A Tip on WiMAX Direction

If analysts at In-Stat are right, and the WiMAX chipset market is driven primarily by embedded Mobile WiMAX chips in mobile PCs through 2012, we might conclude that some suppliers are betting WiMAX will be about mobile and tethered PCs, much more than dual-mode cellular/WiMAX handsets, at least for the foreseeable future.

In that view, WiMAX is, at least initially, a replacement service for cable modems, DSL and 3G data cards, rather than a platform for newer services. There's nothing wrong with approaching a possibly-new market by snagging revenues for legacy applications. What will be interesting is to see whether WiMAX can develop into something more than a 3G network with more bandwidth.

To be sure, there are several potential "disruptions" here. There is the "open networks" challenge, the possibility of disruptively-lower prices, opening up Web connections for whole new classes of devices as well as the potential creation of a mobile-Web-optmized network for the first time.

“The total WiMAX user terminal chipset market will reach almost $500 million in 2012, growing from $27 million in 2007,” says Gemma Tedesco, In-Stat analyst. “Furthermore, WiMAX base station semiconductor revenues are expected to be approximately $1.4 billion in 2012, compared to $130 million in 2007.”

Verizon Launches 7 Mbps Service

Verizon has launched a new 7 Mbps broadband access service availabe in about 400 Verizon-served communities. Prices begin at $39.99 for contract plans. Verizon will expand the program into more communities throughout the year.

Verizon Shifts to GPON

Verizon has begun installing Gigabit Passive Optical Network (GPON) optoelectronics as part of its FiOS deployments in California, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Pennsylvania, Virginia and Texas. GPON will replace the former broadband passive optical network (BPON) technology Verizon has been using up to this point. Users won't notice anything different, at least at first.

In years to come, they well might. BPON delivers 622 Mbps to 32 potential users in the downstream, with a shared 155 Mbps in the upstream.
GPON supports 2.4Gbps downstream and 1.2Gbps upstream that can be shared among 32 to 64 users. Basically, that means a downstream bandwidth increase of four times and an upstream improvement of eight times.

At some level, GPON is a logical and improved enhancement to BPON technology, and its price now is closer to BPON than was the case some years ago. At another level, the move is protection against the cable industry's upcoming upgrade to Data Over Cable Service Interface Specification 3.0, which will support channel bonding and shared downstream bandwidth as high as 160 Mbps.

Depending on customer take rates, the FiOS GPON network can support much more bandwidth that DOCSIS 3.0, absent some sort of major network upgrade by a cable operator.

So long as on-demand techniques are used to deliver video, most of the additional bandwidth can be allocated for other data-focused uses. As this chart from the IEEE shows, after video, it is data demand which grows most.

Xohm: Where's the Beef?

Sprint Nextel says it will launch it Xohm WiMAX service at the end of April. Associated Press also reports that Xohm will not use subsidized handsets, will offer daily, weekly, monthly and longer-term contracts. In an attempt to differentiate itself from simple "access" services, Xohm will feature location-based services tied to advertising and search and portal services created by Google.

But Xohm will have to do more than that. As the first widespread network created expressly for broadband-based services, Xohm will be an early test of the economics of networks anchored on broadband access revenues rather than voice. And that is going to be a challenge in the early going. By definition, Xohm is soft launching service in three markets with established cable modem and Digital Subscriber Line service.

Chicago, Washington D.C and Baltimore, to be specific. Other markets are supposed to be added in April. The point is, if the offering is positioned as a terrestrial broadband substitute, how big is the opportunity? Conversely, if Xohm is positioned as a mobile broadband alternative to existing third generation services, are location services enough of a differentiating factor?

It is conceivable that customers will defect to Xohm for prosaic reasons: no-contract service or lower prices, for example.While helpful, that is hardly an objective requiring construction of an entirely-new network. Many years ago, when new blocks of spectrum were auctioned off for what was then called "personal communication services," the thinking was that the spectrum would be used to create new services, used in new ways. A prime example was a sort of quasi-cordless, quasi-cellular service that offered call handoff when the user moved at pedestrian speeds, but wouldn't be usable at freeway-driving speeds.

What happened is that all that spectrum wound up being used as the basis for CDMA and GSM-based 3G mobile networks instead. New services were created, of course, but not the ones everybody expected. People thought the access mode would be the difference. Instead, it was text messaging and mobile email that wound up driving new service revenues.

It is conceivable that some new use mode will develop for WiMAX networks, based on game platforms or media devices rather than phones, for example. The issue then will be about whether the cost of building and operating the network, and securing the spectrum, can support the revenue generated by the new use cases. It's not going to be easy.
.

FCC to Look at Traffic Shaping

The Associated Press says the Federal Communications Commission will investigate complaints that Comcast Corp. actively interferes with Internet traffic as its subscribers try to share files online.

This should be very interesting. One one hand, there's an issue about packet blocking. On the other hand there is an issue of exposure to copyright law, since much peer-to-peer traffic that Comcast and others appear to be blocking infringes copyright laws.

A coalition of consumer groups and legal scholars asked the agency in November to stop Comcast from discriminating against certain types of data. Two groups also asked the FCC to fine Comcast at a rate of $195,000 for every affected subscriber.

It is possible there are two intertwined issues here: packet blocking and copyright violations. The former might be technologically necessary to prevent the latter.

Satellite Broadband Gets Eutelsat, ViaSat Boost

French satellite operators Eutelsat SA and U.S.-based ViaSat want to leapfrog current and emerging generations of satellite-based broadband, and are putting money behind the effort, according to the Wall Street Journal.

To put the effort into perspective, the ViaSat satellite will have bandwidth exceeding the combined signal capacity of nearly all the two-way commercial communications satellites serving North America, ViaSat calculates. Basically, the two new satellites will offer price-per-bit performance an order of magnitude better than the advanced satellites in orbit today.

For its part, Eutelsat's one new advanced satellite will have a capacity equal to Eutelsat's entire 24-satellite existing fleet.

Each company has committed to separately build and launch a satellite with 10 to 15 times greater capacity than the most-advanced birds already in orbit. The companies say they plan to share some marketing and capital expenditures in securing wholesale customers.

Eutelsat hopes to launch its satellite in 2010, with ViaSat scheduled about a year later. In the U.S., the Internet connections are expected to cost between $49 and $79 a month.

Business Fiber: Better, Not Good

By some measures, business customers have better fiber access than they used to. By other measures, most businesses still do not. One has to be in a building with enough private line potential to support something on the order of four T1 circuits, says McLeodUSA CEO Royce Holland. And as recent data from service providers such as XO Communications shows, most business customers are not in those buildings.

In fact, despite strenuous efforts by all sorts of companies that make a living providing fiber-based services to business customers, lower T1 prices over the last decade arguably have made the "fiber to building" business case tougher. Lower T1 prices obviously reduce the amount of recurring revenue any provider can hope to make from a single site.

The countervailing trend is higher demand for optical services such as Ethernet. Though the cost of hardware has declined over the last 10 years, the cost of installation and construction has not, and that's most of the cost.