WiMax backers see broad deployment in two years

SAN FRANCISCO Wed Aug 22, 2007 5:49pm EDT

SAN FRANCISCO Aug 22 (Reuters) - Backers of WiMax are increasingly confident that their billions of dollars invested in the emerging high-speed wireless technology will pay off within the next couple of years.

WiMax allows connections over long distances, making blanket coverage over a metropolitan area more possible than with Wireless Fidelity, or Wi-Fi, the familiar and popular standard used to connect to networks over short distances.

Intel Corp (INTC.O), the world's largest microprocessor maker, has been working on the technology for years with the aim of convincing PC makers to build it into their notebooks. Both the chips for notebook computers and the computers themselves typically have fatter margins.

"This changes the way people use the laptop," said Sriram Viswanathan, who heads up Intel's WiMax efforts. "It changes the business model for us. People will start seeing the laptop as an always-on, always-connected device."

Now other large players have joined Intel and laid down big bets, including Web search giant Google Inc. and Sprint Nextel Corp (S.N)., the No. 3 U.S. wireless carrier, as well as smaller wireless provider Clearwire Corp. CLWR.O, founded by mobile pioneer Craig McCaw.

Google (GOOG.O) last month inked a deal with Sprint to build services that run on the carrier's WiMax network. And Sprint plans to spend as much as $5 billion on its WiMax network by 2010 and expects $5 billion in revenue a year later.

Together, Clearwire and Sprint expect to be able to offer customers access to a network covering 100 million people by the end of next year, as the cost of putting WiMax networks in place is coming down and will spur competition among service providers.

"Over the next 12-to-24 months you're going to see a number of these operators that are now in trial mode and evaluating WiMax make the decision to do a nationwide or large-scale deployment," said Viswanathan.

Viswanathan said he expects WiMax to take off first in mature economies such as Western Europe, the United States, and South Korea. Deployment in other regions such as India, Latin America, and China where there are already some networks that could be adapted to WiMax would follow.

"If you look at it that way, it's been around for a while," said Godfrey Chua, an analyst at market research firm IDC. "In the Philippines there's a nationwide fixed broadband wireless network up and running but it's not WiMax certified."

Many of those so-called pre-WiMax networks use a technology standard called 802.16d, which is designed for connecting things -- such as laptops -- that aren't moving around, unlike a later standard, 802.16e, which is what Sprint and Clearwire are using.

"Because of the value of mobility, most of the equipment sold is going to be 16e," said Charles Golvin, a principal analyst at market research firm Forrester Research. "The Sprint and Clearwire agreement is still the largest commitment to that we've yet seen."

'WiFi ON STEROIDS'

Intel's WiMax platform will launch next year, the executive said, and PC makers such as Hewlett-Packard (HPQ.N), Lenovo (0992.HK) LNX.N, Dell DELL.O and others would then be selling notebooks with the technology already built in.

"What WiMax is trying to do is give people a broadband wireless connection while you're on the move and not just in a public hot spot," Viswanathan said. "Think of it as WiFi on steroids."

WiMax won't necessarily displace WiFi, analysts said. Rather, the two technologies would complement one another.

"WiFi will serve lower- to mid-tier subscribers," Chua said, noting that WiMax would compete more with DSL and Cable high-speed access. "WiMax is able to deliver broader coverage and better security."

Also the costs to deploy a WiMax network have declined considerably, compared to other technologies, Chua said, to around a couple of hundreds dollars per subscriber. Ten years ago, satellite telephone service would cost operators about $15,000 per subscriber, he said.

"The key development really has to do with improvements in performance and in cost," Chua said.

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