LTE Deployment Myths & IP Uncertainty Benefit Mobile WiMAX

Recent news and market reports seem to play up LTE, while casting a shadow on the viability of Mobile WiMAX. Much of this LTE deployment news has been exaggerated and taken out of context, while the negative market forecasts for WiMAX are due more to global economic conditions then to the technology itself.

We have already commented that VZW would not have a large LTE installed base till late 2010 or early 2011 at the earliest. 

Let's take it a step further here: The LTE chip sets won't appear until 2010 and the devices incorporating them will have to undergo testing and certification before they can be sold into a commercial LTE network.  Korea cell phone vendor LG this past week stated they have the first LTE chip set that would work in a handset.  LG exhibited their LTE cellular data chips at its Korean research facility, but stated that handsets featuring these fourth-generation (4G) chips won't appear until at least 2010. 

So how could any cellco offer a large scale LTE service in 2009, without tested silicon and certified handsets? This implies that early LTE adopters like DoCoMo, Verizon Wireless and China Mobile are likely to face the choice of implementing pre-standard systems that might not be interoperable or upgradeable if they are to offer an LTE like service within the next two years.

Meanwhile, many WiMAX chip sets are in production and the notebooks, MIDs, and dual mode phones that use them are coming to market early in 2009.

There is also a looming patent issue with LTE.  An LG executive told The Korea Times, "We've already secured 300 patents related to the technology." LG is not a member of the LTE patent pool that would allow fair and nondiscriminatory pricing for all associated intellectual property—single digit percentage for handsets, single digit dollars for laptop.  What kind of royalties will LG charge chip and device makers to use its patents/IP? This creates a new sense of uncertainty regarding the cost and availability of LTE devices.  Operators want low cost devices to encourage more users, but this won't be the case if excessive royalties have to be paid.  There is also the issue of patent litigation that can delay mass deployment of a new technology or network.

WiMAX does not have this dark IP cloud hanging over it.  Earlier this year, WiMAX vendors and network operators created the Open Patent Alliance with the intent of pooling IP.  The patent pool will aggregate essential patent rights needed to implement the WiMAX standard as defined by the 802.16e-2005 standards and the WiMAX Forum.  This approach will focus on providing a competitive royalty structure by charging only for the features required to develop WiMAX products.  The patent pool will incorporate a variety of royalty licensing solutions, including accounting for cross-licensing among individual members within the pool.  Meanwhile, the IEEE 802.16 standards require fair and reasonable patent licensing. 

The window of opportunity for mobile WiMAX is OPEN and will prosper in the broadband wireless market over the next two years, especially in developing countries, e.g.  India, Russia, Eastern Europe, Latin America, and Asia (Taiwan and Malaysia).

 

Sunday, December 14, 2008 in Business  | Permalink |  Comments (1)