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NOVEMBER 30, 2004
By Alex Salkever WiMax: Between Hype and Hot Stuff Intel's financial support helps explain the excitement. Problem is, the wide-radius, superfast "WiFi on steroids" still has a long way to go Bruce Chatterley likes alternatives. As the CEO of national broadband reseller Speakeasy Networks, he relies on the Baby Bells to provide his residential and business customers with premium DSL broadband service. And though Chatterley says the Bells have treated him well, he still wouldn't mind having other options. Little wonder Chatterley is jumping on the WiMax bandwagon. Why is he so excited about WiMax? Think WiFi on steroids. WiMax promises to deliver bits and bytes at a blazing 70 megabits per second -- and to do so wirelessly within a 30-mile radius, provided the transmitter is located at a minimum height of 120 feet. QUICK SWITCH. What's more, WiMax can function in a wide electromagnetic spectrum ranging from publicly available bands, such as 2.4 or 5.8 gigahertz, to privately owned bands that could be used for dedicated wireless broadband networks. It's the kind of flexibility that should allow broadband providers and gear makers to achieve greater economies of scale and create innovative products quickly and cheaply. Although WiMax is still more concept than concrete reality, Speakeasy plans to launch a WiMax network in its hometown of Seattle in early 2005. Says Chatterley: "We view this as a potential disruptive technology." The first phase of the network will use pre-WiMax wireless networking equipment, but Chatterley says Speakeasy will transition into WiMax gear as quickly as possible. The new system could provide him with a much-needed backup mechanism for his broadband customers, as well as a neat new product that could undercut existing business broadband services like T-1 lines. Those dedicated circuits, a staple of the Bells, deliver data several times faster on average than DSL or cable modem lines, which often slow noticeably under heavy traffic loads. INTEL INSIDE. Yet big questions surround WiMax and whether it can live up to the hype preceding its arrival. The tech landscape is littered with startups that tried pitching wireless broadband for businesses in big cities. Over the past five years, big players such as AT&T (T ) and Sprint (FON ) have launched and abandoned wireless-broadband trials for residential customers. And as the Baby Bells sink big bucks into fiber-optic cable expansions, they will be reluctant to spend significantly on WiMax. "We see it as a complement to our other broadband efforts. We are definitely exploring it, but it's too early to tell," says Mark Wegleitner, chief technology officer of Verizon (VZ ). Even early WiMax adopters appear to need some prodding to embrace the tech standard, which has come in the form of investment from tech bellwether Intel (INTC ). The chip giant is designing PC chips that will have WiMax reception built in, echoing a successful strategy it used with its Centrino chip, which put WiFi connectivity into a majority of new laptops on the market today. Intel likely will throw big marketing dollars at WiMax to popularize the technology and plans to stay involved in developing standards. While Chatterley says he would have investigated WiMax anyway, Intel helped his decision by offering to buy a minority stake in Speakeasy and its support for the WiMax project. On Oct. 25, Intel also took a $150 million stake in Clearwire, telecom pioneer Craig McCaw's rural wireless broadband startup. As part of the deal, Clearwire announced it would use WiMax technology to power parts of its network. But even with Intel's backing, at least some of the customer reluctance likely comes from the fact that WiMax gear is not yet in production and that early commitments to go WiMax amount to buying into the promise before testing actually occurs. A WORLD APART. Even some of the big chipmakers are holding off for now. Broadcom (BCOM ) declined to include WiMax compatibility in its next line of chips for communications in PCs. "There are some unknowns anytime you have to talk about something that doesn't exist yet," says Alan Varghese, a wireless analyst at Oyster Bay (N.Y.) tech consultancy ABI Research. "It will offer very high bit rates. There are some questions about how close you have to be to a WiMax transmission base station to achieve those bit rates, though." Speakeasy's Chatterley confirms that distance from the base station significantly affects speeds, but he insists WiMax will easily outrun offerings from traditional broadband providers. One other potential drawback: The Federal Communications Commission has chosen to allocate radio spectrum in the 3.5- and 10-gigahertz bands to private WiMax providers. The rest of the developed world has WiMax allocation in different spectrum locations. That means gearmakers will have to customize WiMax equipment for the U.S., possibly driving up costs. And global WiMax roaming, one of the potential attractions of the technology, will be problematic for U.S. users. "We are going to become another wireless island. We are not supporting international standards. It's not going to be compatible with any other equipment worldwide," says Robert Sanchez, chief technology officer of San Diego (Calif.) wireless tech consultancy inCode. WAIT AND SEE. Even so, Sanchez says he loves the idea behind WiMax and thinks it will ultimately prove a big success. And despite the obstacles, few doubt the role of WiMax in broadband's future. But whether that role is big or middling remains far from resolved. Chatterley at Speakeasy is eager to sell WiMax to businesses, but he remains far more cautious on sales to consumers -- an area where overcrowded spectrum and wider coverage could become expensive problems. Is WiMax the next big thing? Intel and others seem to think so, but it's still too soon to tell.  Salkever is Technology editor for BusinessWeek Online in New York Edited by Beth Belton
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