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Simple_Graduate

Broken In
http://www.businessworld.in/oct2306/indepth03_b.asp

The first salvo in Indian telecom’s upcoming 3G and WiMAX bidding wars has just been fired. Malaysian Maxis, which recently acquired GSM service provider Aircel, has readied a $2-billion war chest for 3G and WiMAX licences and infrastructure.

More such grand statements will be made in the coming months, as telecom players, Internet service providers and everyone else interested in the broadband wireless market firm up their technology and bidding strategies.

But WiMAX could provide a twist in India’s bidding drama. WiMAX (Worldwide interoperability for Microwave Access) is a broadband wireless access technology that can deliver data speeds much higher than 3G, and at cheaper rates. Till recently, 3G has been the only way to deliver broadband connectivity to mobile phones. Now, WiMAX promises an interesting alternative.

India is one of the few countries where both 3G and WiMAX spectrum will be auctioned simultaneously. In most other markets like Europe and the US, bidding for 3G licenses preceded WiMAX by a few years. Operators had bid aggressively for 3G licences. Germany’s spectrum auction, for example, raised a whopping $45.85 billion from six operators. But in India, the presence of WiMAX as an alternative may temper the bids for 3G licences.

So, what can WiMAX do? A lot. A typical mobile WiMAX network can deliver up to 15 Mbps within a 3-km cell radius, compared to 3G speeds of 2-2.4 Mbps (for CDMA 2000 and WCDMA). Or in other words, if you want to download a full-length movie onto your mobile, it will take 64 minutes on a 3G connection, but less than nine minutes with WiMAX. This could drive a variety of applications on your handheld — key among these will be video telephony and video conferencing, mobile TV, interactive gaming, streaming video, music downloads and mobile TV. But WiMAX is not just about data. Now, there is a greater push for offering voice also on a WiMAX platform. Many, including Nortel, are conducting trials of mobile WiMAX.

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This has the potential to disrupt the Indian telecom business model as WiMAX spectrum licences could be far cheaper than 3G or even the GSM or CDMA licences that have been awarded so far. Globally, this has been the case. In Singapore, for instance, the highest amount paid for broadband wireless spectrum was $2.27 million, compared to $100 million for 3G. According to telecom regulator Trai’s recommendations, the minimum bid amount for a pan-India WiMAX presence is Rs 142 crore. Compare this with the Rs 1,050 crore base price for similar deployment of 3G services — almost eight times higher.

Theoretically, such a disruptive technology model — though unlikely in the near term because WiMAX is not the best in supporting voice — is not beyond the realm of possibility.

In some ways, WiMAX could do to mobile what Skype is doing to global long-distance telephony. Both WiMAX and Skype offer voice services using Voice over Internet Protocol (VoIP). But, WiMAX was designed primarily for data and is limited in its ability to carry voice. On the other hand, 3G is good for voice, but cannot match the data speeds that WiMAX supports. “On a dollar per megabit ratio, our WiMAX technology is at least three times cheaper than 3G. And 3G is too big for voice and too small for video,” claims Mallikarjun Rao, director (Wireless), Nortel.

Moreover, the global 3G experience hasn’t been pleasant. It has not succeeded in most markets, barring a few like Japan and Korea. Huge licence fees and network costs have pushed operators into the red. Hong Kong’s Hutchison Whampoa, for example, spent nearly $22 billion on 3G licences and networks, and reported a loss of $3.25 billion in its 3G operations in 2005 alone. Such mistakes may not be repeated in India. The presence of WiMAX will rein in any such extravagant bids.

Besides, from a bandwidth standpoint, some operators like the US’s Sprint Nextel are supplementing their existing 3G networks with WiMAX. These experiences provide enough reason for India’s telecom operators to seriously consider WiMAX. Fresh networks have to be rolled out for both, and equipment costs are comparable. The annual spectrum fee is also the same, although WiMAX deployers will be exempt for the first year. The real cost advantage, of course, comes from a much lower spectrum licence fee.

But mobile WiMAX also has several shortcomings. It is perhaps at the same stage 3G was in 2000 — it has plenty of potential, but is yet to deliver much. It is still largely untested. In India, operators could take three routes in the upcoming bidding for 3G and WiMAX spectrum.

The first is to deploy pure 3G networks along with existing 2G (GSM or CDMA) networks. While most operators are very keen on 3G, having a pan-India 3G presence could be expensive. While the minimum reserve price adds up to Rs 1,050 crore for coverage across India, this could range between Rs 1,200 crore and Rs 1,600 crore after the bidding. Pure play telecom operators (like, say, Hutch) may choose to go the 3G way.

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The second option is to deploy purely WiMAX networks. Since the recommended reserve price for this is lower, it would be much cheaper. However, operators may be wary of getting their fingers burnt with a new technology. But this option will certainly attract Internet service providers (ISPs). It will allow them to deliver broadband across long distances and eliminate cable for last-mile connectivity. Moreover, WiMAX could become hugely popular in the new self-contained townships that are coming up in special economic zones springing up all over the country.

The third, and this is the most feasible, is to use a combination of both. For instance, an operator could focus on 3G networks in the major metros, where most of the initial 3G usage is expected to come from, and deploy WiMAX in the rural areas, for both broadband penetration and mobility applications. Telecom operators who also provide broadband Internet, like Bharti and Reliance, may perhaps supplement 3G networks with WiMAX in some areas. “Some operators might want to supplement 3G with WiMAX. But someone like, say Dishnet might want to use only WiMAX,” explains Surendra Arora, director (customer solutions), Intel. (See ‘Who Is Doing What in WiMAX’.)

In the meantime, more wireless broadband technologies like WiBro and Mobile-Fi are also coming up. It will take a while for this tech puzzle to be solved.
 

[xubz]

"The Cake is a Lie!!"
Thanks for the Information! :)

WiMax may Support 2-15Mbits/sec, But I Seriously Doubt that It Will "EVER" be used to Full Extent here..
Going by the fact they still call 256kbps "Broadband"..
 
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