Online Extra: Intel's Telecom Weapon: WiMax

In the past three years, Intel has become one of the prime backers of some innovative, high-speed wireless technologies -- including Wi-Fi and WiMax -- that promise to reshape the telecommunications industry. While Wi-Fi can cover a few hundred feet, WiMax has a range of up to 25 to 30 miles. That makes it an alternative to traditional broadband technologies, which use phone and cable pipes.

The technology's backers, including Intel (INTC) and Alcatel (ALA), plan to have a mobile version out within a few years. Intel expects to begin producing WiMax chipsets for fixed-wireless broadband equipment later this year. BusinessWeek Internet Editor Heather Green recently spoke with Sean Maloney, executive vice-president and general manager of Intel's communications group, about the company's plans. Here are edited excerpts from that conversation:

Q: Put WiMax in perspective. Why is Intel so excited about broadband wireless?

A: The next wave of personal productivity at work is about mobility, with people wanting to get access anywhere. During the next 5 to 10 years, industry after industry will turn to wireless. People use their notebooks 30% more once they're on wireless. It's pushing people to take their computers everywhere.

Q: What are your projections for WiMax adoption?

A: That's difficult to say. Whatever answer I give, someone down the line will challenge me on it. More than people are expecting.

Q: Why do you think the deployment will outpace people's expectations?

A: The major equipment manufacturers are starting to use it. You saw recently Alcatel (ALA) and Siemens (SI) moving in this direction [of making WiMax equipment]. We're also seeing BT (BTY) moving in that direction. [BT has trials in four towns in Britain.]

For service providers, this is an obvious next step. They can't reach all their customers with high-speed data as it is, and if they want to take someone else's customers, this is the way to do it.

WiMax provides a wireless infrastructure to supplement DSL [digital subscriber line] or to go in and compete with an existing cellular provider. The industry has gone through a substantial change of mind in the last nine months around [WiMax].

Q: How does WiMax fit in with Wi-Fi?

A: It's an extension of Wi-Fi. WiMax is about broadband to the home. It can also be used as a backhaul for Wi-Fi hotspots. But it won't replace Wi-Fi. Your home will have Wi-Fi in it, and you will have the option to use WiMax connect to the Internet.

We see WiMax migrating into the notebook computer in 2006 or 2007. There are some strong similarities in the two technologies.

Q: You have said you don't see WiMax as a replacement for 3G, and you that DSL won't go away. How do you see these technologies working together?

A: Ultimately, the cell-phone standards are about providing relatively low-speed data and doing an outstanding job on voice. The [computer-industry standards such as Wi-Fi and WiMax] are about high-speed data, with voice as an afterthought. They have their own roles.

If I want to do wireless DSL, which is where people have positioned WiMax, I won't use EVDO [Qualcomm's (QCOM) third-generation, or 3G, gear, which provides data and voice for wireless networks and is being rolled out by Verizon (VZ)]. It isn't good for this, and you won't see whole urban neighborhoods with kids coming online with EVDO.

People are deploying 3G networks for cell-phone usage. Yes, you can use it for data transmissions, but it's designed for voice. Equally, you can do Internet telephony over Wi-Fi, but it was created for data.

Ultimately, WiMax will go portable. But we don't see it changing the game in voice. All of these networks will get built out for different usages. There's an overlap at the edges.

Q: How does Intel expect to benefit from backing WiMax?

A: You can't quantify what the benefit will be. When I started working at Intel in 1982, Ethernet was a brand new technology. No one could have known how it would revolutionize the computing industry.

The basic principle is the more that people can be connected, the more they will use computers. With the idea of putting umbrellas of high-speed data over cities, we believe they will use more technology in their lives. It worked with Ethernet, the modem, and Wi-Fi.

Q: How does WiMax fit into Intel's push to selling to the telecom industry?

A: You can't stand still where you are with technology. For cellular companies, unless they introduce new services, the average revenue per user will continue to drift down. Something like this enables a lot of new applications for users.

During the last two days, I have been meeting in Japan and South Korean with service providers and equipment makers. They're looking at rolling out a lot of new technologies, including WiMax, so they can enable all kinds of new services, like video content, person-to-person video, TV shows to handsets.

Q: How important are Wi-Fi and WiMax to Intel's push into the telecom industry?

A: They're critical because they're technologies that can be manufactured at low cost and can be connected at high speed.

Q: Why is Intel targeting the telecom industry. What's the payoff?

A: It's a bigger market. More people connected to the network means more people buying phones with chips in them. Once you start designing workflow around mobility, it raises the demand for all wireless technologies. We're seeing a broad deployment of wireless notebooks, a wide deployment of smart phones and PDAs.

Q: There are still doubts about how quickly this equipment can get out there and whether it will live up to its billing.

A: There's skepticism about whether we can solve the technical issues. Skepticism is justified, but cynicism isn't.

Look at Wi-Fi, it has gotten better, and millions of Wi-Fi chips have been shipped. It's good to be skeptical about new technologies, but I'm just looking forward to proving people wrong.

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