‘WiMax’ Wireless Web Access the Next Big Thing?
Sean Maloney steered his van up a dusty road in the southeastern foothills above the heart of Silicon Valley, pulled over by a fence along a horse pasture and fired up his laptop. In a moment he was on the Internet, calling up websites at blazingly fast speed.
“Seven megabits a second at 14 miles. Not bad,” he said, recalling the recent field test. That was more than 120 times faster than standard dial-up speed -- and 14 miles away from the source of the wireless signal.
Maloney was using the stuff that he and his colleagues at Intel Corp. see as the Next Big Thing: long-range, high-speed wireless Internet access using something called “WiMax.”
Known formally by its technical standard 802.16, WiMax is big brother to the 802.11 wireless protocol that transmits Internet signals as far as 300 feet to provide WiFi hot spots at coffee shops, airports and hotels and for personal networks at home.
WiMax is WiFi on steroids. WiMax broadcasts its signal over many more channels than WiFi, and those channels are much less cluttered. WiMax signals are also less susceptible to interference. All that helps a WiMax signal travel as far as 30 miles.
That gives it huge potential, not only as a business opportunity but also as a tool to deliver Internet access to remote or underdeveloped areas of the world that don’t even have telephone service.
Maloney, a 47-year-old who speaks with the accent of his native London, likes to say that WiMax is the technology that will bring the next 5 billion people to the Internet.
“We’re facing an incredible next five years,” said Maloney, general manager of Intel’s communications group. “It’s the broadband wireless era, as interesting as 1994-99 was with the explosion of the Internet.”
Telecommunications companies have shunned isolated areas of North America and Europe as well as vast swaths of China, India and Africa. To reach those far-flung customers with today’s technology, they would have to spend billions of dollars installing phone or cable lines, all for a minimal financial return.
With WiMax, which is expected to be available next year, the cost would probably be in the millions or less.
“It’s very early, but it’s very promising,” said Nathan Brookwood, principal analyst of Insight64, a technology consulting firm in Saratoga, Calif. “It can do for computer access what the initial television broadcast system did for entertainment.”
In the United States, the benefits of WiMax deployment would stretch from the prairie to the shores. Midwest farms that are miles away from their nearest neighbors, cabins in the Rockies and ships plying coastal waters would be able to get broadband access for the first time.
Intel, the world’s biggest chip maker, with $5.6 billion in profit last year, would surely benefit as well.
The company won’t speculate on revenue that might be generated from WiMax chips and related hardware or say how many engineers it has devoted to the technology. Its wireless and communications businesses -- recently consolidated under Maloney -- had a combined operating loss of $858 million last year, though they accounted for $4 billion, or 13.3%, of Intel’s $30.1 billion in revenue.
The future looks better for Maloney’s department. Intel executives have said they expect at least half of all laptops sold in the United States by the end of this year to have wireless capability.
That’s probably a safe prediction, considering the popularity of WiFi: So far this year, someone somewhere in the world has deployed a new WiFi access point every 2.5 seconds, Intel executives say. More than 9.3 million people are using the technology worldwide, and their ranks are expected to swell to 30 million by the end of the year, according to market researcher Gartner Inc.
WiMax works in tandem with WiFi. It starts with a transmission tower connected to an Internet backbone pipe; the tower takes the Internet signal and transmits it over the air. When Maloney logged on from the road near the pasture, a “black box” in his van received the WiMax signal and used it to create a WiFi hotspot, which Maloney tapped into with his laptop.
Intel plans to bring its first WiMax hardware -- chipsets that would be purchased by telecommunications equipment manufacturers -- to market by the end of the year. Telecom service providers could have outdoor installations ready in the first half of next year, with indoor deployments in the second half. In 2006 or 2007, Maloney predicts, WiMax receivers will be built directly into laptops and personal digital assistants, eliminating the need for a WiFi relay.
A single WiMax transmitter could serve a corporate headquarters, a college campus or even a sprawling city. The technology would be useful to service temporary events, said Sarah Kim, who follows the wireless industry for Yankee Group, a market research firm in Boston.
“You can imagine an event like the Democratic Convention, where you could come in and boost access with WiMax rather than dropping in a bunch of T1 lines,” Kim said.
A transmitter atop Sutro Tower in San Francisco could provide a wireless umbrella over the entire city, providing broadband access to every resident. By contrast, the cost of digging up a street to upgrade cable or phone lines for broadband is about $300 a foot, Maloney said.
That doesn’t mean there will be customers.
“For all the places with nomads and camels it’s great, but WiMax is a technology in search of a market,” said Jeff Thermond, head of the home and wireless networking business at chip maker Broadcom Corp. Advanced cellphones -- some of which are powered by Broadcom chips -- offer a more convenient way to communicate in remote areas, he said.
Craig Mathias, a wireless analyst with Farpoint Group in Ashland, Mass., says WiMax is unlikely to displace cellphones in the United States and other industrialized countries. The “big markets,” he said, are in underdeveloped economies.
So far, several big telecom equipment makers, such as Siemens of Germany and Alcatel of France, have joined Intel as members of the WiMax Forum, a consortium set up to study the technology. Cellphone maker Nokia, a founding member of the group, left last month but said it might pursue the tech- nology when details about WiMax deployment become more clear.
British Telecom is also a WiMax Forum member, but American carriers like Verizon Wireless and Sprint PCS seem cautious.
“It’s got to make business sense,” said Sprint spokesman Charles Fleckenstein. “You don’t go out and spend a lot of money putting in new technology if no one’s going to go with it, or someone’s going to eclipse it. So we’re keeping an eye on it.”
Ultimately, Intel stands to make the most money from WiMax by selling Pentiums and its other flagship PC chips, not by selling WiMax chip packages, said Rick Whittington, an analyst with San Diego-based investment bank Caris & Co.
That’s because ubiquitous high-speed Internet access over the air would make laptops more attractive to computer buyers, and Intel chips power most laptops.
“I view a lot of these seed efforts by Intel as loss leaders,” Whittington said. “Intel will help develop technologies so they can sell their profit lodestar.”