Thursday, April 16, 2009

WiMax, Femtocells and WiFi on cell phones: Three ships that will collide in the night

All three of these technologies are reaching new levels of maturity.  Verizon is publicly considering adding WiFi to its handsets while its competitors have been doing this for years.  The GSM community has finally approved 3G femtocell standards that will allow consumers and small businesses to improve cellular coverage in their homes and offices.  The Federal stimulus package has billions of dollars earmarked for bringing broadband internet to under-served communities.

While the mainstream media is certainly confused about how each of these technologies address their needs, it often appears that the industry is just as confused.  Appearances can be deceiving.  I believe that the industry's perceived confusion is actually more pragmatic.  I think we are at a point where 3 similar technologies have multiple paths to commercialization.  Some of the paths are obvious while others are speculative.  Some of the paths lead to competition while others are uniquely suited for just one technology.  Let's look at a number of the paths open to these 3 technologies.

Rural broadband is an example of a path specifically suited to WiMax technology.  Neither WiFi nor femtocells support the coverage needs of rural broadband.  Craig McCaw, the visionary that he is, saw this opportunity several years ago.  Notice that Clearwire, founded by McCaw, focused on moderately populated communities before its partnership with Sprint.  Clearwire's work in the Inuit communities in Canada's northern provinces is an excellent example of McCaw's vision of empowering under-served communities with broadband internet.  While this should be a strong growth opportunity for Clearwire, I fear that Sprint's involvement could jeopardize this.  Partnering with Sprint is often akin to casting Ted McGinley in your sitcom.  Many companies that have partnered with Sprint have suffered setbacks as a result.  Sprint partnered with several cable companies in the 1990's to enter the digital cellular revolution.  While Sprint flourished in this new market, its cable partners found wireless to be an expensive distraction from their core businesses and quickly exited their partnerships.  The merger with Nextel is another example of unfulfilled promise.  Sprint's initial launch of Clear in Baltimore illustrates a dangerous diversion from Clearwire's original business model.

An example of a truly competitive path is indoor coverage enhancement.  T-Mobile really pioneered this space with the launch of their HotSpot@Home service in June of 2007.  This service took advantage of WiFi on specific handsets, public WiFi hotspots and the customer's own WiFi network to provide enhanced coverage and reduced rate plan cost to the customer.  Verizon launched a competitive service using a femtocell in place of a WiFi hotspot.  This is definitely an example where 2 of the technologies compete head to head.

Sprint's announcement that it will use WiMax to provide 4th generation wireless services plots a collision course with femtocells and WiFi.  While femtocells and WiFi provide increased coverage, increased data speeds are also a benefit of both technologies.  Where WiMax as a cellular evolution path becomes interesting is how Sprint would handle indoor ceverage expansion.  Would they deploy WiMax femtocells?  Would they allow WiFi onto their WiMax products in order to expand coverage?  Or, will they rely on 3G femtocells to fill the indoor coverage gaps?  This is the technology collision I am watching for like an avid NASCAR fan on a hot Sunday at Darlington.

Other paths to watch are muni-WiFi, or the use of many WiFi hotspots to cover a large municipal area.  There is speculation that cellular companies may use WiMax to transmit data from remote cell sites to their central switching office.  It is conceivable that your next cell phone will use WiFi when you are at work, a femtocell at home and WiMax to jump from the carrier's tower to their central office at other times.  Regardless of the technology moves that have, and will continue to take place.  Real long term success for each of these technologies lies in their stealth.  As long as the customer can make and receive phone calls, get their e-mail, surf the web and do whatever other data tasks they find important, they will not care if the network is WiFi, WiMax or Mad Max.  My vision of a telecom utopia is that all of these technologies will find their profitable niches and enable new and exciting services for customers.  More importantly, the customer will have no knowledge of the network, and will never need to know.  I am looking forward to a day when CDMA vs. GSM, or WiMax vs. WiFi is replaced with ubiquitous wireless coverage . . . Period.

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