Intel to play WiMax vs. 3G game as capacity vs. coverage

Santa Clara (CA) – From a consumer’s point of view, WiMax has been a huge disappointment so far. Yes we know, it was expensive and complicated to develop, and we had the Xohm financial debacle and reorganization, but it was late to launch to begin with and it is now almost two years behind the initial rollout schedule. While Clearwire will be driving the network rollout, companies such as Google and Intel have an interest in getting the technology out as quickly as possible to sell hardware and services into the market. The marketing strategy seems to be unfolding now.

If you aren’t educating yourself, WiMax can be a confusing story. How is it exactly different from what we have already, such as 3G? And you (and we) may be wondering whether WiMax will be a data service, a voice service or both. We had a chance to sit down with Intel’s Ciricia Proulx, who is in charge of the firm’s Global WiMax Strategic Communications, to get a few answers.

At it this point, Intel, which is a major investor in Clearwire, expects to make WiMax accessible to 120 million people in 2010, with global rollouts planned or already happening not just in the U.S., but also in nations such as Russia, Japan, Taiwan, Malaysia and India.

We usually hear that WiMax is a complementary technology that is not positioned to replace voice services even if it has the potential to – and given the fact that Sprint is the largest shareholder in Clearwire, we shouldn’t expect the company to cannibalize its regular voice service with a competing WiMax voice service anytime soon without asking for nosebleed prices. Proulx told us that there will be devices that will combine voice and data capability via WiMax, but we she indicated that the majority of the devices will support either voice or data. We did not go much further into this topic, but it is somewhat obvious that this circumstance is not due to technology restrictions, but rather due to old telecommunications structures, old thinking and the high cost of the WiMax buildout – cost that must be recouped in one way or the other. And you just don’t do that by destroying margins or, in this case, Sprint’s voice business.

However, if you don’t advertise WiMax as a capable voice/data service, for example in the next-generation MIDs, how do you convince consumers that they should choose WiMax over 3G services such as CDMA or HSDPA? Simple: Intel pitches 3G’s capacity dilemma.

We have heard enough about 3G networks not being able to carry the growing data load: AT&T had its fair share of problems with the iPhone. Users are already told they cannot use certain applications over the cellular network because of bandwidth constraints and probably not only we here at TG Daily know that those 3G networks crumble during big events with many people taking pictures and videos and uploading them to the Internet.

There is no doubt, 3G has a capacity problem and Intel seems to be focusing its WiMax case on exactly this 3G weakness. The company counts on disgruntled 3G users who may consider a switch to WiMax: “People don’t pay for an experience they don’t get,” Proulx said. She admitted that the capacity of WiMax base stations is limited as well, just under 80 Mb/s at this time, but future generations are expected to quickly move into the triple digits – and WiMax may be more scalable due to its data-centric, all-IP network infrastructure.

WiMax has its weaknesses as well and the most critical one is coverage. The buildout is complex, expensive and is very limited at this time in the U.S. In the end, Intel is seeing the battle against 3G as capacity vs. coverage. It is unclear at this time how this competition will work out, but neither technology is in a position to take over the market entirely at this time. One effect we are seeing already is that WiMax may be putting pricing pressure on 3G services as the service becomes more available. Proulx said that carriers already have begun adjusting their pricing strategies and we should expect this trend to continue.