THE WiMAX BUSINESS MODEL

The biggest challenges to deploying WiMAX-based services are business related. Carriers need financial capability to implement infrastructure. Each operator has to carefully identify its own requirements, dictated by the type of services offered, the market segments targeted, the spectrum available, and the topography of the coverage area. There is no single solution that works for all, and operators need to make key choices about the management and core networks as they plan for their WiMAX networks.

An accurate business case analysis must take into account a wide variety of variables such as demographics, services, frequency band alternatives, capital expense items, operating expense items, and CPE equipment. The WiMAX business model can be looked from several perspectives. These include the equipment vendors, service providers and application providers, and customers. WiMAX will have a larger impact long term than we have seen from cellular phones in the past two decades. Initial rollouts of WiMAX will begin mostly by competitive local phone service carriers and rural Internet service providers. Larger carriers will utilize fixed WiMAX to deliver services to residential customers many of whom are in underserved markets. WiMAX adoption in these underserved markets will be high due to lack of availability of high-speed data access. These deployments will generate capital to be reinvested for future deployments. Larger customer base will begin driving both the cost of carrier and customer equipment down. As the economy of scale makes deployment less expensive, mobile platforms will begin to appear. This development will be spread between high population centers and the rural markets that already have fixed platforms deployed. Fixed platform will act as a springboard for mobile deployment. Then interconnections will begin to form between rural markets and metropolitan markets as carriers from cooperative agreements to share network resources. The economy of scale will increase exponentially at this point and we will notice a negative impact on traditional cellular, Internet, and voice services. Once the implementation of initial hot underserved rural markets and high-density metro areas is completed, springboard deployments will quickly take WiMAX coverage to the level of coverage offered by traditional wireless today. This process will move much faster than the deployment of cellular networks and devices for the following key reasons:

• Manufacturing process for WiMAX devices will be quite similar to that of wireless devices and mostly the changes will be in components and software.
• Readiness of the current wireless fixed and mobile market and waiting on new technology.
• As carriers built out wireless networks, most of the questions in this field have been answered and can now be applied to the development of a mirror network that provides WiMAX access.

WiMAX—Architecture, Planning, and Business Model

The fixed/portable broadband wireless access is becoming a necessity for many residential and business subscribers worldwide. The demand is exploding as the pricing of broadband services is rapidly decreasing. The worldwide interoperability for microwave access (WiMAX) technology is an integral part of the portfolio by complementing 2G/3G mobile access, Digital Subscriber Line (DSL) broadband fixed access, and Wireless Fidelity (WiFi) hotspot access. An extended overview of WiMAX and its applications in higher generation wireless networks as a cost-effective solution to answering the challenges posed by the digital divide is presented. Technology behind WiMAX and its network architecture, design, and deployment are examined in addition to factors that impact WiMAX planning and performance. A WiMAX radio coverage simulation and analysis at different frequency bands for different demographic is presented. Furthermore, the WiMAX business models and a comparison with two enhanced third-generation (3G) technologies that are potential competitors to WiMAX are explored. 

Telecommunications has grown at a tremendous rate in the last ten to twenty years. Improved semiconductor and electronics manufacturing technology, and the growth of the Internet and mobile telecommunications have been some of the factors which have fueled this growth in telecommunications. The deployment of state-of-the-art telecommunications infrastructure and services has, however, been restricted to the developed world. The least developed countries have been left in the technological dark ages with few or none of the next-generation networks installed. Developed countries now boast high-speed connections with a large percentage of homes having access to the Internet and broadband services at an affordable fee. The underdeveloped countries are yet to enjoy such facilities. This is referred to as the digital divide. During the first World Summit on the Information Society (WSIS) held in Geneva in December 2003, the Digital Divide was defined as the unequal access to information and communication technologies (ICTs), where the least developed countries are separated from the developed countries because of a lack of technology particularly ICT.

The digital divide has persisted due to the relatively high cost of putting up modern telecommunications infrastructure. This is compounded by the fact that there are a number of different services available and each service requires its own technology and network. Therefore, existing technologies such as Wireless Fidelity (WiFi), Digital Subscriber Line (DSL), Global System for Mobile communications (GSM), Integrated Services Digital Network (ISDN), and the relatively new 3G technologies have not been able to provide a total solution to closing the digital divide. Figure 1 illustrates the main network types and the prevalent technologies associated with each, mapped against usage models and access modes.

 

Figure 1: Wireless network type and range. MAN—metropolitan area network (citywide, rural area), LAN—local area network (office, home, campus), and WAN—wide area network (countrywide, international).

WiMAX will boost today’s fragmented broadband wireless access market and mobile WiMAX promises to offer a solution to closing the existing digital divide. WiMAX can address the fixed wireless access and portable Internet market, complementing other broadband wireless technologies. Government initiatives to reduce the digital divide are making gains for broadband wireless countries such as Australia, South Korea, Taiwan, and the United States have programs in place today, and there has been a push by the European Commission for more flexible spectrum policies.

WiMAX access can be easily integrated within both fixed and mobile architectures, enabling operators to integrate it within a single converged core network, thereby providing new capabilities for a user-centric broadband world.

WiMAX addresses the following needs which may answer the question of closing the digital divide:

• Cost effective
• Offers high data rates
• Supports fixed, nomadic, and mobile applications thereby converging the fixed and mobile networks
• Easy to deploy and has flexible network architectures
• Supports interoperability with other networks
• Aimed at being the first truly a global wireless broadband network

WiMAX is a standard that is championed by the WiMAX forum which was formed in June 2001 to promote conformance to IEEE 802.16 standard. The WiMAX forum currently has more than 470 members comprising the majority of operators, component, and equipment companies in the communications ecosystem. The WiMAX forum promotes interoperability by working closely with IEEE and other standards groups such as the European Telecommunications Standards Institute (ETSI) which have their own versions of broadband wireless. Along these lines, the WiMAX forum works closely with service providers and regulators to ensure that WiMAX forum certified systems meet customer and government requirements.

The original WiMAX standard only catered for fixed and nomadic services. It was reviewed to address full mobility applications; hence, the mobile WiMAX standard, defined under the IEEE 802.16e specification was created. Mobile WiMAX supports full mobility, nomadic, and fixed systems to compete against DSL to cover isolated areas such as rural hot spots, private campus networks, and remote neighborhoods. Mobile WiMAX is more promising to be deployed as a cellular network that offers ubiquitous broadband services to mobile users to over large geographical areas. It can be deployed as a central office bypass to avoid using existing wired infrastructure for competitive local exchange carriers and wireless Internet service provider. Figure 2 shows the standard history for 802.16.

 

Figure 2: 802.16 standard evolution.