WiMAX and HFC Technologies - Essay Example

Cost comparison between WiMAX and HFC technology T81-570 Michael Leung 5 2006 Contents Current challenges of cable ISP market 3 Marketing advantages of WiMAX 4 The market immediately before a metropolitan area WiMAX launch 7 The market 6 months after WiMAX launch 8 The market 1 year after WiMAX launch 9 The market 3 years after WiMAX launch 9 Improving marketability 10 Conclusion 12 Implications of WiMAX to the cable ISP market (Is this the title of the paper or that on the first page) Current challenges of cable ISP market The primary challenge all ISP operators face is satisfying the growing expectations of users for more capable, easier-to-use and more universally available communications and broadband services. All customers, both corporations and individual users, tend to pay less and to receive more qualitativebetter (qualitative) services. Contemporary cable operators note that customers often avoid long-term contracts and easily make decisions to move to another operator.1 Existing cable providers have the advantage of developed customer networks, installed equipment that is proovedproved to be tested and working correctly. As Wanczyk2 (who is this) writes, today, cable modems and DSL connections serve an increasingly large portion of the online community. Current estimates expectHe estimated that over 40% of online households in the United States to rely on broadband connections by 2006 (did this prediction bear out seeing 2006 is almost over); those same estimates indicateand that the top fifteen DSL providers worldwide boast a market share of over 80% and his prediction seems to come true.3 Also the established telecom firms have the resources to continue investing in technological improvements to match consumer expectations. Large companies like Time Warner Cable, SBC Communications, AT&T, Verizon, and Comcast are about to continue dominating the marketplace because they hold the first-mover advantagebenefit over any potential entrant firms. However cable ISP companies face the problem of emerging competitive new technologies. Is it quite possible for the entrant firms to come in the market and take advantage of new technology, when the existing (especially large) firms have too complicated infrastructure to do it so quickly as it is necessaryessential. The relativecomparative ease of setting up wireless networks could aidassist the efforts of entrant firms, as they fightstruggle for a share of the Internet access market. However, the technological hurdles associated with hosting a large number of simultaneous users on local wireless networks are significantsufficient. Cable ISP providers face increased competition from wireless mobile broadband. WiMAX and cellular broadband provide a pathwayway to "personal broadband." The ultimate vision is for the abilitycapability to always be connected with a sufficientadequate level of broadband service and simplified billing. Deploying and managing diversevaried wireless networks that deliver increased numbers of media and other services is complexcompound. Both corporate and individual users have shown a willingness to pay for simplicity over more complex or multiple services. Several well understood factors fit into this equation, including ease of use and productivity: less time spent dealing with buying, paying for and learning how to use services and devices results in greater commercial benefitsprofit and user satisfaction.4 Marketing advantages of WiMAX It is absolutely clear that for obtaining advantage in the ISP market new entrant firms should have serious technological benefits. Lae Let us see what technological benefits WiMAX can give. Firstly, WiMAX costs less to deploy than any other broadband technology. As the table below indicates many technologies such as Hybrid fiber coaxial (HFC) are significantly more expensive to deploy. The worst scenario for service providers using an expensive landline technology (and their investors) such as HFC or cable is that after an investment in the many billions of dollars to serve one small region, a WiMAX operator could enter their market and with far less capital expenditure and drive the incumbent, high-cost operator out of business. Broadband technology Installed base Cost for home passed DSL $270 Bn $30-$50 Cable $65 Bn $1,200 3G $405 Bn $50 HFC $93 Bn (estimated) $1,250 WiMAX $3 Bn (estimated) $8 Table 1: Comparisons of leading broadband technologies5 The table above shows the strong economic advantage of WiMAX over other broadband technologies. Spectrum fees are included into Installed base figures. With the exception of 3G wireless technologies, the other broadband technologies cannot offer mobile services. Disruptive technology is defined by Harvard Business School Professor Clayton Christensen cited in Wimax.com as being "cheaper, simpler, smaller and more convenient to use" than legacy technologies.6 So WiMAX is definitely a disruptive technology for the ISP market. As it clearly is seen, the barrier to entry for WiMAX service providers is very low relative to other broadband technologies. (Are spectrum fees figured into these anlyses) This has the potential to invite entrepreneurs into many markets to offer WiMAX-related services in direct competition with incumbent service providers who have invested millions if not billions of dollars in their respective network infrastructure. Currently there are following potential applications for commercial use of WiMAX: Connecting Wi-Fi hotspots with each other and to other parts of the Internet Providing a wireless alternative to cable and DSL for last mile (last km) broadband access. Providing high-speed mobile data and telecommunications services (4G) Providing a diverse source of Internet connectivity as part of a business continuity plan.7 Many companies are closely examining WiMAX for "last mile"8 connectivity at high data rates. Last mile is the final leg of delivering connectivity from a communications provider to a customer. To solve the problem of providing enhancedimproved services over the last mile, some firms are beginning to mix networks. One example is Fixed Wireless Access, where a wireless network is used instead of wires to connect a stationary terminal to the wireline network. This solution could result in lower pricing for both home and business customers. Wireless systems such as WiMAX have an advantage over wired systems in last mile applications in not requiring lines to be installed. So the cost of new customer launch significantly decreases that is very important, for instance, for outlying and rural areas where there are few potentialpossible customers. However, WiMAX systems also have a disadvantage that their unguided nature makes them more vulnerable to unwanted noise and hackers' intrusions. In areas without pre-existing physical cable or telephone networks, WiMAX will be a viable alternative for broadband access that has been economically unavailable. Prior to WiMax, many operators have been using proprietary fixed wireless technologies for broadband services. Wikipedia9 writes about commonly held misconception is that WiMAX will deliver 70 Mbit/s, over 70 miles. Each of these is true individually, given idealperfect circumstances, but they are not simultaneously true. In practice this means that in line of sight environments you could deliver symmetrical speeds of 10Mbps at 10 miles but in urban environments it is more likely that 30% of installtionsinstallations may be non line of sight and therefore users may only recieve 10Mbps over 2 miles. WiMAX has some similarities to DSL in this respect, where one can either have high bandwidth or long reach, but not both simultaneously. The other feature to consider with WiMAX is that available bandwidth is shared between users in a given radio sector, so if there are many active users in a single sector, each will get reduced bandwidth. Typically each cell has a 100Mbps backhaul so there is is no contention here. On the radio side in practice many users will have a range of 2,4,6,8 or 10Mbps services and the bandwidth can be shared. The market immediately before a metropolitan area WiMAX launch Issue of spectrum should be clearly solved before WiMAX launch. Licensed spectrum is protected by the government authorities and unlicensed is not protected. Using licensed spectrum without proper license is strictly forbidden, so Tthose who trespass onto licensed spectrum may go to radio jail (cute but we need to be accurate - " can incur substantial fines or even be sentenced to incarsaration.". In the US, that means Federal Marshalls can be called in to disband an illegal operation.10 Concerning the unlicensed spectrum, there are many successful Wi-Fi (unlicensed 2.4 GHz) service providers. They have learned to deal with interference from other unlicensed operators via agreements with the other operators, changing channels within the unlicensed bands, changing antenna polarity and other tricks of the trade to mitigate interference on open standards equipment using unlicensed frequencies. WiMAX operators expecting to use unlicensed spectrum can learn a lot from the experiences of Wi-Fi operators. For example, Wi-Fi that operates on an unlicensed part of the spectrum allows for the community-based networks in Boston, or the Internet cloud over Portland. But that fact has also scared off some major players, like Verizon, who feel that unlicensed spectrum is a free-for-all that remains impossible to govern; as a result, the telecom firm feels insecure about the ability to ensure quality service and secure transmissions. To sum up all stated above, WiMax, however, operates in a mixture of licensed and unlicensed spectrum, which could give the advantage to firms able to bid on those spectrums during auctions. Auctions are the best way for the government to generate peak revenue from spectrum allocation, but can be a barrier to entry for small interests. Spectrum issues are the easiest way to examine the role established firms plan to play in the wireless era; by analyzing current actions, we can elicit some information about future strategies. Nextel, for example, is already attempting to secure the swath of spectrum necessary for a WiMax roll-out. (Many sentences of the above text are taken directly from a source only referenced later in your paper. 1. You should not present such word-for-word material without putting it in quotes and citing the source. 2. Unless the text is a pertinent quote, you should not present word-for-word referenced material in your paper. We want to find out your thoughts - not the thoughts of others on this topic.) Organisation for Economic Co-operation and Development gives specific numbers of spectrum used for licenced and non-licensed data transfer: " Potential WiMAX providers in the United States have focused on the 2.5 GHz and 5 GHz ISM bands. The 3 400 - 3 650 MHz range is allocated for use by the radiolocation service (radars) on a primary basis and does not contain provisions for use of fixed or mobile systems. The United States recently opened up new spectrum for wireless broadband in the 3 650 to 3 700 MHz range that uses a hybrid approach of licensed and unlicensed regulatory models. The band will require the use of contention-based protocols that will minimise interference. The goal is to stimulate the expansion of wireless ISPs with limited resources".11 (The reference text above is word-for-word from the reference.) If use of unlicensed spectrum appears to be successful, community networks will surely continue to emerge. But if WiMax moves entirely to licensed bandwidth, we will see a market structure similar to today's cell phone industry. The market 6 months after WiMAX launch I don't think that WiMAX will significantly affect the ISP marketr (marker) in a metropolitan area, because this area already has advanced infrastructure of DSL, cable, fiber and Wi-Fi networks. So new WiMAX Internet service provider appears to be just one more ISP with some technical advantages and limitations. Possibly "line of sight" limitation may considerably prevent WiMAX from market success in a metropolitan area. A cable line combined with Wi-Fi hotspot appears to be more suitable to provide Internet in aeroports, hotels, restaurants and metro stations. However low costs of introducing a new WiMAX network will help ISPs to install, run and test the technology, so it has chanseschances to becoame mature. Like with any introductory technology, existing prices will continue to drop as new top-of-the-line performance leaders emerge. Assuming that the technical gap will close, the territory will be covered with WiMAX network as well. As more businesses like supermarkets, hotels and restaurants follow the ISP model of charging a fee by the minute, the day, or the month, more creative strategies to exploit wireless technology are emerging. The motives vary, and the methods prove how fascinating the wireless era has already become. The market 1 year after WiMAX launch It is probable that 1 year after WiMAX launch the network will develop and include more and more customers in outlaying and rural areas. We should take into consideration Also given the limited wired infrastructure in some developing countries. Also, , the costs to install a WiMAX station in conjunction with an existing cellular tower or even as a solitary hub are likely to be small in comparison to developing a wired solution. So, WiMAX has great market perspectives for developing countries where there no developed mature cable networks. Areas of low population density and flat terrain are particularilyparticularlywell suited to WiMAX and its range. For countries that have skipped wired infrastructure as a result of inhibitive costs and unsympathetic geography, WiMAX can significantly enhance wireless infrastructure in an inexpensive, decentralized, deployment-friendly and effective manner.12 (The paragraph above is largely taken from an unreferenced source.) The market 3 years after WiMAX launch According to many analyses, Iin the future, content will be the product most in demand. We Humanity will all be connected to the vast cloud of information, metaphysically hanging over the cities and towns of a wireless nation. Our People's homes will be "smart," logged into a network that constantly refreshes the information cached within our material possessionsfrom Internet and many other networks. In this world, set anywhere from fifteen to fifty years in the futuretime, access to that such networks will be as commonplace as the air we breathe. Indeed, in a sense, we will mine that same air for information. In this world, the old-fashioned model of paying for an Internet connection will be as unimaginable as the notion that villagers once spent days traveling the distance it now takes an hour to traverse.So the information itself or services will be more valuable than service that provides such information. So information providers or services providers will be taking getting money for their content, but not for means of getting the content will be cheap or free. We Humanity already lives in a world with networked economies, networked societies, and networked knowledge; the advent of wireless broadband can only hasten the process. The noted technology scholar, Nicholas Negroponte, has crafted a beautiful metaphor for the changingvarying structure of telecommunications, and the communalcommon nature of the resulting society: "Further down the street, beyond the reach of my system, another neighbor has put in Wi-Fi. And another, and another. Think of a pond with one water lily, then two, then four, then many overlapping, with their stems reaching into the Internet."13 (Again the section above is taken word-for-word from your reference. We want your thoughts and words, not knowing that you can find good references. Read and learn and then write your own thoughts.) Improving marketability At the beginning of WiMAX launch cable ISP companies can cooperate in order not to let hi-tech entrants to gain competitive advantage of WiMAX technology as it recently was with Wi-Fi. In 2002, as T-Mobile began working with Starbucks to offer wireless hot-spots around the country, a coalition of tech firms (including Intel, IBM, AT&T) formed a company called Cometa Networkswith the same intention; obviously, some major companies are actively involved in the early stages of Wi-Fi deployment. So the role of the smaller firms in this revolution may be on a more specialized, local level, that is lying beyongbeyond interests of hi-tech giants. Currently the nation's wide wireless carrier Nextel could use WiMax to gain an edge on its competition in the coming years. On the other end of the industry, Intel has positioned itself well as the cooperative partner to whichever firms wind up supplying bandwidth in the next decade. Unlike Nextel, which is scooping up the sectors of the spectrum now allocated to 802.16e, Intel advocates reallocation. They argue that wireless technology will only flourish if it is allowed to shift into the lower frequencies that are now reserved for traditional broadcasters. I have already mentioned above a corporate partnership Intel formed with AT&T and IBM. These three giants teamed up to form the vertically integrated Cometa Networks, an enterprise that offers wholesale Wi-Fi access to carriers and ISPs. Their cooperation allows them to develop corporative business strategy that will then b easily applied to WiMAX as well as to any other promising technology. The companies behind Cometa have a strategy, Bby establishing an early foothold in the Wi-Fi world, and setting themselves up as middle-men, the companies behind Cometa have a strategy in place. It iscould be somewhat a little surprising that the hardware manufacturers, such as Intel and IBM, are pushing a forward-looking plan in the realm of the providers-considering the provider's business so promising. bBut, it the reason could be that these firms are much better suited to cope with a new technological erainformed about new prospective technologies and are looking for beneficial business opportunities. To What's about Intel and IBM, it doesn't much matter who is selling wireless access, as long as that access relies on Centrino chips and IBM workstations. (Word-for-word from your referenced source.) It is not strange that that the hardware manufacturers, such as Intel and IBM, take part in implementation of new wireless access network. This alliance gives them opportunity for selling applications and hardware in WiMAX market as well. To that end, Intel has also teamed up with software firm iAnywhere to develop a bundled package called the Wi-Fi Toolkit. It includes Intel-based mobile devices, software from iAnywhere, and the hardware necessary to set up a wireless access point. The package is designed specifically for small businesses, one of the intended targets of the Wi-Fi industry.14 To sum up, the market for wireless broadband access is evolving from the top-down and the bottom-up, simultaneously, but there is stagnation in the middle. While Intel strengthens its position as the provider of microprocessors and the regulators and lobbyists battle for licensed spectrum, neighborhood networks gain in popularity and usefulness. Also there are some major present providers that could be left behind. The cable industry (Comcast, Time Warner) seems to be going its own way, instead of concentrating on wireless services. The leading DSL suppliers (Verizon, SBC, Covad) have also been late to react, with cell phone also-rans like Nextel and T-Mobile doing their best to move up in the market by exploring new ideas. Some companies who have already evaluated the WiMAX potential, like EtherLinx and Aiirnet, are implementing innovative ideas and testing new strategies. For example, EtherLinx outlines 4 directions for development: wireless "last mile" broadband, rural wireless broadband, EtherLinx developer network (EDN) and wireless consulting.15 Conclusion WiMAX provides the opportunity for DSL, cable, and cellular operators to supply a single, extensible platform for delivery of wireless communications that include triple play IPTV, Internet access, and VoIP phone service. As WiMAX evolves to full 4G mobility, it will be capable of providing a full set of services when combined with local area DSL, cable, or fiber optics. Also WiMAX technology has the potential to be a productive enough to be a wireless alternative to cable and DSL for "last mile" broadband access. User satisfaction and evolving usage factors force the industry to consider deployment of networks that can evolve over several years. Increasingly, the decisions for 4G wireless broadband come down in favor of the mix, if not the exact prescription of platforms based on new standards. WiMAX is the first major effort to develop a framework for the long-term evolution of 4G technologies. WiMAX operators will face the same challenges as current ISPs providing broadband Internet access. End users don't care about the technology; they care about speed and price, and a little about customer service. Each operator has a different set of customers, either business or residential/SOHO. Therefore, WiMAX must offer a tier of services to satisfy multiple classes of users. Bibliography 1. Adlane Fellah, Service Providers' Challenges and Expectations Regarding Fixed WiMAX http://www.wimax.com/commentary/spotlight/spotlight11072006mw1/ WiMax.com, 2006 2. http://www.etherlinx.com/ EtherLinx Communications Inc. 2003 3. Last mile http://www.answers.com/topic/last-mile Answers Corporation. 2006 4. THE IMPLICATIONS OF WiMAX FOR COMPETITION AND REGULATION http://www.oecd.org/dataoecd/32/7/36218739.pdf Organisation for Economic Co-operation and Development, 2006 5. Wanczyk, Stephen. Cooperative Disruption And Great Firms Failing http://www.newburyopen.net/pubs/cooperative_disruption.pdf CCTP-753 6. WiMAX. http://en.wikipedia.org/wiki/WiMAX Wikipedia, 2006 7. WiMAX http://www.answers.com/topic/wimax Answers Corporation. 2006 8. WiMAX Economics: Compare WiMAX with other Technologies http://www.wimax.com/education/wimax/economics WiMax.com, 2006 Read More