*** WCA Technical Symposium
By John N. Latta
January 21 – 22
San Jose, CA
It has been some time since we have seen so much excitement about a
technology. There have been multiple starts to make broadband wireless
viable but the sense here is that its time has come. Over and over the
words “what a difference a year makes” are used to contrast last year
with today. Welcome to broadband wireless. Now the highlights of the
event
Intel – The Future is Wireless:
The Wireless Revolution
A keynote by Sean Maloney, EVP and GM Intel Communications Group
The premise is that the 1990’s was the Internet Era and 2000, beginning
in 2003, will be seen as the Broadband Wireless Era. Sean stated quite
simply that “Intel’s Role is to Help Make this era Happen.” The
confidence for its thrust into broadband wireless access was shown in a
drawing of the components of a fictitious city called Intel Sim City.
The basis for this was both in-building tests and simulations. Intel
had a vacant building in San Diego which was instrumented with
wireless. As a result of these efforts Intel became convinced that DSL+
speeds would be possible in a dense urban area using WiMAX technology.
They saw this as their 3rd generation of wireless learning. Sean stated
that: “They do not see any problems with wireless that cannot be solved
by enough engineers over time.”
There are market forces which support wireless use and not the more
traditional cable, DSL and fiber. He cited that it costs $300/foot for
insurance to dig in San Francisco to protect from water main breakage.
The VC money has exited the wired technologies including all of fiber
optics. One of the reasons that Intel was slow to move into the WiFi
space was the long internal debate over HomeRF vs. WiFi. All said,
Intel is squarely in the open standards wireless technology arena that
includes WiFi and WiMAX.
As important as all the other factors was the statement that Intel has
invested $4B in wireless through 2004. This is a massive commitment to
the technology. As Sean stated “We invested in companies in this space
that can do better than we can.”
Intel’s WiMAX vision has four components:
High Throughput Access for Business backhaul and some residential
Consumer Broadband Access
Mobil/Portable Broadband
Hotspot Backhaul
They expect that the indoor install will happen in H1 2005. Portability
will take place in 2006/2007.
“WiMAX will be a big deal in 3 years.”
A very interesting chart was shown based on analysis from RHK. It
showed the normalized CapEx for Mobil NLOS as a function of frequency.
The obvious implication is that the lowest frequency shown, 700MHz, was
the least expensive. This, of course, links back to the statement made
by Chairman Powell that some of the most valuable spectrum being held
today is by the UHF broadcasters as they wait to move to HD and thus
vacate the spectrum.
“We believe that the benefit of wireless to business is to drive time
out of processes.” A tape was shown of how this could be done in the
construction industry and with police departments. “At Intel we expect
that when this happens that there will be value in this and we should
be able to get value for it.”
NEXTEL – How Can You Help Us Make Money? :
Barry West, the EVP and CTO of Nextel
The theme was very simple: we bought the MMDS licenses at bargain
basement prices from MCI. This investment included:
MCI
$144m for licenses for the 35 top 100 markets;
This sale is expected to close in Q2 2004
Nextel is accepting 59% of the spectrum leases
Nucentrix
Acquired the licenses which include 8 of the top markets for $51m
What is important to understand is how Nextel approaches the use of
this spectrum.
We will do with this spectrum what we did with SMR. That is:
Innovation is in our DNA
Be First, Be Better, Be Different
Nextel has the most valuable, most loyal customers in wireless
Nextel has been running field trials. What is really important about
the trial is that they want to understand what consumers will pay for
and how satisfied they are.
They are evaluating “all” technologies. Nextel is further seeking via a
NPRM the use of this spectrum for voice and data. The vision expressed
is one where a consumer carries a WiMAX phone from inside to outside
with seamless roaming. It is a VoIP phone with Nextel connectivity.
The most telling part of the presentation was:
Nextel believes that to succeed we must manufacture 1GB of data per
user per month for $20 or less.
The logic behind this is that Nextel believes that for these advance
broadband services consumers will use 1GB/month. If its wireless
services are to be competitive they must price it less than DSL or
cable. That price point is $20/month per subscriber. During the
question session he stated that Nextel was open to proprietary
technology in the same way that they launched the IDEN technology based
on the Motorola proprietary technology. Barry said he felt that WiMAX
was important but that the standards process was too slow. If someone
could respond to the $20/month requirement they are interested. Put in
another way “Don’t talk to us unless you can meet this goal.”
Barry had some humorous observations that included:
When we first sold the Motorola IDEN phones they were a brick that cost
$399. This was too expensive for the market. I asked what it would take
to price them at $199 and we could sell to our customers for $150 with
a $50 subsidy. Motorola’s response was 1m units. I ordered 1m units. We
sold 950,000 that year. It is a testament to the importance of pricing
for the consumer.
There is something wrong with the cellular business.
The cellular operators buy phones for $200 from the cell phone
companies.
They are sold at deep subsidy for $10.
The public thinks the phones are worth $10.
The next year the public sees new models and wants one for when they go
to the cell phone store to get the phone fixed or replaced.
In the store they see all the new models.
When they are told it costs $200 to get the phone fixed or replaced
they just go to another carrier.
This is churn and very bad for the industry.
The only one that benefits from this, are the cellular phone companies.
It is a crazy business.
What’s Hot, What’s Not in Wireless:
The Wireless Communications Alliance, here in the Bay Area, ran its
monthly meeting during a slot in the WCA (Association) Symposium
program. Guy Kawasaki, of Apple note, was the moderator of this session
that included VC’s and investment bankers. Guy was very good in
flushing out the panel. Here is a sample:
Hot
Consumer communities based on Mobil access
Consumer Peer-to-Peer
Making an order of magnitude improvement in the power for small devices
Over Hyped
WLAN – over invested, no money being made
Enterprise applications for WLAN
ASP have not surfaced
RFID – over 5 years away
WiMAX – where are the major carriers?
Where is money to be made when standards compliant HW prices drop like
a stone?
UWB
SDR
FCC as an Innovator:
Edmond Thomas, Chief, Office of Engineering and Technology, FCC.
His comments included:
There are 400m unlicensed spectrum devices in the US today.
Cognitive Radios sense the RF environment, and modifies frequency,
power or modulation. It enables real time spectrum management and thus
increases spectrum efficiency.
The Interference Temperature approach to regulating spectrum sets a
maximum “threshold” for RF energy within a band which allows for the
protection of incumbent operators. Thus, devices that stay below the
threshold can share the spectrum. Key to this concept is cognitive
radios. This is all a part of the new thinking at the FCC that all
spectrum use is flexible. With the exception of public safety and some
broadcasting, all other users of spectrum should not consider their
ownership of the spectrum as absolute.
Now is the time to reexamine broadband over power line. Yes, prior
attempts at this have failed due to the interference caused by
broadband transmission over power lines that can serve as radiators.
But technology has changed the potential for broadband over power and
now is the time to reexamine it. We feel that power line is no longer a
technical issue but one of business economics.
Unlicensed spectrum has 660MHz of spectrum and this is 5X what cellular
has.
White spots are spectrum in a geographic area not being used. An
example of this are channels 3,6,10 and 12 in New York City. The
opportunity is that this spectrum could be used by cognitive radios.
These radios would have to not only be radio aware but location aware
so as not to interfere with these channels that are filled in New
Jersey and Connecticut. This spectrum is of significant importance due
to the propagation characteristics.
There are fundamental issues which the commission must face. For
example, will the use of unlicensed spectrum create an asymmetric
environment for licensed spectrum holders? That is, what happens when
unlicensed devices begin to provide the same services as license
holders? One issue which concerns me is “unlicensed spectrum squatters
rights.” That is, unlicensed spectrum users establish such a presence
with their presence that they will come and demand licenses for the
spectrum, and thus invalidate the value of unlicensed spectrum.
Interference Temperature – Rethinking Spectrum “ownership” and Use:
Right after Edmond Thomas’s presentation he chaired a session on
disruptive technologies, of which much of the focus was on Interference
Temperature. An excellent overview of the proceeding was given by Harry
Perlow, Sprint.
This is radical thinking as reflected in the NPRM.
It is possible that unlicensed operators could be permitted to use
licensed spectrum if their operations do not push their market’s
overall interference temperature over the pre-designated interference
limit or “cap” for that service.
One of the most important issues is to determine compliance. It is even
being suggested that a “monitoring grid” be put in place to determine
if interference is taking place. Another is to only allow sharing when
the shared devices have cognitive radios.
In the discussion some in the audience took this as a given because the
FCC has already started the NPRM process. Yet, Edmond stated that
nothing is final. The concept is new and they must be assured it is
viable.
In a subsequent presentation David Schafer of Harris stated that the
interference temperature concept changes everything. Further, he stated
that this might only happen when all the radios in use meet the
cognitive radio standards.
Alvarion – The CEO Speaks:
Alvarion is an Israeli company which has 40 – 45% market share in BWA.
Its revenue is $150m per year and the total market is about $320m to
$350m. Alvarion has one of the largest research operations in the
industry – 300 engineers.
Some comments by the CEO
The value proposition of BWA is like DSL – broadband to the home. But
we see the current major opportunity being the supply of a range of
telecommunications services over wireless. For example, it is very
important that we provide TDM voice service. Yes, VoIP is hot but the
companies that we deal with want us to provide wireless delivery of
dial tone to homes and businesses. Vendors in this business must have a
full solution for the carriers to win their business. 50% of our
current installations are for voice.
We do not believe that WiMAX will support Mobil for 3 years. With WiMAX
we can focus our efforts on applications for our hardware and not ASIC
chip development (by implication Intel will supply the chips.)
The WAVE Repot asked the question:
With the strong Alvarion market share why did you decide to support
WiMAX which will only create competition to your business and possibly
lower your market share?
Response
We recognized that to grow this business it will only happen with the
wide availability of network components that interoperate together and
at much lower prices. It will be very had for us to expand the market
from its current $350m base. In our strategic meetings we considered if
we should go into other businesses, such as DSL, or seek to expand the
core business in wireless. The decision was made to support WiMAX and
this standard/process as a means to simulate the market.
It was our decision that the market could go to $2B with standards. We
believe it better to fight to keep our 40% market share under these
conditions than try to build the market ourselves.
Wave Comments:
In times of chaos there is a quest for stability. Familiarly is an
anchor but there may be none. The expectations are in the eyes of the
beholder. There are great wonders associated with what this technology
can do and it is all the more evident today. It is all true but the
venture capitalists are saying it is over invested and hyped.
WiMAX wants to look like WiFi in emulating success. Intel is all over
this technology and market. They are bound and determined to make it
happen. The veteran Sprint, long in its investment in MMDS, is more
cautious. Nextel is making a big bet on broadband wireless and they are
driven by the prospect of making a profit – standards being secondary.
But the early stages of this market are no different than any other
early high expectation markets. Before it lies, the Internet, color
television, PVRs and other technologies. In this chaos one cannot lose
sight of a simple fundamental:
‘The technology must deliver a sustainable economic business
proposition’
Wave Issue 0353 03/04/04 Article 2-01