Mutual skepticism

The Mobile World Congress in Barcelona in February 2007 was the highpoint in media coverage for the WiMAX alliance. WiMAX took the congress “by storm”, said media coverage. Nokia, Motorola, Intel, Samsung and others were promoting WiMAX at a gigantic stand. There was no sign of Ericsson.

The journalists reported instead about tremendous skepticism about Ericsson’s choice of technology. Almost all its competitors were focusing on WiMAX and claimed to be able to supply equipment at the end of 2007. Nokia was going to have WiMAX mobiles ready during 2008. Intel’s deputy CEO, Pat Gelsinger, declared that a global WiMAX network would be built.

Even Arun Sarin, CEO of Vodafone and a firm friend of Ericsson’s, spoke up for WiMAX. His address, which attracted a lot of attention, claimed that the development of LTE was taking too long.

Ericsson’s spokesman Mikael Persson made the following statement: “We would be glad to see faster development of LTE. But it is worth pointing out that the HSPA technology already exists. More than 100 operators all over the world have upgraded their existing 3G networks to HSPA, which offers end users transfer rates of 3–7 Mbps. That is more than mobile WiMAX is expected to provide even at the end of this year.” He went on to say:

“We can see no demand for WiMAX in the market. On the other hand there is great demand for HSPA, which will be offering up to 42 Mbps and similar coverage to GSM in the very near future. WiMAX will not be able to do so. But WiMAX may become a niche technology for operators who are not able to get a 3G license.

“Upgrading networks to HSPA is much cheaper for operators than investing in a new technology. The fixed version of WiMAX has only about 200,000 subscribers today and it has been available for some time now. There are analysts who claim that mobile WiMAX will be able to reach about 35 million subscribers in 2011, but that is only 5 percent of the global market.”

Moreover, the high speeds envisaged for WiMAX of up to 70 Mbps could be expected only where there were fixed links with receiving antennas installed on top of buildings and under optimal conditions with unobstructed line of sight.

In addition, WiMAX’s high frequency required large numbers of masts to provide coverage; this would lead to rollout problems because of planning and building permits, in addition to the major investment required to build stations and masts. And because WiMAX could not offer continuous coverage, the terminals also had to support GSM or WCDMA.

Author: Svenolof Karlsson & Anders Lugn

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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