March 18, 2008

wimax is this decade’s pcs

Heresy seemed to be in the air at the recent Mobile World Congress in Barcelona, Spain. Vodaphone CEO Arun Sarin appeared to be opening himself to a new Spanish Inquisition by suggesting that some of the mobile spectrum currently licensed for GSM should be redesignated to carry WiMAX. Considering how the GSM community has their own pathway to high-speed wireless called HSPA and LTE, such advocacy could tempt the treatment meted out to heretics in the 15th century.


As I listened to the Barcelona hallway Inquisition Tribunals present and debate evidence in the WiMAX case a new realization dawned: WiMAX is this decade’s PCS.

Back in the mid-1990s new digital technology called Personal Communications Service (PCS) was forecast to be the death knell of the cellular industry. It seemed all anyone could talk about was the “smaller, cheaper, lighter” handsets that would perform feats beyond the capabilities of analog cellular.

Now in the mid-2000s the differentiator is speed and throughput and WiMAX is the new hot technology. A carrier CEO recently told me that his fixed wireless users consume around 3 gigabits of data services each month while his Blackberry subscribers use 10-15 megabits. The 300x difference between mobile consumption and desktop consumption is a leading indicator of what the mobile data future will look like, and the strain it will put on networks.

In The Lead

It looks like WiMAX will begin delivering high-speed throughput sooner than will the wireless industry’s LTE plans. Just like PCS it will require new networks, but it has the added advantage of being force-fed into the market by Intel and chip manufacturers who are including WiMAX capability on the new generation of microprocessors. Down the road WiMAX and LTE begin to look an awful lot alike, not unlike how cellular carriers’ digital networks are virtually undifferentiated from the newer PCS networks.

Back in the days when the promise of the new PCS technology was driving cellular stocks into the tank, one of the wisest men in the cellular business, John Stupka, told me, “Relax, it’s just more spectrum.” What he meant was that while there might be new spectrum assignments enabling a new technology, the incumbent carriers knew how to deal with the changes and would ultimately prevail. Today the two largest U.S. wireless carriers are the very same companies that were given up as dead meat when PCS arrived. Consumers have no idea whether they are on cellular spectrum or PCS spectrum. Even the terms “cellular” and “PCS” have yielded to the androgynous “wireless.”

Vodaphone’s Sarin worked for one of the new PCS carriers back in the 1990s. His past could just turn out to be WiMAX’s prologue.

Integration

Like PCS, WiMAX networks will be built. Like PCS, it will bring new competition and expanded services. Sarin’s strategy portends that, also like PCS, WiMAX networks will end up being an integral part of future integrated wireless offerings. Moving WiMAX into Europe’s existing spectrum allocations would be the beginning of an integrated high-speed wireless offering.

Here in the U.S., WiMAX networks will be built off the balance sheets of the major wireless carriers, just like PCS was. Then, when the business is proven and throwing off cash flow it will continue to follow the PCS model and be bought by the big carriers, folded into their offerings, and become invisible.

After all, “It’s just more spectrum.”