Intel is facing a bitter blow as it becomes increasingly clear that future, fourth-generation high-speed mobile phone networks are going to be based on long term evolution (LTE) technology, rather than WiMax, the standard backed by the world’s largest chipmaker.
Over recent months, a number of network operators who supported WiMax have indicated they are making the switch to LTE. It is bad news for Intel, which has invested at least $1.2bn in supporting WiMax operators such as Clearwire in the US.
Last month, Dan Hesse, chief executive of Sprint Nextel, the third-largest mobile phone operator in the US, told the Financial Times that the company was considering using LTE for its networks.
Sprint had been one of the biggest supporters of WiMax, as the biggest investor in Clearwire, the mobile network operator building a WiMax network that will cover 120m people in the US by the end of the year.
In India, a number of companies that won spectrum for 4G mobile broadband services in a recent auction have said they will use LTE rather than WiMax for their networks. These include Reliance Industries, owner of Infotel Broadband Services, the only company to have won a national allocation of spectrum.
In June, UK WiMax operator Freedom4, owned by the Daisy group, sold off its WiMax licences to a rival. In May, Yota, a Russian wireless network operator, which has rolled out a WiMax network with 600,000 users in five Russian cities, said its next network roll-outs would use the LTE standard.
“I think many service providers are still going to look at WiMax as the best technology and I think WiMax absolutely has a lifespan that’s going to continue,” said Julie Coppernoll, Intel’s director of WiMax. “I do see LTE and WiMax coexisting; 10 years from now there will ideally be two technologies.”
Intel has pointed out that WiMax is already being deployed in 500 networks in 147 countries, and the technology is being embedded in a large number of new laptops and netbooks. Best Buy, the electronics retailer, for example, will bring out many more WiMax-enabled notebooks at the end of this year, Ms Coppernoll said.
“WiMax is here and it’s available now. We’ve never said it will be the only solution, we’ve said it will be a timely solution.”
Nevertheless, analysts said the company appeared to be backing away from the technology.
“Intel at one time was ‘WiMax, WiMax, WiMax!’. Now they’re more like – well, we’re going to end up supporting both technologies and there might be the potential for the two standards merging eventually,” said Jim McGregor, analyst at In-Stat, the research group.
The WiMax-LTE battle is the latest standards showdown in the technology world, much like the VHS-Betamax contest of the 1970s and 80s.
Analysts say neither standard offers any notable technological advantage over the other. Both offer fast data speeds – up to 10 megabits per second – which is faster than most UK consumers can get over a fixed-line internet connection at the moment.
WiMax has been a little earlier on to the market than LTE, and licences for the spectrum have tended to be less expensive.
However, LTE has been backed by the world’s largest telecoms equipment companies, including Nokia, Sony Ericsson and Alcatel-Lucent, and mobile broadband operators are keen to go with the technology with the biggest selection of devices to offer consumers.
“We are switching to LTE because most of the device makers, like Nokia, don’t support WiMax. The device ecosystem for LTE will be much bigger,” said Dennis Sverdlov, Yota’s chief executive.
“In terms of the underlying technology there is not a lot of difference between the two standards. LTE’s advantage comes from economies of scale,” said Phil Kendall, wireless analyst at Strategy Analytics, the research group.
Unlike Betamax, however, WiMax is unlikely to disappear altogether, analysts say.
“There is a big enough market for WiMax to survive. There is a role for it out there,” Mr Kendall said.
In emerging markets, where there is little telecoms infrastructure in the ground, it will continue to have a role as a cost-effective alternative to fixed wireless connections.
WiMax could also become a behind-the-scenes, wholesale support network for LTE telecoms operators, handling data in crowded hot-spots where network operators are struggling to handle demand.