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Broadband Strategies for the Fixed Market

Published June 2006

This Report looks at the key technologies, standards, regulatory situation, and market dynamics. It takes as its starting point the growth in broadband access (DSL and cable in particular) and the steady emergence of fixed wireless technology based on IEEE802.16-2004. What are the prospects for alternative carriers, incumbents and mobile operators over the next 5 years?

Broadband Strategies for the Fixed Market Report RR0605 Table of Contents PDF file.
Broadband Wireless Strategies for the Fixed Market Brochure PDF file.
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With accelerating activity in WiMAX deployment for fixed applications-over 75 operators are now deploying networks-the path for WiMAX to gain ground in developing markets for fixed services is well established.

In developed markets, where DSL and cable has a dominant position, WiMAX will be used as infill in rural areas and also by ISPs wishing to compete without using unbundled loops. WiMAX provides the opportunity to compete with the incumbent in these markets and for fixed services to offer dual use devices that can also be used on a mobile WiMAX network. This could dislodge WiFi from its position as the main portable broadband technology eventually.

Some 88 million subscribers will have fixed broadband services by 2011, using WiMAX, with over 20% of these having a dual "converged" subscription using fixed and mobile WiMAX services.

The outdoor WiFi Mesh and WDS market isn't covered in our latest Wireless Broadband Report. The reason is that we were focusing on point to multipoint systems (using licensed spectrum mostly) rather than WLAN based technologies which uses repeaters and license-exempt spectrum to provide wide area coverage. (Incidentally the US government and others may want to license all spectrum in the future!)

The WifI WDS and Mesh approach has had a checkered history, and several proprietary solutions have been spectacular failures. The major change that now makes the approach attractive is the availability of 802.11 chips at low prices and the fact that Intel provides WifI capability as standard in its chips for laptop PCs.

But, WifI access points equipped with mesh capability are not cheap. Nevertheless there are several companies investing for the market , with Belair but also InspiAir, Motorola, Cisco, and Alvarion, to mention a few.

We think this market has a future but when Intel and other chip suppliers ramp up the volume on WiMAX we cannot see WifI lasting in isolation. It may survive if, as seems likely, it is used as part of a multi technology broadband access service, such as FMC. There is a momentum which will keep it going for a number of years-people are unlikely to switch overnight unless there is a tangible advantage in cost, coverage, data rate or other bundled services.

The biggest advantage of a WifI Mesh or WDS network is its low start-up cost (one or two access points initially) and that is why it has been deployed in city centers and on campuses-you only need to pay for what you want in terms of coverage. But it is labor intensive when you need more than a few access points and data rates fall as more users share the limited number of radio channels.

We have not done any detailed analysis of the business model or technologies. Our view is that these systems will be deployed and supported for as long as there is a large community of WifI users, and that could be for the next 10 years at least. If the industry offers dual use chips supporting at least WifI and WiMAX, plus also 3G eventually, then these networks could go on forever. The user would be charged fixed rates when stationary and mobile rates when on the move or away from a series of designated "home" locations which could include an office, home or set of hot spots. The service will use multiple technologies, the user being unaware and caring nothing about what is going on in the networks he is using.

Much of the investment is being paid for by municipal authorities that are using the WifI infrastructure for public safety and improving public transport, so there is an element of cross subsidization. Even utility companies are using the technology to automate meter reading, so again, the infrastructure costs are being shared. I think that is the secret-if you can re-use the infrastructure several times for different applications, including public Internet access, it can be made to work.

All things being equal in 2007, would a WISP or municipal authority continue to invest in Mesh or WDS WifI or install a single 802.16-2004 base station? Assuming that the chips support both WifI and fixed WiMAX at that time, and the user doesn't care what network he is using, which will be the better investment? It probably comes down to spectrum-a WiMAX base station will need a license in most cases.


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