With the huge investment in fiber, copper and 3G that has been made in Europe, it is hardly surprising that there are many skeptics about the potential role for WiMAX in supporting the vision of the mobilized triple play. In other parts of the world, far greater faith, and larger numbers of dollars, are being invested in the ability to move rapidly to next generation converged services using broadband wireless for fixed and mobile operations. Sprint Nextel has, of course, been the cheerleader in the US, but it is in the southern half of the Americas that we may see some of the most aggressive early roll-outs, and where the WiMAX vendors are gearing up to compete.
Brazil is one of the biggest potential markets and in most suppliers’ top five for telecoms growth in the coming few years. The country’s first genuine triple play operator, pay TV provider TVA – soon to become part of the Telef’nica empire – is determined to ‘do a Sprint’ in the country and steal a march on the telcos, building a wireless service to support business and consumer roll-out of advanced offerings including mobile and fixed high definition television, videoconferencing, ecommerce and VoIP. On paper at least, its plan looks ambitious and creative, and not so different from the aims of Sprint with its cableco allies, with the company’s documents and presentations paying intense attention to key trends like the ‘fourth screen’ (the cellphone), dynamic user interfaces and service bundles that rely on new combinations of devices as well as of services.
TVA also epitomizes the rising level of competition between the major vendors as they start to sign up trials for their soon-to-be commercialized 802.16e equipment. TVA surprised observers somewhat this month by announcing a large scale trial with Nortel, when last year it had become a breakthrough customer for Samsung, much touted as proof that the Korean company could turn its Wi-Bro pre-802.16e technology into a global product that would succeed outside the peculiar conditions of its home country.
Not that TVA’s new decision changes that – both vendors are only trialing with the broadcaster, and most major deployers will look to test at least two suppliers. But it is important for Nortel – excluded, against all expectations, from the deal with its major customer Sprint Nextel, where it lost out to Samsung, among others, the Canadian company needs to boost confidence in its WiMAX strategy, especially with regards to the Korean challenger, which has not been a significant threat outside the Far East before.
Nortel is pinning more hopes than most on WiMAX, having exited UMTS and presenting 802.16e as the first leg in a highly integrated and advanced roadmap to 4G, which will also include LTE and potentially UMB. Its aim is to offer these ‘3.5G’ technologies ahead of the market, relying on its superior R&D in areas like MIMO, and gain the initiative in the 4G process into the bargain. But so far its strategy and technology have looked impressive on paper, but lackluster in reality, with no tier one customer at this early stage in the game. Of course, TVA is not on a level with Sprint or DoCoMo, but it is a genuinely interesting and potentially important provider in its homeland and would be a useful endorsement for Nortel.
TVA will also expect to see its market presence, and the speed of its roll-out, boosted significantly once its acquisition by Telef’nica is finalized. The Spanish giant is consolidating its position across the Latin American region with ambitious plans to invest in broadband quad play activities – and many of these will be wireless, given the low penetration of copper or cable in many regions and difficult terrains. To support its goals, it is engaged in a string of acquisitions, many of local or regional broadband wireless operators, and of pay TV providers to support its quad play, and as such is going head-to-head with another giant of the continent, Mexico’s Telmex, which has similar plans and is also buying up wireless assets, including Argentina’s Ertach. Such changes of ownership, of course, often prompt a review of vendor selection, although Telef’nica’s major supplier of WiMAX-class systems to date has been SR Telecom.
TVA’s latest choice – at this early phase of a new technology where almost every operator decision is closely watched and influential – also highlights some questions that are already being raised over Samsung, which is also placing a huge burden of expectation on 802.16e.
The Korean company – which so successfully maneuvered to make the Wi-Bro technology for which it was largely responsible the basis of the 802.16e WiMAX profiles – sees the platform as its passport to a global infrastructure play, that will drive its device business and also give it new footholds in markets like the US. Success in these respects will then strengthen Samsung’s bid – part of the more general initiative of the Far Eastern countries – to take the helm in the 4G process. But these grand strategies will only turn into reality with strong commercial success, and while Sprint Nextel was a huge credibility boost for Samsung, it may not be the harbinger of things to come – Sprint is a maverick in terms of its equipment choices, and its decisions were very clearly driven by the desire to have vendors that were strong in devices, a factor that may not carry so much weight with other operators.
So the questions around Samsung remain – although very early to the game with wave one 802.16e equipment, which is basically Wi-Bro, is it lagging behind Nortel, Motorola, Navini and others in delivering commercial grade wave two gear – the important profile, since it includes performance and efficiency boosting techniques such as MIMO and smart beamforming? And if its infrastructure fails, for political or technical reasons, to make the impact it hopes for, will it fall back on relying on its devices and its IPR to ensure its market impact en route to 4G?
TVA’s Nortel trial will start next month in Brazil’s largest city, S’o Paulo, in its 2.5GHz spectrum. Nortel will provide an end-to-end solution including consumer devices, base stations, ASN gateway and professional services for the trial. TVA is already running trials with Samsung and Intel in the city of Curitiba, which began in February and says it aims to compare the two technologies before making a final decision on mass roll-out, which it hopes to kick off in the second half of the year. Nortel has recently made a strong commitment to Latin America, a market where it has not been highly focused in the past, and has had some success with its flagship VoIP systems. Its main targets are cable companies and others looking to move into triple or quad play, and medium to large enterprises.
TVA’s former owner, pay TV group Abril, announced last November that it was selling all its broadband wireless spectrum and operations to Telef’nica, although the deal is still awaiting regulatory approval. TVA currently distributes its services via cable and MMDS and its portfolio includes TVA Digital, TVA DVR, TVA HDTV, Portable TVA (Slingbox), Ajato broadband and TVA Voz (VoIP).
“TVA has been working to maximize use of the MMDS (2.5GHz) spectrum. The first step was video digitalization, which allows us to offer over 100 channels. Through this trial with Nortel, we can reinforce our efforts to increase our service portfolio moving forward,” commented VirgClio Amaral, director of strategy and technology at TVA. TVA also has 3.5GHz frequencies. Anatel is currently examining the modification of its 3.5GHz rules to support multimedia and mobility, and has begun the process of allocating 3.5GHz and 10GHz licenses.
Juan Chico, president of Nortel Brazil, said in a statement: ‘Our trial agreement with TVA will allow us to demonstrate the technology’s ability to replicate the user’s fixed PC capabilities, such as blogging, video and VoIP, from any location.’ Nortel claims the system will require one-third of the capital investment of a similar wireline structure.
The most significant moves towards WiMAX in the Latin American region have so far come from Brazil, where some major telcos and cellcos are also studying the technology as a possible candidate for their 3G-plus initiatives, in place of UMTS or CDMA2000, making it one of the most likely countries where operators could look to leapfrog 3G by moving directly to a ‘post-3G’ technology such as WiMAX. Anatel plans to hold 3G auctions later this year, keeping prices low to encourage competition. However, interest from carriers has been lukewarm, whereas there is a growing list of triallists of WiMAX, including the major fixed line operators Telef’nica, Telemar and Brasil Telecom.
By contrast, the cellular carriers – TIM Brasil, Vivo, Claro and Oi ‘ said earlier this year that they wanted to recover their investments in second generation systems before investing in 3G.
Growth in Brazilian cellular communications is rapid, with the total number of subscribers up 42% between 2003 and 2004, reaching almost 70 million in 2005, the fourth largest base in the world. The mobile operators are investing accordingly ‘ the leaders are TIM Brasil; Claro, part of Mexico’s America Movil SA de CV (AMX); and Vivo, the largest of the three with 23 million users, which is a joint venture between Telef’nica and Portugal Telecom. But all their investment activity is focused on GSM, GPRS and EDGE, not 3G, and WiMAX may prove a better way to add new spectrum and introduce new services for some cellcos, especially if Anatel makes the 1.9GHz 3G spectrum technology neutral.
Brazil has already been the most active Latin American nation, along with Mexico, in promoting broadband fixed wireless services and testing portable or mobile extensions. The Brazilian administration has a program called Service of Digital Communications (SCD), which aims to bring internet access to remote areas. Intel is working with government agencies and has a WiMAX pilot, in partnership with Siemens, to serve rural communities and. Also in Brazil, Neotec, a consortium of mobile operators, has tested a NextNet-based system in urban areas, in the MMDS spectrum that many Brazilian operators own for television services.
Last month, Brasil Telecom (BrT) said it planned to launch a pilot WiMAX network this quarter in the southern city of Porto Alegre, as an alternative to DSL services. Its main competitors in the WiMAX market, Embratel and Neovia, are also expanding their trials. Telmex-owned Embratel is the only company with a national license for 3.5GHz spectrum.
Last year Motorola forecast that the WiMAX market in Brazil is likely to be valued at over $100 million at the end of 2007.