Broadband wireless will anchor fixed mobile and media convergence

The convergence of fixed and mobile is creating challenges for service providers and vendors alike. The issue, according to the Yankee Group is that these various technology implementations make it difficult to support mass market initiatives. The problem, the Yankee Group says, is that service providers and vendors are betting the future without a clear direction on how these new technology implementations will play together. The following is an edited text of a research abstract published by the Yankee Group on March 22. Fixed wireline and broadband service providers are eager to extend their service offerings to include wireless – whether WLAN hotspot technology, 3G wireless mobile or alternative technologies such as WiMAX. Each of these technologies has a logical position in the value chain. Providers can position each in a complementary manner. 3G can offer wide-area mobile capabilities. WLAN can offer local-area hotspot-type services. Finally, providers can use WiMAX as a portable service extension to a fixed broadband solution. However, as fixed and broadband service providers implement converged service offerings, providers are extending broadband technologies to new areas. For example, British Telecom plans to implement WLAN for local-area voice service, using UMA for its Blue Phone offering. In addition, operators such as Sprint are taking a keen interest in 802.16e, which when standardized will offer a mobile version of WiMAX. South Korea developed an alternative to WiMAX called WiBRO. We believe WiBRO will ultimately evolve to become a WiMAX standard, but providers intend to use WiBRO to accelerate the mobilization of a WiMAX-like technology. Issue: disparate technology initiatives create challenges in supporting mass-market solutions Vendors and service providers face difficult technology choices. The variety of broadband wireless technologies and the manner in which players have positioned them create a challenge for service providers and equipment vendors as they develop their technology road maps. No one has determined the demand and usage models for converged offerings. Moreover, the commercial positioning of the major service providers and equipment vendors looking for near-term opportunities for their new technologies is confusing players. This creates product development and supply chain challenges for the industry and ultimately will affect the rate at which the market evolves. In particular, should vendors develop multimode WiMAX/3G devices, and if so should they include voice service? Will multimode, Wi-Fi/3G handsets capture mass-market adoption, and if so, how can operators minimize the impact of service cannibalization? At what rate will wireless VoIP evolve and how will it be integrated with traditional circuit-switched technology? Problem: service providers and vendors are placing technology bets without clear market visibility The technology bets service providers and vendors are making are creating technology fragmentation and disrupting the market development. Service providers and vendors are touting a wide variety of broadband technologies. In many cases, the technologies are being inappropriately positioned relative to the solutions for which they are being used. For example, WLAN technology is an ideal local-area technology. However, it lacks scale to operate efficiently beyond local-area implementations. Wireless VoIP solutions are currently less efficient than traditional circuit-switched voice in a wide-area mobile network. In addition, the recent supply chain systems developed for WiMAX lack the necessary scale for mass-market adoption during the next 24 to 36 months. The complexities and confused positioning of wireless technologies are disrupting market development and creating significant supply chain stresses. The market is too focused on the transport technology, whether it is Wi-Fi, WiMAX, UMTS, HSDPA or CDMA2000. Carriers are not paying enough attention to developing compelling solutions that take advantage of existing technologies. Service offering innovation also is lacking, as is the development of solutions that ensure a fulfilling end-user experience. Nascent solutions such as Blue Phone lack the variety of devices to adequately support mass-market offerings and will not succeed without adequate market focus. Solution: target broadband wireless technologies appropriately and give nascent solutions time to incubate By focusing on aligning broadband wireless technologies to the solutions and markets where they are most needed, the industry will be able to incubate the compelling technologies toward success. For example, the industry should not position emerging technologies such as WiMAX as mass-market solutions, but rather in the fixed wireless market, which is currently receptive to technical discontinuities. It’s best for solutions such as network meshing and smart antennas to develop in unlicensed markets where there are fewer obstacles to augmenting equipment architectures and the performance requirements are typically not as stringent. The wireless industry must emphasize underlying requirements and market demand for the services that the broadband wireless technologies are enabling, rather than viewing these technologies from the perspective of the cellular market. The mass-market scale in the cellular wireless industry and a confirmed market interest in mobility and device personalization mean that nascent broadband solutions require careful market positioning. Providers should position these solutions as complementary to cellular technologies or target alternative markets that need the features. For example, WiMAX is a natural extension of current broadband cable and DSL services, and enables operators to offer broadband service in areas where they don’t already have cable and DSL connectivity. WiMAX also has the capability of offering portability – subscribers would be able to use the same broadband service in multiple locations. In many cases, WiMAX is best positioned as a complement to 3G. Although some operators are looking to mobilize licensed spectrum WiMAX in the future, the looming market scale and supply chain associated with 3G will challenge the technology. Therefore, providers must position WiMAX to initially serve markets that are willing to sacrifice the supply chain for performance. As the market matures and defines itself, providers will be better positioned to make strategic decisions regarding the offerings that they promote. Value It’s difficult to have a clear view of the future role of broadband wireless in fixed, mobile and media convergence. The market will define this future based on the manner in which it incubates the various broadband solutions. This makes it even more important that service providers take a systematic service-centric approach to their broadband wireless strategies that place particular attention on the key drivers that will stimulate market demand and – and more importantly – the stages that are necessary for the adopted technologies to garner broad market success. By taking this approach, vendors and service providers will mitigate their risk in the nascent broadband wireless market and be better positioned to opportunistically capture share and achieve profitability as the market defines itself. Recommendations Vendors and service providers must manage the market hype that is being created regarding next-generation broadband wireless technologies by promoting realistic market positioning and by anticipating value chain and supply chain limitations relative to other, more established markets. This hype creates market confusion and shifts important focus away from the revenue-generating services the technologies enable. Recognize that robust supply chains need to be developed for next-generation broadband solutions to capture mass-market adoption beyond early adopters. For new technologies, focus supply chain development on the areas in which they can be incubated in the market. Build evolutionary strategies to capture broader market adoption. Focus on solutions that are broad enough to adapt to changing market demands. The subscriber continually surprises the market – and the impact of these surprises is amplified when providers implement services in silo architectures. Recognize and leverage the complementary capabilities of the variety of broadband wireless technologies in the marketplace. Focus on integration requirements and anticipate the impact of the solution on the technical and distribution requirements for the device and customer-premises equipment (CPE).

Broadband wireless will anchor fixed mobile and media convergence

News | April 6, 2005

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