Doubts Over Intel's WiMAX Service Pricing Claim

Ian Lamont writes "An Intel executive has suggested in a blog post that WiMAX could lead to massive savings on broadband Internet, mobile voice, and mobile data service prices. His post lists a WiMAX-based package of services including home broadband, mobile voice and broadband, home phone service (including international) and even video phone service for $50 to $100 total. It sounds great, but unfortunately for Intel and consumers, it's unlikely to happen any time soon, thanks to factors ranging from costly WiMAX buildouts to the telcos' lucrative business models based on existing wired and 2.5G/3G infrastructures. There are also questions about WiMAX's actual range following a messy Australian rollout, although the vendor there claims the Australian service provider under-provisioned the network."

Comments

Hard for WiMAX NOT to be cheaper.

[mrbluze]

.. lucrative business models based on existing wired and 2.5G/3G infrastructures

Now there's an understatement. I would call the business model 'ludicrous' rather than lucrative. 3G is priced way out of reasonable range for any serious use.

Nobody pretends that wireless broadband will be available in mountain crevices, but 3G has been quite disappointing IMO.

As for $50/$100 plans, that will depend on competition, which in Australia, at least, is totally lacking.

Re:Hard for WiMAX NOT to be cheaper.

[zappepcs]

In North America and many other places (not all, obviously) the network business plan is basically one of build out the basics which are often guided more by equipment functionality or protocol functionality than anything in the marketing brochure. Once basic services are built, then increase bandwidth where required, spread coverage where there are customers to pay for it.

Generally this is done without a proven adoption rate for new services like 3G or WiMax. That's the gamble part. So prices will initially be steep and will stay steep if there is no adoption or bundling plan to offset the costs. DSL had initial problems this way, but stuck it out long enough for adoption to catch up. Deals with Yahoo etc. helped boost DSL adoption. Cable was an incumbent, people already had the service in their house and only needed the modem to use it.

One thing in common of all these is the necessary part of the plan to oversell the service. That is to force time-sharing by sheer volume of users. So they sell every household in Seattle 6Mbit/s service while betting average usage is generally less than would have been seen with DSL service. This lets them charge more, but not have to build out their infrastructure, and more or less none of the Mr or Mrs Seattle's ever notices. Then the Internet really got more useful, so more usage was the result. Congestion was the result because of bad network/infrastructure planning. If all users in Seattle want to use all 6Mbit/s of their paid for service, the ISPs start wondering if they are being DDoS'd. The ISPs are, in a word, fucked.

WiMax will suffer from the same self-defeating strategy. It will be great if you are within 1/2 mile of the tower. Anywhere else will suck bad.

Interesting point about the overselling: It is P2P that gets picked on and Newsgroups now because these protocols are generally being used when the consumer is not around, so are not user driven traffic. They are just eating bandwidth that was not counted in the initial infrastructure planning. With dial-up and DSL there were not many people using unattended downloads etc. so they are being blamed for the bad planning. The real problem is that they have to figure out how to explain to share holders that they just can't provide the triple-play and quadruple-play services they have been promising. At least not while all these GooTube and ESPN and Vonage people are using the network.

Anyway, because of how business works, WiMax is doomed to fail. If it's being touted as a cure for any current ills, I guarantee that it will fail. That marketing speak is the same as the run up to the war with Iraq. All lies and falsely reported intel.

If a large ISP were to slowly begin augmenting their network with WiMax where it makes sense, you can bet WiMax would take off slowly, but solidly. That's not what this looks like.

Re:Hard for WiMAX NOT to be cheaper.

[mr_matticus]

Well, one possible explanation is that DSL required replacement of older telephone wiring from junctions to homes. It required significant overhaul to main backbone lines in a large number of cities. It required new technology at each service office, and it was severely range-limited. Then, even after all of that, line filters were needed to be connected within homes to allow voice telephones to function at the same time.

Cable, on the other hand, required new hardware at central offices, a fraction of the number required for DSL.

Cable companies were able to provide broadband service to more customers while simultaneously spending less money (both per-subscriber and overall) and offering greater peak bandwidth. Cable was far more successful in suburbia, and it was cheaper to deploy in urban locales. Unfortunately, they squandered their infrastructure head start, and are now losing the scalability race. Comcast in the Bay Area just recently (finally!) launched a handful of sorely-missed HD channels, but they still don't have anywhere near the satellite offerings, and they're now triple-packing most of them, so the picture quality has decreased significantly, which previously was their advantage over satellite. The DSL providers and Verizon are both pumping out fiber and providing packet-based, rather than broadcast-based, television technology, and the cable companies are screwed--except that fiber deployment is slow and expensive.

If the cable companies had any sense, they'd move their entire distribution method to On Demand, instead of pumping out all the channels, all the time, freeing up bandwidth for other services while they start replacing their infrastructure as well. The digital transition was a good opportunity for them to do just that, but they watched that pitch sail by, too.

Re:Hard for WiMAX NOT to be cheaper.

[nchip]

The posts like your make the mistake of assuming that 3G pricing has anything to do with the price of 3G basestation. Wimax basestation might be cheaper than a 3G basestation, but the backbone infrastructure costs are still similar.

Now some wimax fanboy is going to jump in and claim that wimax infrastructure will be cheaper because you need less basestation. Which is, exactly what that Australian rollout tried to do, with disappointing results. For microwave based communications, if you want blanket coverage, you need dense network of basestations regardless of technology.

High 3G pricing is purely due to lack of competition (or cartelling...), not technology. In some markets entrance of wimax competitors will bring competition and thus prices down.

In .fi all operators offer unmetered 3G plans beginning from 9.9eur. Undercutting that with a wimax network will be hard.. Roaming abroad OTOH still remains ludicrously priced. I don't see wimax fixing that thou.

16e versus 16d

[sg3000]

There are also questions about WiMAX's actual range following a messy Australian rollout, although the vendor there claims the Australian service provider under-provisioned the network."

To provide some context here -- since they used Airspan's equipment, the Australian operator probably deployed the older variant of WiMAX, based on the IEEE 802.16-2004 standard (called 16d or Fixed WiMAX). The majority of the industry on the other hand has shifted to the newer 802.16e-2005 standard (mobile WiMAX). Fixed WiMAX is essentially a near line of sight technology, not intended for non line of sight or mobile applications.

Mobile WiMAX uses a different physical layer than 16d, and it supports radio features to improve link robustness (such as convolutional turbo coding) and smart antenna technologies (2x2 MIMO to increase capacity and beam forming to increase cell range). In short, you can't gauge the performance of a mobile WiMAX network based on the results from a 16d network. The results I've seen in trials have matched radio propagation estimates fairly well, with the range being roughly what you see you traditional 2G/3G cellular -- 0.5 to 2 miles for non line of sight conditions. I've heard anecdotally of longer ranges of up to 30 miles for line of sight.

The rest of the industry has been fairly pleased with the performance of WiMAX during trials and early market deployments. Consider the number of service providers spending capital dollars to deploy. The WiMAX Forum recently announced there are more than 300 service providers deploying WiMAX in 118 countries worldwide. With Sprint's XOHM network going commercial later this year, we should have a better understanding of the benefits of WiMAX in a few months. The biggest concern I've heard of is the lack of devices today, but hopefully that will be alleviated late this year or early 2009.

WiMAX isn't magic. It's just another kinda radio.

[Brett Glass]

Due to massive hype -- much of which is false -- by the WiMAX Consortium, much of the public doesn't understand one simple thing: WiMAX is just another kinda radio. One that's only slightly better than some of the other kinds. There's nothing particularly wonderful about it. But it does have one real drawback that doesn't really have to do with the nature of the standard itself. That is that it's intended and manufactured for use on licensed spectrum, which -- due to poor spectrum management policy -- is expensive and scarce. So scarce that even many of the big telecommunications providers failed to win it in recent auctions. And so expensive, due to speculation and pre-emptive bidding, that once you've bought the spectrum you're unlikely ever to break even on that investment no matter what kind of radio you use. So, WiMAX is at best slightly better than other kinds of radios and is tied to an impossible business model. WISPs that ignore WiMAX and use other technologies will do better.

Re:WiMAX isn't magic. It's just another kinda radi

[mr_matticus]

much of the public doesn't understand one simple thing: WiMAX is just another kinda radio. Every kind of wireless is just another kind of radio.

But it does have one real drawback that doesn't really have to do with the nature of the standard itself. That is that it's intended and manufactured for use on licensed spectrum No long-range service can rely purely on unlicensed spectrum in most developed areas. All portions of the spectrum are expensive and scarce these days, and unlicensed spectrum is increasingly cluttered.

WISPs that ignore WiMAX and use other technologies will do better. Such as? UMTS? How is that cheaper? "4G"? It doesn't exist yet. HiperMAN/WiBro? Those are just rebranded WiMAX variants.

Real life experience with WiMAX

[xt]

I am typing this through a WiMAX connection in Greece, so let me clarify a couple of things...

The technology itself is proven and works, both for data and VoIP. You do need to have a proper backbone though; it just doesn't scale to use WiMAX everywhere. A better idea is to use Ethernet microwave links for the backbone and WiMAX stations locally. If you couple this with a multiservice access node (MSAN) you can service remote areas that have local copper lines installed, but lack a proper backbone (eg fiber is too expensive to install and maintain in a mountain side). Right now, this is the killer application for this technology, as this is how it sells itself with most countrys' incumbent telecommunications providers.

The range is just fine, we have tested successfully with distances up to 30Km. Mind you, this is line of sight, the first generation (called fixed WiMAX) is not very good in urban conditions, but for semi-urban and rural areas it performs as advertised. The second generation (called mobile WiMAX) is supposed to give as 2G penetration and coverage, but I have not played around with it yet. This is also supposed to be the killer application for the second generation; broadband everywhere, even on the go.

The available spectrum is limited, but proper planning goes a long way. I can't get too specific, but in our trials we have been quite limited with spectrum with no real problems.

I don't see prices to be dirt cheap though; licensed spectrum costs money. On the other hand, stations and terminals are getting cheaper all the time. I think that WiMAX services' cost will follow the same general trend; slightly more expensive that the equivalent fixed line broadband at first, getting cheaper as it catches on.

WiMax has one big advantage (for public use)

[Sarusa]

I work for a wireless company, developing WiMax and WiFi. It's pretty hard to beat the raw speed we can get out of 802.11 (WiFi), and we can stretch WiFi to fairly long distances as we can with WiMax.

However, WiMax has one huge advantage for system design - because transfers are a mix of scheduled and free-for-all instead of only free-for-all like WiFi, you can actually guarantee service. You can lock clients down to a fixed bandwidth _without_ letting them flood the channel, or you can guarantee minimum throughput, and you can classify packets into multiple service flows at the protocol level (prioritizing ACKs as an example). WiFi has 4 levels of service with WME, but the client gets to decide and can lie for advantage.

With WiFi you can throttle flows at the gateway, but you can't stop some greedy dick from completely swamping the channel. With WiMax you can throttle at the client. Some of you are obviously going to think that's a bad thing, but if we want to set up a public deployment we really need to be able to make sure that someone torrenting with 512 connections open isn't going to knock everyone else off the air and make it unusable for everyone. WiMax does a far superior job to WiFi of sharing the bandwidth so more total clients get at least a reasonable amount of throughput even if one greedy S.O.B. _really_ wants to eat up the entire channel and then more. And this is the assurance provisioners need when deciding they're going to offer the service.

I don't know about Intel's claims, but you are certainly able to guarantee a better experience with WiMax than you are with WiFi as long as your product doesn't suck.

To be fair, a major WiMax disadvantage is that there's really no equivalent of mesh networks. It's all server/client, no useful ad-hoc like WiFi has. You can simulate it with each node having a server and a client, but they're very asymmetrical, so it's currently pretty wasteful to do so.

Actually, WiMax is intended for one kilometer.

[ahfoo]

The Australian ISP that was whining about their deployment said they were expecting to get full strength at two kilometers and that's not even part of the spec for current generation customer premise equipment. Moreover, their VoIP problems were apparently aggravated by a shaky upstream connect at the ISP.

      WiMax is not really a homogenous entity, it's more like a collection of protocols that work at different service levels according to power requirements and distance and are totally different for the sending radios and the base stations. Overall it's a system that works out to seem like a homgenous entity but that's sort of an illusion because the gory details are reserved for the ISPs. But with the power levels that are going into current customer premise equipment there are technical reasons related to amplifier performance that limit the sending power of the field radios to about a kilometer for a full strength signal and the drop-off comes pretty fast as you go beyond that.

    Having said that, it's still completely true that this is no doubt much cheaper than any kind of wired infrastructure. Even if you had to put in a base station for a single user --which actually would not make sense-- you've got to compare that to the cost of a kilometer of wire and the cost of installing that wire.

But, again, it wouldn't make sense to install WiMax for a single user because the base stations have a sort of minimum density of downstream clients to make them cost effective. You basically will only see WiMax in areas where there are at least fifty users in a kilometer sized circle. That will change when the amplifiers in the base stations can be increased in power but that will not happen for several years if it does happen at all.

Still, the costs are minimal for an ISP and it does enable a new generation of small ISPs focused on remote local communities. It may not be a perfect solution for the remotest locations, but consider that you can use directional WiFi line-of-site for literally hundreds of miles as a feed into a small town and then cover the entire town with one or two WiMax base stations. If you allow users to set up their own directional WiFi with line-of-site to more remote locations you can extend that network at better than DSL upstream rates far into remote areas surrounding small towns at very low costs.

Within cities, there's no reason WiMax shouldn't cost far less than DSL or cable. Wholesale bandwidth costs are like nothing compared to what ISPs are charging in the States.

Re:WiMAX isn't magic. It's just another kinda radi

[debatem1]

WiMAX can operate at several miles in point to multipoint configuration, rather than just point to point. It also has better mechanisms for handling the scalability issues associated with using it as a last-mile technology in conjunction with a WLAN technology. That's the point- it is designed for WISP rollout, not consumer deployment.