What is WiMax?

by Carl Townsend — last modified 2006-08-14 08:44 PM

Figure 1 WiMAX has the potential to impact all forms of telecommunications

WiMAX has the potential to replace a number of existing telecommunications

infrastructures. In a fixed wireless configuration it can replace the telephone company's
copper wire networks, the cable TV's coaxial cable infrastructure while offering Internet
Service Provider (ISP) services. In its mobile variant, WiMAX has the potential to
replace cellular networks. How do we get there?

What is WiMAX or Worldwide Interoperability for Microwave Access? WiMAX is an

Institute of Electrical and Electronics Engineers (IEEE, see http://www.ieee.org) standard
designated 802.16-2004 (fixed wireless applications) and 802.16e-2005 (mobile wire-
less). The industry trade group WiMAX ForumTM (http://www.wimaxforum.org ) has
defined WiMAX as a "last mile" broadband wireless access (BWA) alternative to cable
modem service, telephone company Digital Subscriber Line (DSL) or T1/E1 service.

Fixed WiMAX
Figure 2 Fixed WiMAX offers cost effective point to point and point to multi-point
solutions

What makes WiMAX so exciting is the broad range of applications it makes possible but
not limited to broadband internet access, T1/E1 substitute for businesses, voice over
Internet protocol (VoIP) as telephone company substitute, Internet Protocol Television
(IPTV) as cable TV substitute, backhaul for Wi-Fi hotspots and cell phone towers,
mobile telephone service, mobile data TV, mobile emergency response services, wireless
backhaul as substitute for fiber optic cable.

WiMAX provides fixed, portable or mobile non-line-of sight service from a base station
to a subscriber station, also known as customer premise equipment (CPE). Some goals
for WiMAX include a radius of service coverage of 6 miles from a WiMAX base station
for point-to-multipoint, non-line-of-sight (see following pages for illustrations and
definitions) service. This service should deliver approximately 40 megabits per second
(Mbps) for fixed and portable access applications. That WiMAX cell site should offer
enough bandwidth to support hundreds of businesses with T1 speeds and thousands of
residential customers with the equivalent of DSL services from one base station.

Mobile WiMAX
Figure 3 Mobile WiMAX allows any telecommunications to go mobile

Mobile WiMAX takes the fixed wireless application a step further and enables cell
phone-like applications on a much larger scale. For example, mobile WiMAX enables
streaming video to be broadcast from a speeding police or other emergency vehicle at
over 70 MPH. It potentially replaces cell phones and mobile data offerings from cell
phone operators such as EvDo, EvDv and HSDPA. In addition to being the final leg in a
quadruple play, it offers superior building penetration and improved security measures
over fixed WiMAX. Mobile WiMAX will be very valuable for emerging services such as
mobile TV and gaming.

WiMAX is not Wi-Fi

Figure 4 Where Wi-Fi covers an office or coffee shop, WiMAX covers a city

One of the most often heard descriptions of WiMAX in the press is that it is "Wi-Fi on
steroids". In truth, it is considerably more than that. Not only does WiMAX offer
exponentially greater range and throughput than Wi-Fi (technically speaking 802.11b,
although new variants of 802.11 offer substantial improvements over the "b" variant of
802.11), it also offers carrier grade quality of service (QoS) and security. Wi-Fi has been
notorious for its lack of security. The "b" variant of 802.11 offered no prioritization of
traffic making it less than ideal for voice or video. The limited range and throughput of
Wi-Fi means that a Wi-Fi service provider must deploy multiple access points in order to
cover the same area and service the same number of customers as one WiMAX base
station (note the differences in nomenclature). The IEEE 802.11 Working group has since
approved upgrades for 802.11 security and QoS.

Converged voice and data easy as FM radio?

Figure 5 With WiMAX, converged voice and data can be as easy as FM radio

Visualize turning on an FM radio in your office. You receive information (news, weather,
sports) from that service (the FM radio station) and hardware (the FM radio with attached
antenna). WiMAX can be described as being somewhat similar. In place of a radio station
there is a base station (radio and antenna) that transmits information (internet access,
VoIP, IPTV) and the subscriber has a WiMAX CPE that receives the services. The major
difference is that with WiMAX the service is two-way or interactive.

Figure 6 WiMAX indoor CPE goes near the window and attaches to the customer's
network

Wireless Architectures
by Carl Townsend — last modified 2006-08-14 08:45 PM
The following section will provide a simple overview of wireless concepts and
nomenclature to help the reader understand how WiMAX works and will assist the reader
in com-municating with the WiMAX industry.

Wireless architecture: point-to-point and point-to-

multipoint
There are two scenarios for a wireless deployment: point-to-point and point-to-
multipoint.

Figure 7: Point-to point and point-to-multipoint configurations

Point-to-point (P2P)

Point to point is used where there are two points of interest: one sender and one receiver.
This is also a scenario for backhaul or the transport from the data source (data center, co-
lo facility, fiber POP, Central Office, etc) to the subscriber or for a point for distribution
using point to multipoint architecture. Backhaul radios comprise an industry of their own
within the wireless industry. As the architecture calls for a highly focused beam between
two points range and throughput of point-to point radios will be higher than that of point-
to-multipoint products.

Point-to-Multipoint (PMP)

As seen in the figure above, point-to-multipoint is synonymous with distribution. One

base station can service hundreds of dissimilar subscribers in terms of bandwidth and
services offered.
Line of sight (LOS) or Non-line of sight (NLOS)?

Figure 8: The difference between line of sight and non-line of sight

Earlier wireless technologies (LMDS, MMDS for example) were unsuccessful in the
mass market as they could not deliver services in non-line-of-sight scenarios. This limited
the number of subscribers they could reach and, given the high cost of base stations and
CPE, those business plans failed. WiMAX functions best in line of sight situations and,
unlike those earlier technologies, offers acceptable range and throughput to subscribers
who are not line of sight to the base station. Buildings between the base station and the
subscriber diminish the range and throughput, but in an urban environment, the signal
will still be strong enough to deliver adequate service. Given WiMAX's ability to deliver
services non-line-of-sight, the WiMAX service provider can reach many customers in
high-rise office buildings to achieve a low cost per subscriber because so many
subscribers can be reached from one base station.

WiMAX Radios
by Carl Townsend — last modified 2006-08-14 08:50 PM
At the core of WiMAX is the WiMAX radio. A radio contains both a transmitter (sends)
and a receiver (receives). It generates electrical oscillations at a frequency known as the
carrier frequency (in WiMAX that is usually between 2 and 11 GHz). A radio might be
thought of as a networking device similar to a router or a bridge in that it is managed by
software and is composed of circuit boards containing very complex chip sets.

WiMAX architecture, very simply put, is built upon two components: radios and
antennas. Most WiMAX products offer a base station radio separate from the antenna.
Conversely, many CPE devices are also two piece solutions with an antenna on the
outside of the building and subscriber station indoors as illustrated in the figure below.
Figure 9: Most WiMAX solutions use radios separate from antennas

The chief advantage of this is that the radio is protected from extremes of heat cold and
humidity all of which detract from the radio's performance and durability. In addition,
having the antenna outdoors optimizes the link budget (performance of the wireless
connection) between transmitter and receiver especially in line of sight scenarios. The
antenna is connected to WiMAX radio via a cable known as a "pigtail". One simple rule
for wireless installations: keep the pigtail as short as possible. Why? The longer the
pigtail the more signal is lost between the antenna and the radio. The popular LMR-400
cable, for example will lose about 1 dB (pronounced "dee-bee" for decibel, a measure of
signal strength) for every 10 feet of cable. Very simply put, if an antenna is placed at the
top of a 20-story building and the radio in the wiring closet on the ground floor, one may
lose all signal in the cable.

Radios and Enclosures

Figure 10: WiMAX performance can be optimized by placing the radio in a weather
resistant or weatherproof enclosure near the antenna

Radio placement
The photo above shows the WiMAX radio deployed in an enclosure. Note from left to
right: a) copper grounding cable on the inside of the enclosure b) Ethernet connection to
the data source c) Heliax "pigtail" to the antenna (Heliax is a heavy duty, lightning
resistant cable) d) 110v power via an APC UPS (note black box in top right hand corner
of enclosure.
What are some strategies to ensure the antenna can be as high as possible to take advan-
tage of line-of-sight topologies where ever possible while keeping the pigtail as short as
possible? One approach is to co-locate the radio on or near the roof with the antenna in an
enclosure. Considerations for enclosures include: a) security and b) weather resistance-
how hot or cold can your radio gets and still function?

Sheet metal or fiberglass enclosures with a lock provide security. Next, it is necessary to
determine how well suited the radio is for local atmospherics (hot or cold). Most Wi-
MAX radios are rated as operating between -20 degrees Fahrenheit to 120 degrees F at
the upper end. If you will be operating in locations that will exceed those parameters you
need an enclosure that will shield your radio form those extremes. As the radio will
generate its own heat, surrounding it with insulation will ensure the temperature of the
radio will not suffer from sub-zero temperatures.

WiMAX Antennas
by Carl Townsend — last modified 2006-08-14 08:51 PM
Figure 11: Different antenna types are designed for different applications

WiMAX antennas, just like the antennas for car radio, cell phone, FM radio, or TV, are
designed to optimize performance for a given application. The figure above illustrates the
three main types of antennas used in WiMAX deployments. From top to bottom are an
omni directional, sector and panel antenna each has a specific function.

Omni directional antenna

Figure 12: An omni-directional antenna broadcasts 360 degrees from the base
station

Omni directional antennas are used for point-to-multipoint configurations. The main
drawback to an omni directional antenna is that its energy is greatly diffused in broad-
casting 360 degrees. This limits its range and ultimately signal strength. Omni directional
antennas are good for situations where there are a lot of subscribers located very close to
the base station. An example of omni directional application is a WiFi hotspot where the
range is less than 100 meters and subscribers are concentrated in a small area.

Sector antennas
Figure 13: Sector antennas are focused on smaller sectors

A sector antenna, by focusing the beam in a more focused area, offers greater range and
throughput with less energy. Many operators will use sector antennas to cover a 360-
degree service area rather than use an omni directional antenna due to the superior per-
formance of sector antennas over an omni directional antenna.

Panel antennas
Figure 14: Panel antennas are most often used for point-to-point applications

Panel antennas are usually a flat panel of about one foot square. They can also be a
configuration where potentially the WiMAX radio is contained in the square antenna
enclosure. Such configurations are powered via the Ethernet cable that connects the ra-
dio/antenna combination to the wider network. That power source is known as Power
over Ethernet (PoE). This streamlines deployments as there is no need to house the radio
in a separate, weatherproof enclosure if outdoors or in a wiring closet if indoors. This
configuration can also be very handy for relays.

Subscriber Stations
by Carl Townsend — last modified 2006-07-23 03:36 PM
The technical term for customer premise equipment (CPE) is subscriber station. The gen-
erally accepted marketing terms now focus on either "indoor CPE" or "outdoor CPE".
There are advantages and disadvantages to both deployment schemes as described below.

Outdoor CPE

Figure 15: An outdoor CPE device. Note mounting brackets for outdoor mounting
on roof or side of building
Source Airspan

Outdoor CPE, very simply put, offers somewhat better performance over indoor CPE
given that WiMAX reception is not impeded by walls of concrete or brick, RF blocking
glass or steel in the building's walls. In many cases the subscriber may wish to utilize an
outdoor CPE in order to maximize reception via a line of sight connection to the base sta-
tion not possible with indoor CPE. Outdoor CPE will cost more than indoor CPE due to a
number of factors including extra measures necessary to make outdoor CPE weather re-
sistant.

Indoor CPE
Figure 16: Indoor WiMAX CPE (Airspan EasyST)- object on left) with telephone
handset and VoIP adapter

The most significant advantage of indoor over outdoor CPE is that it is installed by the
subscriber. This frees the service provider from the expense of "truck roll" or installation.
In addition, it can be sold online or in a retail facility thus sparing the service provider a
trip to the customer site. Indoor CPE also allows a certain instant gratification for the
subscriber in that there is no wait time for installation by the service provider. Currently,
many telephone companies require a one month wait between placement of order and in-
stallation of T1 or E1 services. In addition, an instant delivery of service is very appeal-
ing to the business subscriber in the event of a network outage by the incumbent service
provider.

Site Survey
by Carl Townsend — last modified 2006-07-23 03:43 PM
Before any equipment is deployed, there must be a site survey to determine what is
needed in order to have a successful wireless operation. By understanding the dynamics
of the market where the deployment will take place and planning accordingly, the service
provider can ensure success on Day One of operations.

Link Budget
Figure 17: The link budget determines the success or failure of a wireless operation

The figure above illustrates a link budget. It is the equation of the power of a signal
transmitted minus detractions between the transmitter and receiver (rain, interference
from other broadcasters, vegetation, gain at the antennas ate either end) and what signal is
received at the receiver.

Frequency Plan
Part of the site survey process is to determine a viable frequency plan. The wireless op-
erator must make maximum use of limited spectrum assets. How does one do that?
Figure 18: By reusing frequencies at different base stations, a WiMAX operator can
avoid interference from their own network

The diagram above illustrates how a wireless operator (cellular, WiMAX, etc) uses their
limited spectrum allocation to deliver the best service possible while avoiding interfer-
ence between their base stations. Note there are nine different base stations with three
different frequencies but no similarly shaded circle touches another. If they did touch,
there would be interference between base stations because they would be operating on the
same frequency.

Its about windows, not roof tops

Traditional wireless thinking dictated that a radio and its associated antenna should be at
the highest point possible with a line of sight to a majority of the service area (note
mountain tops and the Empire State Building). This is not necessarily so with WiMAX.
As indoor subscriber units mature, the value of antenna placement is not necessarily in
height above subscribers, but in achieving as short and direct a line of sight possible be-
tween base station and subscriber's CPE.
Figure 19: Imagine each window or floor paying $500 per month in WiMAX
services

Objections to WiMAX
by Carl Townsend — last modified 2006-07-23 03:50 PM
A discussion of WiMAX is not complete without taking on objections to the technology.
Before any one can sell a high technology product, they must first sell the customer on
the technology.

Figure 20: Objections to WiMAX are best understood via the provisions built into
the WiMAX Physical and MAC layers
Source: IEEE

Technology sales people invariably encounter objections to the technology they are sell-
ing.
The primary objections to WiMAX are:

1. Interference: Won't interference from other broadcasters degrade the quality of the
WiMAX service?
2. Quality of Service (QoS): Wireless is inherently unstable so how can it offer
voice and video services?
3. Security: Is WiMAX secure? Can anything wireless be secure?
4. Reliability: Nothing can be as reliable as the telephone company's service
(rumored to offer "five 9s" of reliability or 5 minutes of downtime per year).

The answers to those objections are best understood via the Physical (known as the PHY,
pronounced "fi") and Medium Access Control (MAC pronounced "mac") Layers. The
WiMAX Working Group no doubt were aware of these objections based on experiences
with earlier wireless technologies (Wi-Fi, LMDS, MMDS, CDMA, GSM) and have en-
gineered WiMAX to fix failures of past wireless technologies.

Interference
by Carl Townsend — last modified 2006-08-14 08:53 PM
Wireless services have been around for a century. There is always the potential for inter-
ference and the service provider must engineer accordingly.
Figure 21: Interference occurs in a number of forms and interference mitigation is a
matter of good engineering
Source: IEEE

Countering interference is a matter of understanding it and engineering accordingly.

Interference occurs naturally in the electromagnetic spectrum. Figure 21 above shows
out-of-channel interference, which comes from other transmitters that are not on the same
frequency as the primary radio. A co-channel interfering transmission occurs on the same
frequency as the desired signal. Step One in interference mitigation is to avoid co-channel
interference through thorough frequency planning, use of licensed spectrum, and dynamic
frequency selection. Step Two is to pay close attention to the link budget on the wireless
network and plan power and spectrum to overcome interfering signals. Much of the im-
pact of out-of-channel interference can be avoided using such technologies as OFDM,
OFDMA, and a host of antenna technologies.

Solutions to Interference - OFDM

Figure 22: Multipath and intersymbol interference occur with all wireless
transmissions

OFDM mitigates interference by breaking the signal into subcarriers. The loss of the data
on a small percentage of the subdivided signal does not degrade the reception of the
received signal.

Figure 23: OFDM and OFDMA mitigate interference by breaking the signal into
mul-tiple subcarriers

Antenna Technologies & Interference

by Carl Townsend — last modified 2006-08-14 08:57 PM
Adaptive Antenna System (AAS)

Figure 24: By utilizing AAS and beam steering technologies, WiMAX overcomes
interference while
boosting range and throughput

Adaptive Antenna Systems (AAS) use beam-forming technologies to focus the wireless
beam between the base station and the subscriber. This reduces the possibility of
interference from other broadcasters as the beam runs straight between the two points.

Dynamic Frequency Selection, MIMO, and Software

Defined Radios
Figure 25: Dynamic Frequency Selection enables a radio to shift frequencies when
interference is present

One of the simplest remedies to interference is to simply change frequencies to avoid the
frequency where interference occurs. Dynamic frequency selection (DFS) does just that.
A DFS radio sniffs the airwaves to determine where interference does not occur and
selects the open frequency to avoid the frequencies where interference occurs.

Multiple in and multiple out (MIMO) antenna systems work on the same principle. With
multiple transmitters and receivers built into the antenna, the transmitter and receiver can
coordinate to move to an open frequency if/when interference occurs.

Software defined radios (SDR) use the same strategy to avoid interference. As they are
software and not hardware defined, they have the flexibility to dynamically shift
frequencies to move away from a congested frequency to an open channel.

Quality of Service
by Carl Townsend — last modified 2006-07-23 04:14 PM
Quality of Service (QoS) is what determines if a wireless technology can successfully
deliver high value services such as voice and video. The chief detractors from good QoS
are latency, jitter and packet loss. Solve these issue and you have a carrier-grade service.
Very simply put, WiMAX offers a very low latency across the wireless span. Most ven-
dors have products where latency is less than 10 milliseconds from base station to CPE
(and vice versa). To put this in perspective, latency must be measured end-to-end. VoIP,
for example, is highly susceptible to latency. If latency exceeds 150 milliseconds for ex-
ample, the quality of the conversation begins to drag. At or above 200 milliseconds many
listeners may find a conversation unintelligible.

In the case of WiMAX, the large majority of latency will not occur on the air link be-
tween subscriber and base station but rather on the wired portion of the connection be-
tween the subscriber and what ever the "other end" might be (web site server, IPTV
server or VoIP called party). The figure below illustrates how any latency on the wireless
portion of a network is minimal relative to that on the wired portion of a network.

Figure 26: Over-the-air latency in a WiMAX network is minimal relative to the

latency on the IP backbone or the rest of the network

Prioritizing Traffic
The chief solution in offering good QoS is to prioritize time sensitive traffic such as VoIP
and video. Fixed WiMAX offers 4 categories for the prioritization of traffic and mobile
WiMAX has 5 categories.
Table 1: Prioritization of packets depending on traffic type (voice, video, etc)
ensures good QoS
Source: WiMAX Forum and IEEE

Early Wi-Fi offered no prioritization of traffic and the technology has not gone beyond
the wireless local area network (WLAN) stage. WiMAX is different in that, in the case of
fixed WiMAX, there are four categories of traffic prioritized per their needs in delivery
with VoIP and video at the top and web surfing at the bottom. Mobile WiMAX offers 5
such prioritized categories with VoIP being top priority.

OFDM & Dynamic Bandwidth Allocation

by Carl Townsend — last modified 2006-07-23 04:39 PM
Good QoS
Figure 27: WiMAX coding and modulation schemes ensure steady signal strength
over distance by decreasing throughput over range to deliver the best QoS possible

An old wisdom in the networking world goes "Bandwidth is the answer, now what was
the question?". WiMAX offers a pair of mechanisms that ensure good QoS. First, the
coding and modulation schemes (64-QAM/16-QAM/QPSK) ensure a steady signal
strength over increasing distance. Secondly, Dynamic Bandwidth Allocation (DBA) is a
mechanism that monitors the network and, when interference or other detractions to sig-
nal strength occur, the base station allocates more bandwidth and power for the afflicted
stream.

Spectral Efficiency
Figure 28: Beam width is a measure of a product's spectral efficiency

Spectral efficiency is the measure of the width of the signal's beam through the air. It is
also the measure of the WiMAX radio's scalability. In mobile WiMAX, for example,
commonly used beam widths range from 1.25 MHz to 20 MHz. Efficiency of the product
is determined by how much bandwidth (measured in megabits per second in this case)
can be transported over how little beam width (MHz in this case). Spectral efficiency is
especially important in cases where a service provider is paying a high price for spectrum
(example: 40 MHz at 2.5 GHz). With high spectral efficiency, the service provider can
service more customers at a lower cost per subscriber for the spectrum in use.

WiMAX Security
Figure 29: WiMAX offers state of the art security via authentication and strong
encryption

Security in WiMAX is set in the Privacy Sublayer in the MAC Layer. Per their respective
specifications, fixed WiMAX (802.16-2004) uses X.509 certificates for authentication
and 56-bit Digital Encryption System (DES) for encryption of the data stream. Mobile
WiMAX (802.16e-2005) uses EAP for authentication and Advanced Encryption System
(AES, also used by the US government) for encryption. Vendors may use variants of
these. Some vendors offer 152-bit AES, which is rumored to take millions of years to
crack with a consumer grade PC. Both variants use Privacy Key Management (PKM) for
authentication between base station and subscriber station. While Wi-Fi may have suf-
fered a bad reputation for security given early problems in the industry, WiMAX offers
strong security measures to thwart a wide variety of security threats.

WiMAX Reliability
by Carl Townsend — last modified 2006-07-23 10:07 PM
Figure 30: Telephone wires and cable TV cables represent a single point of fail-ure
in their networks. Hurricanes and high winds can cause serious outages.

Some supporters of the telephone network say it offers 99.999% reliability or that it is
down 5 minutes per year. That may be true of the switches in the Central Office, but is
not true of the telephone network as a whole. The copper wires coming to the home or
office, for example, represent a single point of failure (that is, there is no back-up if the
wire or fiber optic cable breaks or is cut). Businesses using the telephone company
should ask themselves two questions:

1. What does it cost us per hour to be down?

2. What back up, if any, do we have if the telephone line is cut or broken?

WiMAX service providers have no wires or cables that can be cut and can offer 99.999%
of reliability by using redundant radios to cover a given market. Use of licensed spectrum
ensures that only one service provider is broadcasting on a given frequency. Finally, ra-
dios with high quality chips have a mean time between failure (MTBF) of 40 or more
years. If nothing else, businesses should consider WiMAX as a cost effective disaster re-
covery solution. Note: a backhoe operator cannot cut a WiMAX wireless connection to
the home or office.

Applications for WiMAX

by Carl Townsend — last modified 2006-08-14 08:59 PM
The race is on in the service provider community to offer "triple play" (voice, video and
data) or "quadruple play" (voice, video data as well as mobile voice and data). Some ser-
vice providers are attempting to do this with 3 or 4 dissimilar networks as illustrated in
the figure below. For example, at the time of this writing, Qwest Communications Inter-
national sold their own voice and broadband data for the residential market, Dish Net-
works for satellite TV and resells Sprint Nextel cellular service. Reselling other service
providers services does not generate the profit margins as selling one's own services does.
Given the vertical orientation of legacy systems like cable TV (only does TV), circuit-
switched voice services (like cell phone networks-designed almost entirely for voice), it
is difficult and expensive to offer more than one type of service on any one "stovepipe"
network. The solution is IP Multimedia Subsystems (IMS).

Figure 31: Legacy "stovepipe" infrastructure cannot easily offer more than one
service

IMS Vision
The vision for IMS is that an all-IP network will allow a subscriber to access a multitude
of services regardless of how they access the network (cable TV modem, DSL, cellular,
Wi-Fi, or WiMAX). Very simply put, the subscriber will be able to access any service on
any device
Figure 32: IMS allows a subscriber to access any service on any device using any
form of access

IMS began as a concept in the cell phone industry to offer voice, short messaging service
(SMS) and video on cell phones. It utilizes a simple three-layer architecture consisting of
the Connectivity Layer (similar to the physical layer in the OSI model), a Control Layer,
which provides switching and signaling functions, and the Service Layer where applica-
tions such as IPTV and VoIP features are offered. Running parallel to those function
layers are a range of support systems, which control security and QoS across the network.
The signaling protocol known as Session Initiation Protocol (SIP) provides signaling
across the network.

Fixed Wireless (IEEE 802.16-2004) Applications

Perhaps the most lucrative application for WiMAX is that of substitute for the telephone
company's copper wire. This is achieved through fixed wireless solutions. A majority of
US businesses and residences receive their telephone service and internet access via the
telephone company's copper wires. A T1 data line from the telephone company may re-
tail for $800/month in many US cities. About 50% of that expense is "local loop" charges
or paying to use the telephone company's copper wire to access a wider network. As the
diagram below illustrates, a WiMAX service provider could purchase the bandwidth
equivalent of a T1 (1.54 Mbps) at, say, $45 and resell to an enterprise customer for $400.
Through oversubscription (overselling), that service provider could realize a multiple of
that profit.
PSTN bypass for fixed wireless T1/E1/DS3 substitute

Figure 33 WiMAX offers a substitute for the telephone company's T1/E1 or DS3

WiMAX VoIP
by Carl Townsend — last modified 2006-08-14 09:01 PM
A fixed wireless solution not only offers competitive internet access, it can do the same
for telephone service thus further bypassing the telephone company's copper wire
network. Voice over Internet Protocol (VoIP) offers a wider range of voice services at
reduced cost to subscribers and service providers alike. The diagram below illustrates a
typical solution where a WiMAX service provider can obtain wholesale VoIP services
(no need for the WiMAX service provider to install and operate a VoIP softswitch) at
about $5/number/month and resell to enterprise customers at $50.
Figure 34: VoIP is the "killer app" for WiMAX

In residential markets, VoIP is a "must offer" service. Without the additional revenue per
user (think ARPU where "A" is for average), WiMAX does not offer a compelling reason
to switch from other forms of residential broadband. When bundled with broadband
internet access and IPTV, a WiMAX triple play becomes very attractive to residential
subscribers. Given the QoS, security and reliability mechanisms built into WiMAX, sub-
scribers will find WiMAX VoIP as good or better than voice services from the telephone
company.

WiMAX & IPTV

by Carl Townsend — last modified 2006-07-23 07:58 PM
The third leg of the triple play is Internet Protocol Television (IPTV). IPTV enables a
WiMAX service provider to offer the same programming as cable or satellite TV service
providers. IPTV, depending on compression algorithms, requires at least 1 Mbps of
bandwidth between the WMAX base station and the subscriber.
Figure 35: IPTV and Video on Demand enable a WiMAX service provider to offer
programming identical to cable and satellite providers

In addition to IPTV programming, the service provider can also offer a variety of video
on demand (VoD) services. The subscriber can select programming a la carte for their
television, both home and mobile, viewing needs. This may be more desirable to the sub-
scriber as they pay only for what they want to watch as opposed to having to pay for doz-
ens of channels they don't want to watch. IPTV over WiMAX also enables the service
provider to offer local programming as well as revenue generating local advertising.

WiMAX Mobile Applications (802.16e)

by Carl Townsend — last modified 2006-07-23 08:04 PM
In order to execute a true quadruple play strategy, a service provider will need to offer
mobile services. Even though it's called "mobile", 802.16e-2005 offers a number of ad-
vantages to the fixed wireless market as well. Better building penetration as well as im-
provements in security and QoS point to a strategy of "one network serves all".

WiMAX as cellular alternative

Of all the sub industries in telecommunications, perhaps the one best positioned to take
advantage of WiMAX is the cellular service providers. They have a lot going for them
including a wireless culture (RF engineers, wireless savvy sales staff, etc) and millions of
"early adaptor" customers. On the other hand, the transition from legacy circuit switching
and a dependency on the incumbent telephone service provider's network will not be easy
or inexpensive.

As the diagram below supports, a large percentage of a cell phone operator's monthly
operating expense (OPEX) is T1 backhaul to support their base stations. In addition, they
use aging circuit switches (Class 4 and 5 as well as Mobile Switching Centers) to switch
phone calls. These come with expensive annual service contracts. A WiMAX substitute
for the cell phone infrastructure could be operated at as little as 10% of the OPEX of a
cellular operator using legacy infrastructure.

Figure 36: The cellular network is a mixture of wireless and PSTN architectures
Source: Trendsmedia

Replacing a cell phone infrastructure with WiMAX will need to incorporate a large mo-
bile data and mobile TV element with it as data bandwidth demands on the system will be
far greater than what is now seen with a voice-centric cell phone network. The diagram
below provides a high overview of a converged voice and data wireless network.

Figure 37: Perhaps the most immediate application for mobile WiMAX is mobile
voice (cell phone) and data

When one mentions "mobile" the first thing to come to mind is cell phone service, which
is a huge industry in itself. However, mobile now connotes a wide range of services be-
yond voice to include mobile data and TV, as well as emergency services (police, fire,
ambulance, aka 4.9 GHz market).

Figure 38: Samsung's WiBro telephone handset, considered to be the first WiMAX
telephone handset
Source Samsung

Samsung's mobile WiMAX phone, the M8000, provides wireless broadband converged
services delivered from a single IP-based network. The Samsung can handle broadcast-
ing, home networking, videoconferencing, video on demand, and more.

Figure 39: WiMAX as a mobile voice and data network is potentially exponentially
more efficient (profitable) than the legacy cellular infrastructure
A wireless operator will want to pay close attention to their ARPU while minimizing
their OPEX. WiMAX allows an operator to do both simultaneously. Failure to update a
legacy network could put an operator at risk of losing business to new market entrants
armed with WiMAX.

WiMAX Economics
by Carl Townsend — last modified 2006-08-14 09:07 PM
WiMAX costs less to deploy than any other broadband technology. As the table below
indicates many technologies such as fiber to the home (FTTH) are exponentially more
expensive to deploy. The doomsday scenario for service providers using an expensive
landline technology (and their investors) such as FTTH or cable is that after an invest-
ment in the many billions of dollars to serve one small region, a WiMAX operator could
enter their market and far less capital expenditure (CAPEX) and drive the incumbent,
high CAPEX operator out of business.

Table 2: Comparisons of leading broadband technologies

The table above shows the strong economic advantage of WiMAX over other broadband
technologies. With the exception 2.5 and 3 G wireless technologies, the other broadband
technologies cannot offer mobile services and are not quadruple play capable. Disruptive
technology is defined by Harvard Business School Professor Clayton Christensen as
being "cheaper, simpler, smaller and more convenient to use" than legacy technologies.
WiMAX is clearly a disruptive technology.
WiMAX: Low barrier to entry
As Table 4 would suggest, the barrier to entry for WiMAX service providers is very low
relative to other broadband technologies. 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. The best way to illustrate this is the notion that, for the
price of a new pickup truck, an entrepreneur could be the ISP, the telephone company,
the cable TV company and even the cell phone company for a small city. This puts at risk
investment in incumbent service providers who do not upgrade their infrastructure to
compete with WiMAX.

WiMAX Value Networks

Figure 43: WiMAX creates a new value network in telecommunications

A value network encompasses a series of industry participants into a vast series of

symbiotic relationships. Telecommunications companies can be described as being
"monolithic" in that they control every aspect of the service from the device in the
customer's home or office, the means of access (copper, coaxial, or wireless) and all
switching and application platforms. WiMAX is simply a means of access for customers.
After access, the "internet model" kicks in where any variety of services (VoIP, IPTV,
gaming, etc; remember, they are just applications) can be offered to the subscriber. In
addition the WiMAX service requires access to IP backbones, which further expands the
value network beyond a single monolithic service provider such as the traditional
telephone company. The figure above illustrates the new telecommunications value
network.

The Market Valuation of a WiMAX Provider

A January 2006 Wireless Communications Association presentation by Graham Barnes
of NextWeb, (acquired by Covad for $24 million) provided an overview of the mergers
and acquisitions potential for WiMAX-type players looking to cash out. As in the 1990's,
the valuation process is key. Guidelines for valuations include:

1. Organic growth: How many base stations does the seller have? Locations? Subs
per base station? In short, what kind of revenue do you have in relationship to
CAPEX and OPEX?
2. Growth: What is seller's percentage of growth year over year? Seller will need to
enter new markets in order to sustain high growth rate. It doesn't hurt to grow via
acquisition.
3. Market entry barriers: incumbents as competitors, spectrum and roof tops, your
business reputation and referrals from satisfied customers.
4. Small operators can expect 3-5 times their EBITDA; large players 5-10 times
EBITDA and LARGER players 10-15 times. Not quite cash flow positive but
want to retire to the islands? Then figure multiples of seller's monthly recurring
revenues (MRR).
5. Things to avoid on seller's way to the top: "diverse" radio gear (limit yourself to
two or so vendors) and 2.4 GHz (unlicensed) spectrum
6. Aspects of valuation: 60% is finances; 20% synergy with acquirer, 20% strategic
model of acquirer
7. Summary: being successfully acquired will depend on the market you serve, your
coverage of that market, your cash flow, and the acquirer's needs.

WiMAX Regulatory
by Carl Townsend — last modified 2006-08-14 09:09 PM
The most important regulatory aspect of WiMAX is the availability and subsequent use
of spectrum (a frequency band on which the service provider will broadcast on).
Unlicensed spectrum allows any one to broadcast on that frequency within certain power
limits. Licensed spectrum protects the broadcaster by giving them exclusive right to
broad-cast on that frequency (spectrum). Other broadcasters who interfere with that
frequency are subject to governmental sanction. Licensed spectrum can be obtained
directly through a national government (Federal Communications Commission in the US,
for example) or via a sub lease from someone who has obtained spectrum from the
national government (this varies from country to country). Spectrum is often allocated by
location and frequency.

Table 3: Simple overview of WiMAX-related spectrum

Municipal Wireless Networks

Many cities throughout the world have launched their own wireless (usually Wi-Fi) net-
works. Most of these networks were initially deployed as a convenience to citizens and in
some cases as an effort to narrow the digital divide. Many cities have also found great
cost savings on their own internal telecommunications and manpower costs by deploying
municipal wireless networks. Ultimately, many municipalities may find that internet
access is similar to the access to businesses and places of work provided by public roads,
streets and sidewalks. In addition, telecommuters pose a lower support cost for local
governments in that they don't put wear and tear on roads and other infrastructure. Given
potential savings to taxpayers and potential economic development benefits in deploying
such wireless networks, municipalities will be a leading market for WiMAX
deployments.

Other Broadband Technologies

by Carl Townsend — last modified 2006-08-14 09:18 PM
EvDo (Evolution Data only)
This is not a mass market technology. It is merely a means of delivering some semblance
of broadband (a few hundred Kbps) to a road warrior's laptop. It is not intended as a triple
or quadruple play technology. Expect to see roll out in urban business districts and
airports, but not to residential areas. A few factors that limit its appeal: expensive
infrastructure, (base stations in the hundreds of thousands of dollars) limited market (road
warriors or other white collar business users) and limited to licensed spectrum held by
cell phone providers (expensive and ergo, must show a rapid return on investment thus
limiting it to dense urban business districts).

DSL
DSL has a number of show stoppers: a) it is inextricably tied to the incumbent telephone
service providers copper wire infrastructure making it vulnerable to the whims of the in-
cumbent's executives and regulatory decision makers and b) it is a fixed wire line solu-
tion i.e. no mobility possible, c) a single DSLAM costs tens of thousands of dollars
giving it a high cost per subscriber.

Cable Modem
Only cable TV operators can use this technology. In order for this to be a means of access
the coaxial cable networks must be bi-directional. Not every operator has made that up-
grade or has the financial means to upgrade their network (or at least a portion of it) to bi-
directional service capable of supporting cable modem service. So, the chief limitations
of cable modem as an access service are: 1) requires the network to be bi-directional and
2) it's a fixed, wire line technology that offers no mobility.

FTTH (Fiber to the Home)

The show stopper with FTTH is its $2,000/home or office served price tag. In addition to
trenching and laying the fiber to the subscribers home, massive rights of way issues have
to be over come in order to even begin the trenching and laying of fiber. Also, it offers no
mobility options.

BPL (Broadband over Power line)

The chief argument against BPL is that, in order to install service in conjunction with ex-
isting power company service, an electric company technician must make a physical cir-
cumvention of the power line at each residence or business where service is to be
installed. Read: big truck roll expense. A second argument is that copper power line, like
copper telephone line, offers a good deal of resistance leading to the need for numerous
repeaters and a limited number of prospective subscribers per home passed. Finally, it
offers no mobility. Truthfully, a power company would be better off in terms of cost per
subscriber and return on investment to deploy WiMAX utilizing their existing rights of
way and access to power poles for attaching radios and antennas than attempting to roll
out service to existing subscribers using BPL.

Competing Technologies Summary

The previous paragraphs detail the disadvantages of the technologies competing with
WiMAX. These technologies were initially envisioned as various means of upgrading an
incumbent service providers legacy network and not as quadruple play, greenfields
deployment strategies. Because WiMAX offers a low cost per subscriber and a rapid
return on investment, WiMAX will enable a new market entrant to reach profitability
quickly, especially in under served markets where incumbents cannot afford to roll out
economical (as compared to a telephone company's data T1 service) broadband solutions.