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Perspectives on building technology businesses and AcceleratorIndia from Cartezia

Financial crisis may give LTE the edge over WiMax for very high speed mobile data

Monday, April 13, 2009

WiMax and LTE (Long Term Evolution) are shaping up as competitors to dominate the next generation of very high speed data services for mobile customers.  Even though their origins are in OFDM technology, these two emerging technologies are being promoted by rival camps aiming to establish the next industry standard.

WiMax has had a headstart with ClearWire rolling out broadband connectivity services in Portland, Oregon and Baltimore in the US. ClearWire, supported by Comcast, Intel, Time Warner Cable, Google and Bright House Networks, has an aggressive rollout plan to reach 80 US cities by2010. LTE, even though it is late to market, also has some heavy hitters backing it, chief among them Nokia. In a recent industry event, a Nokia senior executive likened the WiMax vs LTE debate to the video standards battle between Betamax vs VHSand suggested that LTE will eventually win.

Despite the competitive posturing, the adoption of these standards on a worldwide basis will in reality be influenced by several factors such as availability of spectrum and infrastructure requirements. As a result, despite its open challenge to WiMax, Nokia is still on the board of the WiMax forum which it briefly quit in 2004, only to rejoin soon after. Vodafone, another key proponentof LTE, joined the WiMAX Forum and even piloted WiMax in Malta in 2007.

In the US, the availability of 2.5 GHz spectrum to ClearWire through its merger with Sprint has helped to drive a faster rollout. This relatively low-frequency band allows greater coverage per base station making WiMAX cheaper to deploy in the US. In Europe, a similar bandwidth is very scarce and is mostly occupied by analogue TV and current GSM signals. As a result, most European WiMAX initiatives have tended to focus on the 3.5 GHz or even 5 GHzbands with often disappointing results. Availability of the lower frequency spectrum may not happen until after the transition to digital TV broadcast.

Compared to WiMax, which is a brand new standard, LTE is an evolutionary standard. This means that existing mobile infrastructure can be upgraded to handle LTE unlike WiMax which needs a brand new infrastructure. With the current economic climate, the mobile networks may choose not to build completely new infrastructure to support the rollout ofWiMax, which may favour LTE. Given the challenges of non-availability of spectrum and the need for infrastructure that WiMax faces, LTE, even though a later entrant to the market can still establish itself as the default standard for next generation mobile data services.