Global Insight Perspective | |
Significance | Dutch telecoms upstart Worldmax has launched Europe's first mobile WiMAX service. |
Implications | Worldmax's service launch is far more symbolic than real as the service will struggle to out-compete the existing mobile operators in the country. |
Outlook | Although the odds against mobile WiMAX seem huge, capacity issues with the HSPA/LTE-based services may open a window of opportunity for WiMAX in Europe. |
Dutch telecoms upstart Worldmax has blazed the trail, launching Europe's first commercial mobile WiMAX (IEEE 802.16e) network in Amsterdam (the Netherlands). In a launch that coincided with the just concluded WiMAX Forum Global Congress in Amsterdam, Worldmax said its Aerea service will allow users to surf the Web at high speeds while on the move. The new service—a lightweight version—covers only Amsterdam's city centre and was built by Alcatel-Lucent; Worldmax hopes to roll out a full-scale version before the end of the year. It said it will charge about 20 euro (US$31.2) per month for a wireless broadband connection for laptop computers with unlimited amount of data.
Privately owned Worldmax, with Intel and Greenfield Capital as investors, owns an exclusive and a nationwide 3.5 GHz licence in the Netherlands. The company said it plans to build out the network nationwide over the coming years, which could cost hundreds of millions of U.S. dollars. Chief executive Jeanine van der Vlist admits that a nationwide roll-out would mirror the roll-out of a new mobile network and could require some 3,000 sites to cover the entire country.
Outlook and Implications
Blazing the Trail: For a technology that has elicited mixed feeling around the world, Worldmax's Aerea service has laid down the gauntlet for others to follow. Although it is not the first mobile WiMAX network, launching a viable service in Europe is by far the toughest test for the service, given Europe's unique concordance in wireless telecoms technology. Sprint and Clearwire have committed to mobile WiMAX roll-outs in the United States and other players are reportedly keen to launch services around the world. Hopefully, expected auctions for WiMAX spectrum across Europe, especially in the 2.6 GHz band, later in the year would raise the prospect for more roll-out of mobile WiMAX networks across the region. Similarly, the recent certification of mobile WiMAX equipment and the involvement of deep-pocketed players like Intel, could present the requisite fillip to boost mobile WiMAX usage across Europe (see World: 18 June 2008: WiMAX Forum Begins Wave 2 Product Certification).
Breaking the GSM Grip: Beyond the grand posturing at the WiMAX Forum Global Congress, getting mobile WiMAX to work in Europe is a tough task. GSM and its subsequent evolutions—GPRS, EDGE, HSPA and LTE—are very entrenched in the region, making the prospects for a competing technology bleak. Indeed, the apparent failure of CDMA technologies, despite their superior technical prowess, to break into the European mobile market encapsulates the challenges facing mobile WiMAX and its promoters, and that helps explain why Intel has now called for WiMAX to be harmonised with LTE. Although Mobile WiMAX can steal a show on LTE by breaking into the market more quickly, a robust and late LTE still has the potential to crank up speed and overtake mobile WiMAX. Crucially, too, if improvements to HSPA outperform mobile WiMAX, or LTE floods the market first, then mobile WiMAX will hardly take off in the region (see World: 4 June 2008: Intel Talks WiMAX, Seeks Harmonisation with LTE).
Spectrum Problems: Although much of Europe has committed to auctioning off spectrum around the 2.6 GHz band, there appears to be no sense of urgency. Sweden kicked off the licensing in May 2008, but so far there is little guarantee that other European countries will follow soon. Attempts by the United Kingdom's Ofcom to auction the spectrum in the fourth quarter of 2008 have been put on hold following a legal challenge by the mobile operators. Although the promise of technology neutral spectrum licensing can open up more spectrum for mobile WiMAX, any lack of a defined range of spectrum available for mobile WiMAX will undermine efforts to drive down per-unit cost of both network and consumer equipments (see United Kingdom: 29 May 2008: Ofcom Postpones 3G Spectrum Auction and Europe: 9 May 2008: Under the Spotlight: Sweden Sets Pace for Europe-wide 2.6 GHz Spectrum Licensing).
Stepping on Big Toes: Despite the promise of deep pockets from the likes of Intel, pushing mobile WiMAX in Europe is bound to provoke a reaction from the existing mobile operators. Worldmax acknowledges that it would need to offer mass-market services to be profitable, but given the current push by the mobile operators to target the mobile data market, that immediately creates a battlefield. Already this may have played a part in the legal face-off in the United Kingdom. For Worldmax, the prospect of competing with KPN, Vodafone and T-Mobile, which are all offering HSPA-based mobile broadband services in the Netherlands, is a tough challenge. O2, Telfort and Orange have all pulled out of the market in the last few years because of the tough competition and Worldmax will have to discover whatever it is that made them fail as it navigates the Dutch mobile market.
A Ray of Light: As the hullabaloo over mobile WiMAX persists, capacity issues may open a window of opportunity for the technology to break into the market. Despite all the talk about HSPA and LTE-based mobile broadband services, capacity remains a serious issue. Mobile operators are careful not to jeopardise their voice revenue stream and are thus unlikely to encourage heavy use of mobile broadband. As more and more people sign up for the mobile broadband "donglemania", the overall load on the mobile networks could begin to take its toll. If mobile WiMAX can then present itself as the viable alternative, with unlimited download limits, liberalised VoIP usage, substantial backhaul capacity and ubiquitous availability, the technology may have a bright future in Europe.