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Mobile WiMAX Analyst Briefing;October 30th 2008


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Is Mobile WiMAX Really a Threat to European Cellular Markets?

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Mobile WiMAX Analyst Briefing;October 30th 2008

  1. 1. Is Mobile WiMAX Really a Threat to European Cellular Markets? Luke Thomas, Programme Manager ICT - Europe October 30, 2008
  2. 2. Agenda <ul><li>Key Drivers for Mobile Broadband </li></ul><ul><li>Mobile WiMAX Roadmap </li></ul><ul><li>Update on WiMAX Forum Certification </li></ul><ul><li>Spectrum Auctions in Europe </li></ul><ul><li>Drivers, Restraints and Challenges for </li></ul><ul><li>Mobile WiMAX </li></ul><ul><li>What’s happening with 3G LTE? </li></ul><ul><li>Conclusion </li></ul>
  3. 3. Key Driver for Mobile Broadband
  4. 4. Key Driver: World of Convergence Users will require high bandwidth to access presence-enabled synchronized updated information anywhere on any device in real-time ! Killer devices of 2008 UMPCs & Smartphones Unified Communication across various devices/applications with synchronized updates Relaying real-time presence information across various devices and applications
  5. 5. Unpredictable User Behaviour Consumer habits changing from … SWITCH SURF SLEEP SEARCH PARTICIPATE PERSONALIZE To succeed in mobile broadband, mobile operators need to shift from being Service Providers to … Value-Added Experience Providers . Change in Demographics GenX (15 to 25 years old) Change in Demand (Online gaming, TV/Video on demand, Content Messaging and cross media, podcasting, social network communities, m-commerce, Sharing Presence information and status updates and so on…)
  6. 6. Mobile WiMAX Roadmap
  7. 7. Mobile WiMAX Roadmap Mobile WiMAX Rel 1.0 (802.16e) Mobile Broadband 60+ Mbps 2008 Mobile WiMAX Rel 1.5 (802.16e Rev2) Mobile Broadband 125+ Mbps 2009/2010 Mobile WiMAX Rel 2.0 (802.16m) Mobile Broadband 300+ Mbps 2010/2011 Source : Frost & Sullivan
  8. 8. Comparison of Mobile WiMAX Standards Source : Frost & Sullivan Due to be a ratified standard by 2010 and is designed to be backward compatible to 802.16e. But if the global market shifts to 3G LTE, it could support SC-FDMA in the uplink making it backward compatible to 3G LTE and as a result will not be backward compatible to 802.16e, as 802.16e uses OFDMA in the uplink. Backward compatible with Rel 1.0 and will support enhanced multicast, broadcast and LBS. Certified products available today based on Wave 2 Phase 1. Wave 2 Phase 2 certified products by Q2 2009 (June) and targeted to be commercially available by Q3/Q4 of 2009. Other Specifications More than 1200 users per sector for 2x20 MHz FDD, 2x2 MIMO. 400-500 active VoIP users in 20MHz TDD channel. 150-200 active VoIP users in 10MHz TDD channel. VoIP Support TDD and FDD support. Primarily support TDD. FDD will be supported for the 700MHz WiMAX profile by 2010. This could be phased out if operators do not get FDD spectrum in the 700MHz for Mobile WiMAX worldwide. TDD Support. TDD/FDD Support Upgrade MIMO capabilities to support 4X4 on the network side but achieving this on the client device will be a huge challenge. Support 4x2 Closed Loop MIMO. MIMO and Beamforming Support. MIMO Capabilities 300 Mbps in the downlink (20 MHz; 4x4 MIMO). 120Mbps+ in the downlink (20MHz; 2x2 MIMO). 60Mbps+ in the downlink (10MHz; 2x2 MIMO). Peak sector throughput Mobility enhanced at 350km/hr. Increased mobility at 120km/hr. Limited mobility. Mobility 802.16m Rel 2.0 802.16e Rel 1.5 802.16e Rel 1.0 Attribute
  9. 9. Client Device Roadmap for Mobile WiMAX 2008 2009 2010 2011 2012 PCMCIA cards Source : Frost & Sullivan Devices USB Dongle UMPC Notebook WiMAX smartphones Consumer Electronics Mobile WiMAX Femtocells Dual-mode Mobile WiMAX/Cellular smartphones Gaming Devices Note : This is an optimistic scenario and only WiMAX Forum certified products for 802.16e taken into consideration. The timeframe for the roadmap includes certified client devices commercially available by at least two vendors or more.
  10. 10. Update on WiMAX Forum Certification
  11. 11. Update on WiMAX Forum Certification <ul><li>As of October 1 st 2008, the WiMAX Forum Stamp has been received for 8 base stations and 15 mobile station modules complying to Wave 2 Phase 1 certification in the 2.5GHz . </li></ul><ul><li>Companies that have received the WiMAX Forum certification stamp include Alcatel-Lucent, GCT Semiconductors, Huawei Technologies, Motorola, NEC, POSDATA, Redline Communications, Samsung, Telsima, ZTE Corporation, Airspan Networks, Alvarion, Beceem Communication, Intel Corporation, Motorola, Samsung Electronics Company, Sequans Communications and ZyXEL. </li></ul><ul><li>Surprisingly Nokia and Nokia Siemens Networks, key proponents for Mobile WiMAX deployments, have not yet obtained the WiMAX Forum stamp for their products. </li></ul><ul><li>Wave 2 Phase 1 incorporates nearly 42% to 82% of the various tests outlined for Release 1.0 Wave 2 requirements. Wave 2 Phase 2 incorporates all test procedures for Base Station and Mobile Station certification of Protocol Conformance Testing, Radio Conformance Testing and Interoperability Testing. </li></ul><ul><li>In short, a company certified for Wave 2 Phase 1 need not be interoperable with other vendors’ equipments, as a Tier 1 vendor would have additional features compliant to Wave 2 Phase 2 which would not be included in a Tier 2 vendor. </li></ul><ul><li>WiMAX Forum estimates that 100+ Mobile WiMAX products will be certified by the end of 2008, and by 2011, 1000+ products will undergo Mobile WiMAX certification. </li></ul>
  12. 12. <ul><li>Although Wave 2 Phase 1 would support MIMO, Frost & Sullivan believes that beamforming would be supported only in Wave 2 Phase 2 as currently beamforming is not a Mobile WiMAX standard. </li></ul><ul><li>Wave 2 Phase 2 would have extra MIMO capabilities and more service options, including MBS (multimedia broadcast service) and real-time video. It is also based on IPv6 over IPv4 in Phase 1. The commercial deployments of Sprint-Nextel’s Xohm are using Wave 2 Phase 1 compliant devices for better coverage and data rate. </li></ul><ul><li>The support of such features may not be mandatory for deployment by an operator. It would depend on the service provider to choose either MIMO (or) beamforming (or) support both simultaneously (Closed Loop MIMO). </li></ul><ul><li>However we feel that most of the initial deployments for Mobile WiMAX will be focused on Wave 2 Phase 1 certified products so as to have a better time-market strategy when compared to 3G LTE deployments. </li></ul><ul><li>Ironically, many of the key participants during our primary research had mentioned that Wave 2 may have more than 2 Phases, while others mentioned that such “Phases” were mere marketing propaganda and do not exist in Wave 2. </li></ul><ul><li>Overall, many opine that by June 2009, products will be ready for certification for Wave 2 Phase 2 and by Q3/Q4 2009, products will begin to flow out of the certification labs. </li></ul><ul><li>Only when vendors complete Wave 2 Phase 2 certification can they proclaim of being entirely interoperable with other vendors’ equipments. If Q4 2009 is the optimistic timeframe for commercial client devices based on Wave 2 Phase 2 certification, then the proclaimed lead time of 2-3 years over 3G LTE will be irrelevant. </li></ul>Wave 2 Phase 2 Certification
  13. 13. Spectrum Auctions in Europe
  14. 14. Delays in European Spectrum Auctions ? ? License expired end 2007, Auction delayed to 2009 Auction delayed to 2009 Auctioned completed in Nov’07 Auction delayed to 2009 Auction completed in May 2008 Re-farming of users ongoing, Auction to be decided Consultation planned 2008, auctioning to be decided Auction delayed to Q4 2008 Consultation planned 2008, Military use, Auction data unsure Ministry of Defense  2015, Possibly released by 2009 or 2010 Prior users clearing before 2008, Auction to take place in Q4 2008 Source: Frost & Sullivan, Ericsson Spectrum auctions in the 2.5GHz in key markets in Western Europe will occur either in 2009 or 2010. Hence, the 2-3 year lead time that Mobile WiMAX proponents claim to have over 3G LTE would be irrelevant in such markets as 3G LTE will not only be a ratified standard in 2009 but the market will also witness operators conducting 3G LTE trials during this period. Licensing starts Spectrum cleared for commercial use Auction completed Auctions completed
  15. 15. Analysis of the Swedish 2.6GHz Auction Source : Frost & Sullivan <ul><li>The Swedish auction concluded at a price of €0.13/MHz/pop, with unpaired TDD spectrum going under €0.04/MHz/pop and paired </li></ul><ul><li>FDD spectrum for €0.16/MHz/pop. </li></ul><ul><li>Spectrum costs in the Swedish auction was much higher than the Norwegian auction (total of NOK 228.88 million), which took place in </li></ul><ul><li>the same frequency band and concluded at a price of €0.03/MHz/pop. </li></ul><ul><li>In Norway, the five winning bidders in the 2.6GHz were Telenor, Arctic Wireless, Craig Wireless Systems, Hafslund Telekom and </li></ul><ul><li>NetCom. </li></ul><ul><li>Main reason for the high license costs in Sweden were due to the active bids made by the four mobile operators in Sweden. </li></ul><ul><li>Not many markets in Europe have just two mobile service providers in operation, as is the case in Norway (TeliaSonera and Telenor). </li></ul><ul><li>Hence, the Swedish auction is a clear indicator that future auctions in markets such as the UK will involve much higher bids. </li></ul><ul><li>With the economic crisis in Europe (European governments injecting nearly $2.3 trillion to save the banking system), it will be a huge </li></ul><ul><li>challenge for greenfield operators to not only acquire spectrum at high costs but then deploy the network and compete with existing </li></ul><ul><li>incumbents. Furthermore, the initial phases of the commercial rollout will not offer Mobile VoIP service for WiMAX users on their </li></ul><ul><li>mobile Internet devices. </li></ul><ul><li>This may very well be the reason why Intel had to invest in the Swedish auction so as to gain a footprint in the Swedish WiMAX </li></ul><ul><li>market and Intel would probably make a similar investment move in the UK auction as well. </li></ul><ul><li>However, Intel would most likely be looking at a joint venture or a wholesale agreement with a service provider rather than deploying </li></ul><ul><li>a stand-alone network in Sweden. </li></ul>562,450,000 2×20 MHz FDD TeliaSonera Mobile 533,050,000 2×20 MHz FDD Telenor Sverige AB 548,100,000 2×20 MHz FDD Tele2 Sverige AB 159,250,000 50 MHz TDD Intel Capital 296,600,000 2×10 MHz FDD HI3G Access AB Revenue (in SEK) Bandwidth MHz Bidder
  16. 16. Drivers, Restraints and Challenges for Mobile WiMAX
  17. 17. Initial client devices devoid of cellular technology and highly priced Not backward compatible with cellular technologies Mobile WiMAX included in IMT-2000 Drivers Restraints High deployment cost of wired services European Commission encouraging member countries to allow mobility in the 3.5 GHz Closing the digital divide and driving convergence of various client devices from different industries Delays in WiMAX Forum certification Spectrum auction delay and hoarding in the 2.6GHz by mobile operators such as T-Mobile and O2 in the UK No certified client device based on FDD for 802.16e Adopting an open access Internet model Key Market Drivers and Restraints for Mobile WiMAX Biggest restraint is the immense hype associated with Mobile WiMAX - which still continues !!! Source : Frost & Sullivan
  18. 18. Key Challenges for Mobile WiMAX Backhaul Issues Challenges Battery life of client devices Advantages of FDD over TDD IPR pertaining to Mobile WiMAX still ambiguous Sir, where do you want me to install these huge MIMO Antennas? Source : Frost & Sullivan Cost of 802.16e BTS almost similar to cellular technologies Supporting Mobile VoIP and data applications simultaneously without a dramatic reduction in the sector capacity
  19. 19. <ul><li>Uncertainty remains in Mobile WiMAX royalties; might be even higher than 3G. </li></ul><ul><li>QUALCOMM has publicly announced more than 1000 granted/pending &quot;essential&quot; patents </li></ul><ul><li>pertaining to OFDM/OFDMA/MIMO. </li></ul><ul><li>- Some patents attained through the acquisition of Airgo Networks and Flarion. </li></ul><ul><li>SOMA Networks, Nokia, 4G Systems GmbH, Exoteq, AnyDATA and Leadtek Research, Inc. </li></ul><ul><li>are current licensees of QUALCOMM’s OFDM/OFDMA patents. </li></ul><ul><li>QUALCOMM’s recent licensing agreement with Nokia also includes non-cellular technologies </li></ul><ul><li>such as WiMAX, with Nokia agreeing not to use any of its IPR directly against QUALCOMM </li></ul><ul><li>but rather enable the same into QUALCOMM chipsets. With the Mobile WiMAX market in its </li></ul><ul><li>nascent phase, additional royalties to QUALCOMM are likely with the emergence of new </li></ul><ul><li>client devices supporting WiMAX technology be it smartphones, Ultramobile PC's (UMPCs), </li></ul><ul><li>tablet devices, mini-laptops and various consumer electronic devices. </li></ul><ul><li>However, QUALCOMM has suggested that if client devices do support both WiMAX and </li></ul><ul><li>cellular technologies, then it could potentially extend the cellular royalties to WiMAX at no </li></ul><ul><li>additional costs. Having said that, the initial client devices for Sprint-Nextel's Xohm WiMAX </li></ul><ul><li>service will be devoid of any cellular technology and the jury is out there if the IPR saga </li></ul><ul><li>will arise once again between QUALCOMM and the members of the WiMAX Forum. </li></ul>IPR Issues for Mobile WiMAX
  20. 20. <ul><li>Open Patent Alliance (OPA) was formed with founding members Alcatel-Lucent, Cisco, </li></ul><ul><li>Intel, Samsung, Sprint Nextel and ClearWire. </li></ul><ul><li>OPA seeks to provide a predictable IPR model to the WiMAX industry. Further, through the </li></ul><ul><li>pooling of essential WiMAX patents, OPA members will be able to help participating </li></ul><ul><li>companies to obtain access to essential patents at predictable costs. </li></ul>IPR Issues for Mobile WiMAX (Contd…) <ul><li>Many regard that with the OPA initiative, the IPR </li></ul><ul><li>royalty rate will be much lower in comparison to </li></ul><ul><li>existing cellular technologies. </li></ul><ul><li>However, this can be disputed as key Mobile WiMAX </li></ul><ul><li>players such as Nokia Siemens Networks, Huawei, </li></ul><ul><li>Motorola and non-WiMAX Forum members such as </li></ul><ul><li>QUALCOMM are not yet part of this alliance. </li></ul>Source : Samsung <ul><li>Nokia and Nokia Siemens Networks recently had a licensing agreement with Huawei relating </li></ul><ul><li>to GSM, WCDMA, CDMA2000, optical networking, datacom and WiMAX in mobile devices, </li></ul><ul><li>infrastructure and services. </li></ul><ul><li>Such patent licensing agreements create a lot of confusion and concern for mobile operators </li></ul><ul><li>deploying Mobile WiMAX as Nokia, NSN and Huawei are still not part of the OPA. </li></ul>
  21. 21. What’s happening with 3G LTE?
  22. 22. Worldwide Operator Commitment to 3G LTE Europe North America ASIA/APAC NTT DoCoMo China Mobile KDDI Telstra China Telecom/Unicom Verizon Wireless AT&T Vodafone T-Mobile Telecom Italia TeliaSonera Orange May be the first mobile operator to commercially launch 3G LTE worldwide Source : Frost & Sullivan Next Generation Mobile Networks Alliance (NGMN) selected 3G LTE as its next generation technology of choice for mobile broadband
  23. 23. Global Market Timing for 3G LTE Canada 2011/2012 USA 2009/2010 Latin America 2016 Onwards Africa 2018 Onwards Western Europe 2010/2011 Eastern Europe 2015 Onwards Developed Asia 2011/2012 Australia 2010/2011 Japan/Korea 2009/2010 China 2010/2011 Source : Frost & Sullivan
  24. 24. 2009 2010 2011 2012 2014 3G LTE/SAE ratified as a standard 3G LTE Trials and Pilots 3G LTE Roadmap in Western Europe Sampling of multimode 3G LTE chipsets First 3G LTE enabled data cards and USB Dongles First 3G LTE Mobile Devices Commercial Rollout of 3G LTE by Tier 1 Mobile Operators Availability of €250 3G LTE smartphones 3G LTE embedded into laptops Source : Frost & Sullivan
  25. 25. Conclusion
  26. 26. <ul><li>Mobile WiMAX will face an uphill task to win customers in developed/saturated European markets, and the technology may eventually be phased out and merged with 3G LTE by 2010, if European spectrum auctions in the 2.6GHz continue to be severely delayed in various markets. </li></ul><ul><li>If one compares Mobile WiMAX and 3G LTE, they are more or less similar, based on OFDMA. </li></ul><ul><li>- Main difference is that it is pushed by 2 separate camps. </li></ul><ul><li>However, Mobile WiMAX is a ratified standard today, 3G LTE/SAE is not. </li></ul><ul><li>Delays in spectrum auctioning will go against the lead time that Mobile WiMAX has over 3G LTE not only in Europe but worldwide. </li></ul><ul><li>If WiMAX operators and terminal vendors focus more on the technology, and not on enhancing the user experience and providing next generation value-added services/applications, then end-users will not be able to understand and differentiate WiMAX from existing wireless service alternatives. WiMAX terminal vendors need to start thinking of mobile Web 3.0 today ! </li></ul><ul><li>It will not be an easy task to securely manage several “open” client devices in the WiMAX world of a retail distribution model. </li></ul>Conclusion
  27. 27. Conclusion (Contd…) <ul><li>Not all operators are keen on implementing Beamforming (or) MIMO+Beamforming in their current network deployment. </li></ul><ul><li>Coverage for 802.16e (TDD) inside buildings will be an issue in the 2.6GHz. However, most operators are looking at resolving indoor coverage issues using WiMAX enabled femtocells. </li></ul><ul><li>With the global economic crisis having an impact in Europe as well, it will be a huge challenge for greenfield operators to not only acquire spectrum at high costs but then deploy the network and compete with existing incumbents. Furthermore, the initial phases of the commercial rollout will not offer Mobile VoIP service for WiMAX users on their mobile Internet devices. </li></ul><ul><li>Mobile WiMAX TDD operators would need around 20-30MHz to effectively compete with FDD cellular players and provide triple/quad play services with optimum quality of service. </li></ul><ul><li>Even if Mobile WiMAX resolves some of the challenges as discussed earlier, it is still ambiguous as to what the killer application will be for Mobile WiMAX. </li></ul><ul><li>3G LTE will have a smooth migration path in comparison to Mobile WiMAX as 802.16e service providers would need to start from scratch with regard to site acquisition and installing base stations; municipality approval in setting up base stations is not an easy task. </li></ul><ul><li>With several challenges faced upon by Mobile WiMAX, it is difficult to apprehend the business value proposition associated with this technology in the European market, and if the deployment would make financial sense in the long run -unless service providers are heavily funded or have “deep pockets”. </li></ul>
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  29. 29. For Additional Information Joanna Lewandowska Corporate Communications Europe +48 22 390 4146 [email_address] Luke Thomas Programme Manager ICT Europe +91 44 42044681 [email_address] Sharifah Amirah Principal Analyst, Telecoms ICT Europe +44 207 343 8313 [email_address]