether or not the speculations will hold true. But one thing looks promising—the first phone based on Android will be available in the second half of this year.

Meanwhile, we would like to wish our readers and advertisers a happy and prosperous New Year. We thank you for your continued support you have been giving us, and more power to you all!


You can reach Stephen Las Marias at stephen.lasmarias@rbi-asia.com.