Even though Nortel has decided to stop making WiMax equipment, the company is still committed to WiMax. How is that possible?
We spoke to Scott Wickware, newly-appointed global head of WiMax at Nortel, and he says its just about timing, and the need to focus research work on jobs that haven't already been done elsewhere.
Scott, is Nortel still involved in promoting WiMax, for instance in the Mobile Wimax Acceleration Group's demonstration network in Maidstone?
We are still working with MWAG, and we are continuing with the trial in Maidstone. We are evaluating where we're putting our resources.
What we'll do is any existing customers and trials with our previous product, will transition to the new product, jointly developed with Alvarion - unless they are trials which are completed.
From this stage forward, every base station we sell will be the new product.
What do you mean by a "jointly developed product"?
I want to make one point really clear here. We're working with Alvarion, and the base station they are shipping is an Alvarion product. However, Nortel is investing in the development of that product. In other words, we are paying them R and D so they incorporate features and functionality that we define to a certain degree.
Will the results of that investment be available to other Alvarion customers, or are they making a particular Nortel version of their kit?
No, it will be available to both, because we are contributing both money and direction. We have a lot of IPR and a lot of know-how. One of the main reasons we have done the alliance is because we had some capabilities - notably MIMO - that are applicable in more of a capacity-challenged environment.
With many of the new build-outs of WiMax, they're in underserved broadband areas, and the focus there is really on coverage. Alvarion has a 2x4 branch that is ideally suited to that application. In the short term we will leverage that, but in the long term we will be helping them incorporate capabilities such as MIMO into their portfolio.
The point being that it's not just an OEM, we are working very closely with them on the definition and development of their products. It will then form the basis of products we both sell independently into the market.
This announcement has been interpreted as Nortel expressing a preference for LTE. You are keeping your LTE development in house, and going with a partner for WiMax. Is that because developments with carriers in the US driving you towards LTE?
I think the way to look at this is we are in business to make money, and we look at the business in totality. WiMax is pretty much here and now, and LTE is out there a couple of years, in terms of commercial deployment. Given the market requirements today for WiMax, and given what Alvarion has, and given what we would have had to have done to get to where they are, we made the business decision that said, it's better for us to partner with them for WiMax. But at the same time, we want to send a clear message to the market place, that we are absolutely still in the WiMax business. .
Looking forward to when LTE is really required in the market place, by the customer base we are selling into, we have the time to build the product in-house, using the expertise we've got over the last twenty years in RF development.
It's been suggested that Mobile WiMax starts with a drawback, in that the uplink [based on OFDM] is likely to be much less power-efficient than LTE [which doesn't use OFDM]. In the long term, could it be that LTE is a better network altogether?
Well, technology and religious wars - who knows how it will play out? I am general manager of the WiMax business at Nortel, so that's what I focus on, but my prior role - ie last week - was across the entire carrier business so what I can tell you is, we are building both because we see a clear market for both. The business case for WiMax initially - even mobile WiMax - is based on fixed nomadic usage. The true mobility piece is still to be determined. A lot of people we are talking to really see an opportunity for mobile WiMax,
Clearly LTE, at least the way it's being pitched today, is driven by the main cellular operators round the world. They come from a mobile background and are looking to augment their offering with LTE.
Where the intersection comes between those two technologies, only time will tell. Technology performance, spectrum availability, and the development of ecosystems etc etc will determine how that plays out. The bottom line is, there is a market for both.
WiMax is here now, people want it now. It meets the need for underserved broadband, which is a tremendous need across the world. These people aren't too concerned about mobility for the services they want to sell.
That sounds like a shift in emphasis. As if WiMax isn't going to go as far in the mobile world as people have predicted.
Don't get me wrong - I think there is a lot of opportunity for mobile WiMax. My point is, there is a tremendous market for fixed and nomadic broadband wireless access. Wimax is probably the best technology out there to meet that need. The 802.16e standard was developed to allow mobility.
802.16e needs to get some runs on the board out there, targeted at a fixed and nomadic application, so operators can start testing out mobility-oriented environments. I can absolutely say that a number of operators are looking to deploy mobile VoIP and other applications using mobile WiMax, in much the same way as UMTS is deployed today, but better and faster and cheaper.
A UK-specific question: we hear this week that the 2.6GHz auction may be delayed. Is this something you are following?
I am following this, and I try not to openly get involved in second-guessing Ofcom. Generally in Europe, what happens in regulatory policy has been good for the industry. So I'm sure they have got their reasons. Spectrum is an asset that everybody covets because it is a scarce resource, and that particular spectrum lends itself to a wide variety of deployment opportunities and applications. So I can understand why they would want to make sure that what they do makes sense. But the sooner the better.
It sounds more like it's a couple of operators that want to delay it as long as they can. But that's only one interpretation, and since they're also probably Nortel customers, we probably shouldn't go into that one.
Throwing a question from left field - WiMax deployments may require femtocells. Do you have any thoughts on femtocells at this stage?
Yeah, lots of thoughts on femtocells - I think they will absolutely play a role in many WiNax networks - and not only WiMax, but CDMA UMTS and LTE etc. There's a lot of momentum in the industry behind femtocells. It's not so much if as when, and the when will be determined on getting a cost structure that makes sense, and ensuring that all the frequency and interference issues are taken off the table.
You are selling a base station to an individual, who is using spectrum shared with the macro network. All that stuff is achievable, but the question is when will the price point and go-to-market be right, so the average punter can go out and buy one of these things in a shop and install it at home.
We've definitely got plans to offer femtocells - we are looking at the specific question of when
You still haven't announced any definite femto partners though.
The other impact of femtocells is this, though: more femtocells in houses, means fewer macro cells outside. Femtocells could be bad news for the big macro stations out of doors.
That's the gazillion dollar question. Today, depending on which country you are in, as many as a third of all calls tend to be made in the home. So if you have femtos, you are talking a third of the traffic off the macro network. Clearly the cellular operators aren't keen on that, unless they can find a way to monetise the femto thing.
There are a lot of business models at play, a lot of technology issues at play. We'll see how it goes, but there is no lack of focus on it in the industry.
But it could impact negatively on the business you are involved in with macro base stations.
It could - but we'll see. I think at the end of the day, the reality is that coverage is a -precious thing. I don't see this having a massive impact on rollout plans.
So, to sum up what you said on WiMax and LTE: operators will require both, but LTE is further out, so that's a better place to put R and D dollars. There are existing WiMax products, and Alvarion's are doing well, so it makes sense to use those and jointly build products with Alvarion, and focus your research and development money on LTE - and your decision doesn't reflect which you think will do best in the market.
You are right, it's a timing thing. The only thing I would clarify is that we haven't invested in Alvarion. We are providing them with R and D funds to help develop the product.
The reason Alvarion is interested, is we are opening up a channel for their portfolio as well, that they otherwise wouldn't have access to. A lot of tier one operators want to buy a solution from a well-established tier one vendor with global reach. That's a value Nortel brings as well as the core portfolio of applications and services that any WiMax operator will require. It's not just about the base station, they need to have a core network and a whole host of other things.