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In mobile tech war, LTE haunts WiMax again

HELSINKI (Reuters) - Just as WiMax mobile broadband technology starts to recover from losing the big battle for industry dominance to Long Term Evolution (LTE), a new version of LTE is attacking it in its newly secured niche.

During 2008 and 2009 one mobile operator after another chose LTE, a natural evolution of their current 3G networks, over data-centric WiMax for their next generation, more efficient mobile networks.

But over the last few quarters mobile WiMax has carved out a space for itself as a supporting wireless technology to handle heavy mobile data traffic in mature markets, and as a solution for alternative carriers in emerging markets.

It is the long-term successor to Wi-Fi -- the wireless computer standard popularized in coffee shops, homes and restaurants -- but is under threat from TD-LTE, a new version of LTE that incorporates features of both LTE and WiMax.

This month, Russian operator Svyazinvest picked TD-LTE over WiMax for mobile broadband, and Qualcomm QCOM.O said it would bid in an Indian mobile broadband auction for TD-LTE spectrum.

In addition, the world's largest mobile operator by subscribers, China Mobile 0941.HK, will use TD-LTE for its next generation network.

And to add to the woes of the Intel-led WiMax industry, two of the largest WiMax operators globally -- U.S. Clearwire CLWR.O and Russia's Yota -- signaled over the week they could use LTE in the future.

“WiMax operators know they are fighting a losing battle. If they want to compete they need to move toward TD-LTE,” said Paolo Pescatore, analyst at British research firm CCS Insight.

The head of Clearwire said last week that the telecoms industry should focus on bringing WiMax and LTE closer together.

Like WiMax, TD-LTE uses the same radio channel for data transfer in either direction between the mobile phone and the network. For most consumers, the operator allocates more time for downloads from network to phone.

In pure LTE, there is a dedicated channel for each direction, which means that the uploading channel from mobile phone to network ends up largely underutilized.

Major mobile telephone operators see LTE as a natural way to boost their networks’ data-carrying capacity as some of their equipment can be upgraded with just new software, unlike WiMax, which needs a new network to be built.

At the same time, there are enough technical similarities between TD-LTE and LTE, easing its use for operators. Operators are also attracted by availability and lower price of TD-LTE spectrum.

"There is a lot of it, and not a lot of it is claimed yet," said Stephane Daeuble, LTE marketing chief at Motorola MOT.N.

BETAMAX OF MOBILE SPACE?

Last year Nokia's NOK1V.HE sales chief Anssi Vanjoki forecast for WiMax a future similar to that of Betamax, which lost the battle for video recording standard to VHS in 1980s.

“WiMax is a great idea, but with no market support. They came with innovation, but someone else will capitalize on it,” said Fabricio Martinez, consulting practice director at Aircom.

Mobile WiMax has raised awareness for mobile broadband services and boosted demand among operators and consumers, but lacked support from the top telecom gear firms.

Ironically WiMax networks pushed traditional mobile technology firms to rush the development of LTE networks, and the time when WiMax was the only solution for operators to help to ease data surge in their networks has passed.

“WiMax missed the train,” said Bengt Nordstrom, chief executive of Stockholm-based telecoms consultancy Northstream.

While for Intel INTC.O the failure of WiMax is merely a public relations defeat, for some smaller companies, bets on the technology have cost much more. Finnish electronics firm Elektrobit EBG1V.HE switched its focus to WiMax a few years ago, and has struggled to survive ever since.

Analysts and industry sources say all key LTE suppliers are also best positioned to win deals for TD-LTE. Sweden's Ericsson ERICb.ST, market leader in mobile telecom equipment, has invested heavily in LTE, while Nokia Siemens Networks NSN.UL and Huawei are also seen as winners in the technology shift.

The first commercial trial of TD-LTE will start in May in Shanghai with Motorola MOT.N and Huawei HWT.UL supplying key equipment, and Alcatel-Lucent ALUA.PA and Datang 600198.SS also providing some technology.

Additional reporting by Maria Kiselyova in Moscow, Editing by Sitaraman Shankar

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