Indoor coverage solutions and 2G migration are key to WiMAX, says ZTE

Despite its gloomy view on Mobile WiMAX build-out costs, ZTE is pinning high hopes on the technology to support its strategy of expanding its global footprint, especially in Africa and developing economies in Asia. It believes 802.16e will achieve about 20% of the 4G market once this matures after 2012, taking most of its customers from the CDMA base and from fixed-only providers moving into convergence, and with the map weighted towards markets unserved or underserved by 3G and advanced fixed broadband. This picture dovetails nicely with ZTE's own strengths in CDMA and in very immature wireless markets - though its overall predictions were echoed  at the same congress by Siemens, whose head of WiMAX in the communications devices unit, Marc Achhammer, said WiMAX would account for 10-20% of the mobile broadband market around 2012, with 3G and LTE taking the rest.

Key to achieving that level of share and supporting mobile broadband business cases effectively, WiMAX needs to make some significant technical leaps, and make them ahead of LTE. "The current spectrum of 2.3GHz and 2.5GHz that is available for mobile WiMAX is much higher than GSM and CDMA, so the indoor penetration will be a headache for WiMAX operations," Yuan said. "You cannot just install the macro base stations. In urban and high density areas, you have a lot of blind spots. You need to think about a cost effective solution for indoor coverage, because 90% of the service will rely on indoor coverage, indoor penetration." 

Sprint Nextel, the most prominent WiMAX user looking to deliver full mobile broadband from day one in 2.5GHz, claims antenna techniques like MIMO, AAS, adaptive beamforming and SDMA, plus uplink subchannelization, will largely solve the problems once these are incorporated into devices at low cost, but despite its apparent confidence, privately Sprint executives admit there will still be major challenges once there is mass uptake of the service, using handsets and other devices rather than just laptops. The operator's high frequency spectrum also places it in sharp contrast with rivals Verizon and AT&T, both of which plan to implement LTE in newly acquired 700MHz frequencies. Sprint has a headstart - the 700MHz licenses will not be freed up until at least February 2009 - and large amounts of bandwidth, and 700MHz will have its own problems in terms of urban coverage, where low frequencies and large cells create interference issues. But in rural and suburban scenarios, and for certain applications, 700MHz will bring a major advantage, and one operators like Sprint need to counteract quickly before this spectrum is ready for build-out.

One of the most important approaches for Sprint and other 2.5GHz operators will be bringing the network indoors via femtocells, personal base stations which Xohm president Barry West has indicated will be an important part of the strategy, and with which Sprint is already experimenting in CDMA using the Samsung Airave product. Femtocells provide miniaturized base stations that can be connected to the core using standard interfaces like SIP or UMA, and backhauled using the customer's own broadband line. This option not only reduces infrastructure build-out cost and improves indoor coverage, but can also support a targeted, gradually scalable approach to rolling out new networks - the strategy of creating WiMAX or LTE 'hotzones', matched to areas of strong demand for high value broadband services and falling back to 3G elsewhere, rather than taking on the burden and long ROI period associated with a wide area build-out.

In new research from Rethink Research into operator investment patterns in mobile infrastructure, a survey of over 400 operators found that, of those that expect to be running LTE and/or Mobile WiMAX by 2012, almost 80% plan to have femtocells as part of that deployment, with the tiny base stations accounting for 6% of total mobile infrastructure investment by that date, and over one-quarter of LTE spending. Among those aiming to use WiMAX or LTE femtocells, about 60% saw the hotzone approach as being a key business driver for the choice.

But femtocells are not a near term option, and WiMAX or LTE models at the cost levels operators believe to be necessary (close to that of a Wi-Fi access point, and often integrated with one) will not be available until 2010 at least. So early adopters of Mobile WiMAX will face higher bills than for older technologies. "CDMA networks have better coverage. WiMAX needs more infrastructure, more base stations and also economical solutions for indoor coverage," Yuan said. "According to the calculation of the infrastructure, you need to invest more, but you can earn more. Mobile broadband services are more profitable than basic voice services." 

While the initial operators choosing WiMAX or LTE are easy to predict, in ZTE's view, the real battle between the technologies will come when 2G operators without 3G spectrum start to upgrade.

"This year, next year and probably in 2010, the choice in the market is quite clear - W-CDMA will go to LTE, CDMA will go to WiMAX and fixed line operators if they want to go mobile will probably go to WiMAX - so that is not really competition between LTE and WiMAX," Yuan said. "Of the 80% of the market that is using GSM, only the W-CDMA operators have a convenient migration path to LTE. But most of the operators are still in the second generation, and they have good business and revenue and cashflow from their 2G network, they are not anxious to upgrade their current network to LTE. Three years later, all those 2G operators will be thinking about upgrading their networks to LTE and WiMAX. That is when we will see some tough competition between LTE and WiMAX. At that time, LTE will just be getting commercialized as a standard, while WiMAX will be mature and have a lot of terminals."

Key business reasons for adopting femtocells by 2012 (Sample 420. More than one response permitted).