A funny thing happened on the way to 4G: Nokia, Betamax, WiMAX and LTE

[1]By Robert Syputa, Senior Analyst & Partner, Maravedis Inc.

A funny thing happened on the way to the next-generation wireless network: Long-term market trends and industry developments were blunted down to catch phrases. While aspects of industry development constantly need clarification amidst the rapid pace of technology and market changes, over-simplification can be misleading.

Nokia is among the most respected technology companies in the world, but--like all other companies in this converging field--it struggles with forces of creative destruction. As a leader of the revolutionary industry that is becoming ICT (Information and Communications Technology), Nokia struggles between a wide open framework of standard development and ecosystem of WiMAX, with its open source software and open device market channels on the one hand, and marshaling its position as a leader of the incumbent mobile industry, which maintains control of devices and applications that sell into licensed networks, on the other.

A recent headline heralded Nokia's position with respect to WiMAX as "Nokia dismisses WiMAX prospects [2]," wherein a Nokia executive compared WiMAX to the now-obsolete Betamax technology. Similar articles point out that Nokia has vacillated in its support of WiMAX. But if we look closer we remember that Nokia has never supported WiMAX as a mobile or unified network and has always upheld the Third-Generation Partnership Project (3GPP) stream of development as the mainstream evolution of mobile networks. We can understand this in the simple sense of knowing which side of your bread is buttered: mobile networks have been more successful in developing numbers of subscribers and monumental cash flows. Mobile networks have not opened up to become a unified communications systems because restrictions have not opened to the extent necessary for mobile to fulfill the "information" part of the ICT vision. What is needed for the vision of IMT-Advanced to work out is for aggregation of spectrum, and much less cumbersome development of devices and applications than is common in mobile networks. The 3G industry is changing rapidly, but barriers must still come down to enable its use as a high bandwidth data network. Besides the need to appeal to the information segment of ICT, the mobile broadband market is quickly pushing for higher bandwidth and variety of applications.

WiMAX is sometimes characterized as the network developed by the computing and broadband wireless industry, without much involvement from the wireless industry. But this is not entirely the case, as many mobile infrastructure companies have been involved in the development of the standard as the technologies, market, regulations and oversight have evolved. Wireless' move to flat IP as the platform for future development of a more truly universal communications environment necessarily pushes WiMAX and 3GPP/LTE on the same path. The fact that what is done with the network is becoming more important to the end customer than the technology that runs it (the network itself) means a shift in openness is needed, and will increasingly be demanded. Whether the mobile industry would be compelled to move towards the goal posts without competition from WiMAX urging them on is doubtful in our opinion.

For most incumbent operators, the decision to move to the next generation of wireless networks is not gated by availability of equipment or devices, rather the need to move on to a new platform will require all new devices to be able to operate on this network. No existing 2G-3G device will be able to connect to any next generation WiMAX or LTE network until users swap out existing devices for multi-mode devices.

Recent announcements from leading suppliers of LTE equipment seem to be saying "here it is, come and get it," but there are still few operators committed to trials yet, let alone major network deployments. This is partly because operators are finding ways to enhance 3.5G to extend its life, which makes it easier to hold on to revenues because older handsets and dongles will still work. So long as the bandwidth and quality-of-service (QoS) demands can be met, there is not sufficient reason to move to the next network. This fact has been echoed many times by almost every major operator we have interviewed including Telecom Italia. Out of those operators committed to deploy LTE in the near term--DoCoMo, China Telecom and Verizon notable among them--none intend to erode current revenues in the process of rolling out the new networks. LTE has to wait for the market to develop and for 3G to reach its end of life before major transition is likely.

Although Verizon, DoCoMo and China Telecom have political, spectrum and market reasons for pushing ahead with LTE deployments, watch what they are doing closely: Are their deployments transformations/migrations of their overall service or is it as a way to solve a capacity and marketing image problem in the face of WiMAX, combined with a desire to stay a few years ahead of major generation changes? WiMAX pushes the time frame, and the incumbents must both prepare for an eventual shift to the next generation and must presage the marketing advantage that a new network might give their competition. China Telecom has a different agenda, of course; China has not fully deployed 3G, and has morphed its internal TD-SCDMA standard into TDD-LTE Advanced in hopes of becoming a leading supplier nation for 4G.

Meanwhile, WiMAX continues to develop and edge its way into more markets, including a coming push into mobile applications made feasible by Clearwire and other national deployments. However, the numbers are a small fraction of those of traditional mobile networks, and WiMAX has yet to gain momentum enough to run alongside or cause convergence of the air interface standards, but it has moved far enough to make it reasonable to propose that de facto standardization may occur. Multiple mode integrated circuits (ICs) and modules are well on their way, such that network operators will soon be able to decide if mixed networks or override service makes commercial sense. ...Continued [3]

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