March 2007

The Promise of Connected Communities

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WiMAX

The promise of ICTs cannot be realized if people are not connected on physical networks on a world-wide scale. Broadband wireless technologies can help connect isolated communities and bring affordable as well as ubiquitous in high-speed Internet access. In countries which have lacked a traditional backbone network, these communication technologies represent an opportunity of leapfrogging. Several cities and countries have been successful in addressing the digital divide issues with inexpensive and pervasive wireless technologies.

TECHNOLOGY UPDATE


Source: Maurie Dobbin, an independent view coMparing new wireless technologies, apec telecommunications and working group,teleSources engineering (aust) pty ltd., april 2005

Communication networks are comprised of desktops, laptops, PDAs (Personal Digital Assistant) etc, a group of them forming a LAN (local area network), MAN (metropolitan area network) or WAN (wide area network). Wireless technology used in these networks gave rise to WLANs (Wireless LANs). Initial responses to wireless technology were mixed. Some industry experts claimed that it would be the future of communication, while others touted it as being too unreliable, thus futile. Wireless communication however has survived and is growing at an enormous rate. The following graph shows the various wireless technologies in the market presently.

Wireless broadband is on the verge of a shift towards usage of wireless technologies which were initially too costly due to expensive equipments but now with the availability of Worldwide Interoperability for Microwave Access- WiMAX a low-cost solution is envisioned. Technologies related to WiMAX provide greater mobility and higher bandwidth.

WiMAX in itself is not technologies but certification marks given to equipments which meet a certain conformity and interoperability tests for the standards used. WiMAX is an advanced technology solution, based on an open standard designed to meet the need, and to do so in a low-cost flexible way. WiMAX networks are optimised for high-speed data communication and it is expected to spur innovation in services, content and new mobile devices.

The technology behind WiMAX is IEEE 802.16 which is a group working on development of broadband wireless systems. The first standard being worked upon was for Wireless MANs in 2000, and the first standard was published in early 2002.

Initial research was in the 10-66 Ghz band and line of sight connectivity and large towers were required for these frequencies. These are thus suitable for backhaul networks. The current standards being worked upon are-

  • 802.16a – uses lower frequencies in the range of 2-11 and allows for non-line of sight communication also.
  • 802.16d – deals with connectivity between fixed devices.
  • 802.16e – deals with a ccess via portable devices like laptops, PDAs and mobile phones.
  • 802.16f – deals with incorporation of mesh networking capabilities for the standard.

The technologies used make WiMAX better suited for long distance wireless connectivity as compared to Wi-Fi. There were service lab trials in the third quarter of 2005 by member companies of the WiMAX forum, followed by commercial trials in the fourth quarter of 2005. WiMAX forum certified products were deployed in the market in the first quarter of 2006. The ranges and speeds for WiMAX however are estimates- theoretical and out of the lab trials in 2005. The range and data speeds are given as follows-


TimelineSource: Maurie Dobbin, an inDepenDent view comparing new wireless technologies, apec telecommunications and working group, telesources engineering (aust) pty ltd., april 2005

It is claimed by the WiMAX forum that a service area of three to ten kilometers would be serviced by a base station without needing line of sight communication. The data rate available in this scenario would be 40Mbps per channel for fixed and portable access applications. One cell could allow hundreds of connections at 1.5Mbps and thousands of residential connections at 256Kbps. The actual throughput would however depend on the geography, the radio channel size, spectral density etc.

Source: http://www.qoScoM.De/DocuMentation/51_wiMaX%20SuMMit %20pariS%20-%20May04.pDf

It is also claimed that WiMAX may provide about 15Mbps of capacity in a cell radius of about 30Kms with the capacity being shared by all users. The throughput for mobile users would be low. Access will be available for moving vehicles also. Korea’s new technology WiBro may be able to give about 1Mbps downloads for vehicles with speeds of 60Kmph.There are researchers who think the claims given for WiMAX are too optimistic.

Quality of Service and costs of wimax products

Network quality of service is determined by physical and market characteristics. Connection quality is related to distance from terminals from the transmitter and the amount of interference in the frequency band, on the physical side, while in the market side, competition makes the operators increase the quality of service. Quality of service of WiMAX certified products is used by network operators to give a differentiated level of services. With respect to WiMAX, theoretical estimates on performance show the following results vis–à-vis other technologies:

Source: http://www.oecD.org/DataoecD/32/ /3 218 39.pDf, page 28

In analyzing the cost incurred for fixed wireless access it is informative to breakout the end to end network and consider three major CAPEX (Capital Expenditure) components: Customer Premise Equipment (CPE), Base Station Infrastructure and Edge, Core, and central office equipment. For an incumbent wire-line operator extending the reach of an existing network with wireless access; most of the edge, core and central office equipment would be in place already, but, for a new operator this will be a sizeable up-front investment. However, since the investment will be spread over tens of thousands of customers it will (generally) have a minor long-term impact.

To bear such costs, the operators might:

  • Bear the full cost of terminals and installation while requiring a 1 or 2 year service commitment.
  • Offset terminal costs by charging a one-time activation fee and/or an equipment rental fee.
  • May offer incentives to encourage customers to purchasetheir own terminals.
  • May partner a state/ municipality in a public-private partnership

Source: wiMaX foruM, wiMaX: the buSineSS caSe for fiXeD wireleSS acceSS in eMerging MarketS, June 2005

The WiMAX forum is keen on keeping the costs low, as the long-distance wireless equipment has been costly in the past. This lowering of prices is being implemented through standardization. Current projections indicate that 100 USD can be achieved for self-installable indoor terminals by the end of 2007 and for outdoor terminals by the end of 2010.

Spectrum prices may play an important role in determining the network cost. Operators are likely to move towards usage of equipment in license-exempt bands especially in rural and remote areas. Flexibility in the spectrum policies in various countries may play an important role in determining costs.

Market Scenarios For Wimax

Source: Maurie Dobbin, an inDepenDent view coMparing new wireleSS technologieS, apec telecoMMunicationS anD working group,teleSourceS engineering (auSt) pty ltD., april 2005

The WiMAX role in the wireless market is still debatable though, since the commercial deployment of WiMAX devices is very recent and most of the analysis done internationally as well as the industry claims made so far have been either theoretical or as a result of lab tests. Some supporters of the technology are being optimistic about its role while as some others say that it is not justified. Following is a graph showing estimated of WiMAX infrastructure as per a forecast in US.

In the Asia Pacific (APAC) market, equipment vendors, including chip set makers, CPE (Cost Per Equipment) makers and system solution providers, have to act very quickly to adopt the latest technical specifications and optimize their equipment performance in real environments. As per current statistics:

  • Trial network deployments are in progress in at least 13 APAC countries.
  • Many service providers are developing solutions in developing markets such as India, Thailand,
  • Philippines and Indonesia have shown great interest in setting up WiMAX networks and extending telecommunication services coverage to under-served places.

Source: tia’S 2005 telecoMMunication Market review anD forecaSt http://www.tiaonline.org/MeDia/preSS_releaSeS/inDeX.cfM?pareleaSe=05-24

WIMAX may be partially substitutable for Wi-Fi for longer distances, but Wi-Fi supports faster data rates for customers within 100 metres. Fixed version of WiMAX maybe a good candidate for Wi-Fi backhaul. WiMAX could thus play a complimentary role in Wi-Fi due to differences in range. This could play a role connecting Wi-Fi hotspots in a mesh network, which would increase coverage and capacity quickly.

WIMAX IN EMERGING MARKETS

Wireless access networks based on WiMAX-compliant solutions provide an opportunity for operators to participate in the high growth opportunities in emerging markets which have very low current gross domestic product per capita (GDP) with an above-average economic growth potential. Traditional wire-line infrastructure in these countries is either non-existent or only accessible to a small segment of the population. Though, having said that, these markets present a lot of challenges.

In terms of broadband services the low flexible income per household results in:

  • Lower revenues (Average Revenue Per User i.e. ARPU) for broadband services.
  • Fewer customers can afford to purchase their own customer premise equipment.
  • Higher churn and higher percentage of bad debts can result in higher operating expense
  • Lower percentage of households own personal computers thus reducing the size of the addressable market for broadband services.

Rural areas in emerging markets are typically the most underserved. There have been several reasons as to why broadband ICT access has been mostly deployed in urban areas. Economically this is as service providers are inclined to first serve the most populated areas, i.e. dense, rich cities and suburbs where most of the potential customers are located where the ARPU is much higher. Rural areas in developing countries are still at first favouring only voice communication instead of value added services representing a slow evolution towards ICTs. Developing areas still lack basic infrastructures like legacy telecommunication infrastructures, electricity supply, roads, etc.

Source: wiMaX foruM, wiMaX: an efficient tool to briDge the Digital DiviDe, noveMber 2005

WIMAX could reduce the need of wire-line communications, especially in these remote and rural areas, and this could make the regulators cut down on wire-line subsidies and the Universal Subsidies Obligation Fund may have to be looked into with this perspective again. Rural areas in developing countries like China, India and some parts of South America are considered as prospective markets for the usage of WiMAX certified technology options. The Telecom regulatory authority of India (TRAI), has given recommendations (October 2005) on growth of telecom services in rural India and has recognized Wi-Fi and WiMAX as a possible technologies for extending rural coverage. According to TRAI, WiMAX systems are ideally suited for providing broadband
access in remote or rural areas in conjunction with Wi-Fi.

WiMAX based access networks, compared with other wired solution such as ADSL, or any other wireless or satellite system, will enable operators and service providers to cost-effectively reach millions of new potential customers providing them with broadband ICTs access. This is true even for developing rural areas for which the cost/profitability and the demand factors are essential. This also includes adequate coverage, reliability, performances, capacity and applications.

The WiMAX forum is fully committed in cooperation with the private and public sector, to make available the benefits of new technologies, especially ICTs with the goal that: every one can create, access, utilise and share the information and knowledge, to achieve their full potential and improve their quality of life in a sustainable manner. WiMAX would help:

  • Connect villages with ICTs and establish Community Access Points, as it is estimated that 1.5 million villages in developing nations remain unconnected to telephone networks.
  • Ensure that more than half the world’s inhabitants have access to ICTs within their reach.

The main advantages of using a WiMAX based network are:

  • Ease of installation- which is particularly useful in rural areas where lack of basic infrastructure and long distances are not uncommon.
  • High range- WiMAX can provide for non line-of-sight (NLOS) communication also with a coverage (up to 15 Km around the base station) and long range transmission up to 50Km in LOS conditions.
  • Flexibility- WiMAX solutions can be deployed point, multipoint as well as backhaul networks.
  • Multiple applications- WiMAX uses the Internet protocol and thus supports all multimedia services from Voice over IP (VoIP) to high speed internet and video transmission. WiMAX has a high throughput and does has the capacity to deliver services for SMEs, SOHOs (Small-Office-Home-Office), Cybercafes, Multimedia telecentres, schools and hospitals. The same network can support
    private and public services and thus favour financial partnerships. The WiMAX networks will be able to support fixed, nomadic, portable and mobile wireless broadband connectivity on the same network.
  • Cost effective- WiMAX is cost effective for a few or for a million subscribers, it is easy to deploy and allows for dynamic competition, which further bring down prices.

Source: trai-June 200

(The WiMAX forum which is an industry-led, non-profit corporation formed to promote and certify the compatibility and interoperability of Broadband Wireless Access (BWA) products using the IEEE 802.16 and ETSI HiperMAN wireless MAN specifications, is fully committed in cooperation with the private and public sector to make available the benefits of new technologies to achieve their full potential and improve their quality of life in a sustainable manner.)

challenges and Way ahead

Source: wiMaX foruM, wiMaX: an efficient tool to briDge the Digital DiviDe, noveMber 2005

Even though the picture looks good, there are several challenges which may act as barriers to mass adaptation of the technology. These are mainly issues regarding security, lack of awareness, lack of a single bill roaming agreement and lack of uniform authentication procedures. The lack of education and support leads to difficulty of establishing a wireless connection. There is also a lack of awareness among consumers that publicly accessible links are available. The WiMAX growth would depend on the availability of spectrum and its success could be hindered by mobility restrictions in certain specific spectrum bands.

Though, the growing availability of WiMAX equipment and the early announcement of a number of deployment plans have led to a surge of interest in WiMAX in developing markets its progress may be hindered by limited discretionary income. There are several key questions regarding:

  • A viable business model for WiMAX with regards to the type of market, competitive landscape, operator characteristics, service mix and technology requirements.
  • Critical factors that will define the success of WiMAX in different situations?
  • Financial return can be expected, more so as models for WiMAX showing attractive returns may be a tad optimistic.
  • Success of new entrant network operators and service providers
  • Opportunities and threats to incumbent fixed and mobile operators
  • A possible slow take-up and low ARPU which could not bring in expected returns especially in developing markets.
  • Low PC penetration rates, low disposable incomes in developing areas which could hamper growth.
  • Competition from mobile and DSL growth in developing areas.
  • Experts have claimed that the WiMAX spectrum is currently undervalued effectively meaning that WiMAX spectrum may get a lot more expensive as more regulators release lower frequencies to be used for mobile WiMAX. The WiMAX spectrum costs are already higher in developing markets. The cost of WiMAX per MHz per person has been higher in markets with low broadband penetration. Perhaps counter-intuitively, WiMAX spectrum is also more expensive in lower income countries, an indication of the higher perceived opportunity for WiMAX in such markets.

Wireless networks have had a definite impact on the communication sector so far,and this is likely to continue on the same lines. WiMAX seems to be the saviour for the developing world. Though with policy and other issues involved, it remains to be seen whether the WiMAX technologies will prove to be as successful as claimed.

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