WIMAX WATCH

The authoritative source of WiMAX information: real data, no hype

Volume 1, issue 17: January 7 2005

DoCoMo’s Super 3G group takes on Samsung and WiMAX 2

Flarion could gain as 450MHz challenges GSM’s grip on Europe 9
Critical success factors in WiMAX’ make or break year 13
MobilePro seeks to cash in on cableco interest in wireless 17

News highlights: 20

Airspan acquires ArelNet

NextWeb joins Forum
WiMAX operators to gain from FCC ruling
Navini adds OSS partner

“
Super 3G is a part of DoCoMo’s efforts to domi-
nate the 4G market
LG Electronics

”
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DoCoMo’s Super 3G group takes on Samsung and WiMAX

• Super 3G backed by Vodafone and DoCoMo to fend off WiMAX

• Asian 4G initiative splits between Samsung and NTT
• Korean vendors look to dominate 4G through 802.16
• LG hits out at DoCoMo’s agenda
• But the gulf is political, not technological

The start of the new year saw two important, and not unrelated,
events in the world of next generation wireless networks. A
group of companies spearheaded by Japanese operator NTT
DoCoMo announced plans to develop ‘Super 3G’, while Korea’s
Samsung finally joined the WiMAX Forum.

The reason these two events cannot be viewed in isolation is that

they show the Asian-led move to create the fourth generation net-
work being split down the middle. The two main movers and
shakers to date in creating platforms for future 4G, DoCoMo and
Samsung, are taking very different paths to achieving their aim of
a new mobile generation that will be driven from the East, not the
US and Europe.

DoCoMo has to stay faithful to its W-CDMA roots and Super 3G

shows it marshalling the forces of this market to stand against
threats from WiMAX, while Samsung is embracing WiMAX as
the most likely future basis of 4G, and seeking to take a dominant
position in that community.

These two developments highlight several conflicts whose out-

come will shape mobile communications in the second half of the
decade. The Super 3G group, which also includes Vodafone and
many large vendors, is technologically redundant, when set
against the existing 4G development efforts (by individual ven-
dors like Nokia and bodies like 3GPP), plus the emergence of

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broadband wireless. However, it is a clear signal from the domi-

nant players in cellular networks that they aim to stop the devel-
opment of 4G falling into the hands of factions with different
agendas from their own – particularly the vendors that are back-
ing WiMAX as the next generation network. In that model, new
operators will be able to enter premium mobile services with
relative ease, and the focus – as in Wi-Fi – will be on the device
rather than the network, threatening to reduce the cellcos to bit
carriers. Both would seriously threaten the business assump-
tions on which large cellcos built their expensive plans for 3G
and beyond.

The stakes are highest of all for DoCoMo, which has invested
more than any other company in 4G and seeks to drive the
global agenda. In the past, the Japanese giant merely aimed to
launch new technologies ahead of the world, often in a ‘pre-
standard’ mode that was incompatible with other networks –
most famously, its FOMA proprietary implementation of W-
CDMA 3G.

Now, it recognizes, like Intel in the WiMAX camp, that it needs

to work with its international rivals to influence global stan-
dards rather than staying in its own technological island.

NTT DoCoMo’s technology:

The Super 3G members claim they will have specifications, based on the current W-
CDMA technology, by mid-2007 and working systems by 2009.

Technologically, the various factions are far closer together than they are politically, with
few really fundamental differences of approach between WiMAX, DoCoMo’s 4G experi-
ments for next generation W-CDMA, and Qualcomm’s plans for a future for CDMA2000.
This was clearly shown by DoCoMo’s demonstration of 1Gbps 4G connections in its labo-
ratories just before Christmas, just a month after Siemens showed similar performance us-
ing WiMAX-like OFDM.

In the DoCoMo demo, a downlink speed of 1Gbps was achieved in a laboratory experiment
using a combination of VSF (Variable Spreading Factor) Spread OFDM and the smart an-
tenna technique, MIMO (Multiple In Multiple Out), a popular approach for WiMAX that
employs arrays of antennas to send data in multiple paths. DoCoMo admitted the distances
were short, since the experiment was indoors, and that its techniques are mainly focused on
rapid downlink, with uplink speeds not disclosed. Last fall, DoCoMo demonstrated down-
stream data rates of 300Mbps with an average rate of 135Mbps, in a car running at 30 kilo-
meters per hour at around 800 meters from the 4G base station.

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The evolution of 4G:

This will put new impetus behind the creation of 4G. Once
slated for commercial deployment in the 2010-2015 timeframe,
the project has remained very much confined to the laboratories
and standards bodies, with very little consensus on what exactly
a 4G network will comprise.

There are basic definitions – 4G, according to the ITU and other
industry forums, should be IP-based, run at 100Mbps while mo-
bile and 1Gbps when fixed, support next generation applica-
tions such as high definition television to the handset, and span
fixed and mobile communications.

But specifics on how this would be achieved have remained

vague, and despite early stage demonstrations by DoCoMo and
others, technological consensus has not been reached. Now that
has to change, as WiMAX holds out the prospect of a globally
harmonized, fixed and mobile network that could deliver 4G
performance – as defined above - before the end of the decade.
Already companies like Motorola and Siemens are demonstrat-
ing OFDM networks at close to 1Gbps, while others like Wi-
Lan are showing off connections at high speed, up to 100 kilo-
meters per hour.

Good news for users demanding applications such as mobile

television or heavy duty corporate data exchange – neither
really satisfied by 3G – since these facilities could be offered
far earlier than expected, and at better prices. Good news for all
those equipment makers and operators that have been excluded,
by choice or market failure, from cashing in on cellular net-
works, but which now have a second bite at the mobile cherry.

Very bad news for operators – and for suppliers that are too
heavily dependent on GSM or CDMA networks – who are
stuck with a 3G technology that may have a shorter lifespan
than expected.

Not only will it be harder, if 4G standards are dominated by a

different set of interests and technologies, to gain return on their
huge investments in 3G, but they will not be able to exploit
those technologies in moving to the next generation. Instead,
they will be starting on a level playing field with the new en-
trants, but weighted down by a massive legacy burden.

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Cellular sector bites back:

The cellular community – led by uber-operators DoCoMo and

Vodafone, and some key vendors – is fighting back aggressively,
with Super 3G just the latest defensive position against the rise of
a 4G based on WiMAX.

The line-up of its 27 initial supporters is telling. Here are many

of the world’s largest cellcos, whose current dominance depends
on the mass implementation of their 3G cellular networks –
DoCoMo itself, Vodafone, US market leader Cingular Wireless
and China Mobile lead the pack. All of these have shied away
from broadband wireless or any next generation technology that
would involve a difficult migration from 3G.

This is very much a group led by carriers, and mainly by W-

CDMA, although Qualcomm, the controller of the rival 3G stan-
dard CDMA2000, is also a member. One lesson learned must be
that the two cellular communities must band together to create
4G, not risk another split, especially since WiMAX can now of-
fer the promise of the world’s first globally unified mobile stan-
dard.

Samsung’s decisions:

This enormously important claim has been largely possible be-

cause of the Korean vendors Samsung and LG Electronics. Sam-
sung was the main force in developing the Korean Wi-Bro stan-
dard for OFDM-based broadband mobility, and argued that this
should be the basis of the upcoming mobile version of WiMAX,
802.16e. Intel and others initially resisted such a move, threaten-
ing to create two rival networks, one for Asia and one for the Spectrum for ad-
vanced wireless net-
works

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west, but consensus was reached last fall, with Intel and LG
agreeing to lead the effort to harmonize Wi-Bro and 802.16e,
not only accelerating the standards process but holding out the
prospect of a globally agreed standard.

The new friendship was sealed this week when Samsung offi-
cially joined the WiMAX Forum as a principal member. With
its actions, the Korean giant, and to a lesser extent its compa-
triot LG, has positioned itself to take the role of a Nokia or a
DoCoMo in mobile WiMAX, which it would argue will be the
basis of 4G.

Samsung and DoCoMo have been, for some years, the most vo-
ciferous movers behind 4G development, with extensive R&D
programs and initiatives, such as Samsung’s annual 4G Vision
Forum, to raise awareness and attract industry interest.

Asian-driven 4G:

Their aggression has not just been about commercial leadership

but about swinging the balance of power in the mobile industry
towards Asia, reducing the power of the European and US com-
panies in this critical sector. Japan and Korea have the most ad-
vanced deployments of mobile and broadband networks in the
world, and their corporations aim to take advantage of this to
set the global technology agenda, increase their own influence
and revenues, and reduce the burden of royalties to western
suppliers such as Qualcomm.

In this, they have the important backing of China, whose suppli-

ers are less technologically advanced, but which is keen to ally
with Japan and Korea and use the weight of its market size to
gain bargaining power for the region.

Now, however, the collaboration of China, Japan and Korea to

drive 4G is fragmenting somewhat. The main parties involved
agree on the principle of an Asian-driven next generation, but
disagree on the technologies involved. Samsung and LG see
WiMAX as a technology that, thanks to the Wi-Bro compro-
mise, they are now in a position to dominate, and which could
deliver real world 4G before 2010. Samsung holds hundreds of
patents related to 4G and says over 100 of its patents are incor-
porated in 3G and 4G standards. That number will rise signifi-
cantly because of Wi-Bro.

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Reactions to Super 3G:

DoCoMo, excluded from this party, has to pursue a different

technological route, hence the creation of the Super 3G group.
On announcement of the Super 3G group, Samsung dismissed it
as “just a DoCoMo event”, claiming the Japanese company was
trying, once again, to work outside the industry standards proc-
ess. The efforts of the various technology groups should be
pooled to create 4G, not allowed to fragment the standard, it ar-
gued.

"Super 3G plan seems to be a part of NTT DoCoMo’s global

strategy. The companies involved in Super 3G project did noth-
ing but declaring their intention of starting something, so we
don’t take it seriously,” said a spokesperson to the Telecom Ko-
rea publication.

LG Electronics said: "Considering DoCoMo has always been the

first to develop new technologies but failed in expanding market
share due to staying away from global trend of standardization,
“
Super 3G is a part of its efforts to dominate the 4G market by Super 3G is a part of
drawing attention to a similar project while 4G standardization is DoCoMo’s efforts to
under way.” dominate the 4G mar-
ket by drawing atten-
Most vendors, of course, will keep a watching brief on both ini- tion to a similar pro-
tiatives. DoCoMo’s friends, such as NEC, are of course in the ject while 4G stan-
new body, but so are Alcatel, Siemens, Lucent and Motorola, all dardization is under
companies with interest in WiMAX but with a need to follow any way.”
technology that could be demanded by their key customers in LG Electronics
future. Even Samsung itself is said to be joining, alongside Qual-
comm.

This is not unusual behavior – Samsung’s usual policy is to sup-

port any potential standard and see what the market demands.
However, the presence of these two CDMA giants does not indi-
”
cate genuine support, but a need to keep a toehold in a fundamen-
tally hostile camp, one that aims to preserve the W-CDMA heri-
tage. Such moves are likely to drive Qualcomm and the CDMA
sector even more rapidly towards creating a migration path for
CDMA2000 that will move smoothly to WiMAX or other
OFDM technologies. Qualcomm has shifted in this direction al-
ready with its OFDM-based FLO platform and has started filing
patents enthusiastically in this area.

We expect current CDMA operators to gain a far smoother path

to ‘4G’ than their W-CDMA rivals. Qualcomm and other key

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CDMA suppliers are more focused on integrating with, and even-

tually migrating to, OFDM than the GSM world, and are focus-
ing on a technology that is already highly developed. Hybrid mo-
bile networks will be a possibility from 2007 and a true 4G sys-
tem will be viable before the end of the decade. By contrast, W-
CDMA operators face being pushed by the decisions of the
heavyweights among them - which cannot be ignored by the ven-
dors – down a route to a shiny new 4G technology.

While this may have more in common with W-CDMA and so

offer a smoother technological upgrade once it arrives, it is likely
to take many years to evolve, and will be held back by conflicts
with other developments, including WiMAX and other 4G pro-
jects, all of which will cause confusion and will dilute the R&D
resources of the supplier community.

There is already a strong feeling that W-CDMA operators may be

stuck with an inferior technology. Clinging to it and taking on the
expense and risk of a whole new standards path could be suici-
dal, as the CDMA carriers, and a huge group of new entrants to
mobility, leap on to a technology that, for all its faults, is just
around the corner.

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Flarion could gain as 450MHz challenges GSM’s grip on Europe

• T-Mobile and Inquam gain German 450MHz licenses
• Gives non-GSM technology a foothold in Western Europe
• T-Mobile likely to use Siemens/Flarion Flash-OFDM
• Inquam to spread CDMA450 into new territories
• Business PAMR market set for a revival with the new licenses

Until recently, Europe was widely regarded as a GSM-only zone.

Indeed, that uniformity was one of the chief advantages of the
region, in communications terms, over the US and Asia. But in
its third generation, W-CDMA, GSM has been less obviously the
right choice than it was in earlier iterations. This is not just be-
cause of the well publicized delays and teething troubles in de-
ploying the technology, or the high price of the licenses, which
excluded many players from an upgrade path for their services,
but because alternatives are looking more attractive in certain
markets in terms of price/performance and the business model.

And spectrum is now becoming available for some of these alter-

natives. For high bandwidth applications, the main contenders
are WiMAX, which can take advantage of the rush of 3.5GHz
auctions going on around Europe, and Flarion Flash-OFDM,
which can work in many bands. Flarion is also relevant to the
other main area of challenge to GSM hegemony, technologies
that operate in the 450MHz spectrum formerly occupied by ana-
log mobile telephony. Once the exclusive preserve of Qual-
comm’s CDMA450, these bands can now also support Flash-
OFDM, and it is not inconceivable that WiMAX would look to
create a profile here too.

The 450MHz technologies have remained obscure in Europe un-

til the past year. Now they are being driven by various trends.
Regulators are under pressure to auction licenses, to give opera-

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tors a new option for expanding their networks, especially in

rural areas, without the expense of W-CDMA. Germany is the
most significant country to make this move, awarding licenses
at the turn of the year to T-Mobile and Inquam. It will be fol-
lowed by Sweden and probably the Netherlands, Finland and
Ireland, with the UK also expressing interest. Also, the trend is
accelerated by the entry into the European Union of some coun-
tries from eastern European, where 450MHz is far more com-
monly used.

German licenses:

The main advantage of the 450MHz spectrum is that signals use

a broader cell radius, so that up to 80% fewer base stations are
required for coverage, a major economic advantage in sparsely
populated areas. T-Mobile is the largest operator yet to plan a
450MHz deployment, and is widely expected to use Flarion’s
gear. Last year, Flarion signed a development and OEM pact
with Siemens to create a version of Flash-OFDM for this band,
and since T-Mobile is an investor in the start-up, and is trialling
its gear in other bands in The Netherlands, it would be a logical
choice – though the German cellco says it is weighing up the
CDMA450 option too.

Its main aim is to deliver business-oriented services in

450MHz, reducing some pressure on its other networks and giv-
ing it the opportunity to develop specific services for corpo-
rates. It will offer PAMR (public access mobile radio) services.

Cell coverage and ra-

dius in 450MHz
Source: Flarion

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A wideband successor to narrowband PMR (professional mo-

bile radio), both have grown from the public safety sector and
are designed for use by non-office workers. Businesses pay for
their own private network, offering better security and quality
of service than general access cellular.

PAMR also lies at the heart of Inquam’s business (Inquam

owns the Dolphin PAMR network in the UK, France and Portu-
gal and operates similar services elsewhere.) The company
claims there are 20m workers addressable by PAMR in Europe.
There are two technologies specifically aimed at PAMR –
GSM-based Tetra2 and CDMA-based CDMA-PAMR – though
Flash-OFDM could be adapted for this too. Key applications
are in the blue/grey collar sector for functions such as security,
construction, logistics, healthcare and utilities, or any job where
workers are on the move or in non-office sites but need access
to company data.

Inquam’s major shareholder is Qualcomm and its business

model rests on buying 450MHz spectrum, or taking stakes in
spectrum holders, in order to spread the CDMA450 and
CDMA-PAMR technologies.

Although CDMA is facing a competitor in this spectrum for the

first time, it is likely that the overall market will grow signifi-
cantly for all players in Europe, both for PAMR business net-
works and general purpose cellular communications where W-
450MHz allocations

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CDMA is inefficient. In Russia, Moscow Cellular Communica-

tions and Delta Telecom have both deployed CDMA450 net-
works from Lucent while UralWestcom is trialling Nortel kit.

Other markets:

The top four CDMA manufacturers (Lucent, Nortel, Motorola

and Ericsson) have all launched 450MHz gear, as have two Chi-
nese players, Huawei and ZTE. Huawei sees CDMA450 as a
relatively easy route into Europe as it seeks to establish itself in
the west in many areas of networking. It has three customers for
CDMA450 so far - BelCel of Belarus, JSC Uzbecktelecom in
Uzbekistan and the Inquam Dolphin network in Portugal.

Hard on the heels of Germany, Sweden’s regulator, PTS, has in-

vited operators to apply for a 15-year national 450MHz license
following lobbying by the cellcos. The license will be conditional
on covering 80% of the landmass of each Swedish county and
will be awarded in March.

The Irish regulator has issued a consultation paper and request

for expressions of interest for the 450MHz band and authorities
in the Netherlands, the UK and Finland are also actively consid-
ering how best to allocate and use the 450MHz band.

Also pointing to the expansion of 450 out of a small niche is the

roll-out of the first network using the EV-DO third generation
version of CDMA in the 450MHz band. All previous deploy-
ments have used the current x1 RTT version. The EV-DO system
has been supplied by Nortel to Czech carrier Eurotel Praha and
will support data rates up to 500Kbps for a low capital expendi-
ture compared to conventional CDMA or GSM. With its greater
power, it solves some of the problems of thin spectrum spread
that affect x1 RTT in the 450MHz spectrum and could be par-
ticularly valuable in rural regions where there is limited wireline
broadband infrastructure.

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Critical success factors in WiMAX’ make or break year

• WiMAX must gain credibility and uptake this year or risk losing out
• Rapid path to testing and certified products is vital
• New spectrum choices will be more important than harmonization
• Intel-style laptop card will not be the only important CPE
• 2005 will decide whether WiMAX is one standard or one among many

It is clear that 2005 will be the make or break year for WiMAX.
Every wireless chip and equipment maker of note bar Qual-
comm is now part of the WiMAX Forum; the planned harmoni-
zation of 802.16e with Korea’s Wi-Bro could create the first
unified global standard for both fixed and mobile communica-
tions; WiMAX could quite realistically be the basis, in later it-
erations, of 4G.

Yet it remains, at the start of 2005, a phantom technology. Stan-

dards are ratified but not equipment has yet been tested or certi-
fied for compliance; most of the assumptions about the pros and
cons of WiMAX are based on experience with proprietary
broadband wireless, operating with very different business
models and cost structures.

Two things are certain in this hazy picture – WiMAX has the
potential to be the most disruptive communications technology
since Marconi, and it will only achieve this is significant mile-
stones are achieved during the year ahead, in order to maintain
confidence and momentum and fend off the challenge from the
cellular community.

We believe that the critical success factors for WiMAX are as

follows. All carry risk, and all are to some extent dependent on
the others. Demonstrating concrete progress towards most of
them in 2005 should ensure a high level of success for Wi-
MAX, while failure could enable the cellular community –

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those players with their fortunes bound up in UMTS, for instance

– to sideline it by gaining sufficient traction for their own alterna-
tives that WiMAX loses its killer edge.

Rapid certification:

Vague timescales for availability of ‘real’ certified WiMAX gear

are damaging confidence and making it hard for would-be adopt-
ers to plan. They have to make the choice of gambling on a ven-
dor’s pre-standard gear, hopefully with a firm migration plan like
that offered by Wi-Lan, or delaying roll-out and potentially los-
ing market advantage.

Realistic CPE roadmap:

Intel has done more than any other company to create interest in
WiMAX, but it has also attracted accusations that it is driving the
standards too close to its own agenda – creating a mobile broad-
band wireless network that will spur sales of PCs and other de-
vices, rather than focusing on other important applications.

It has laid out an ambitious program for the evolution of a very

low cost customer premises equipment (CPE), embeddable by
2006 in a notebook card and by 2007-8 in a mobile phone. Since
the falling cost of CPE is the most critical factor in justifying the
WiMAX business model, as against proprietary alternatives, it is
vital that the roadmap materializes and confidence in it is re-
tained.

Development of software and applications:

The 802.16 standards cover only the physical and MAC layers
and WiMAX still looks somewhat sparse in terms of higher level
functionality and added value. Companies like Motorola are
working hard to coordinate efforts to rectify this, and start-ups
focused on such areas should do well. There is also a need to
identify and develop usable applications that are distinct to Wi-
MAX, so that its operators avoid competing merely on the basis
of a price war with DSL or cellular.

Enterprise applications will be particularly important, since cor-

porate uptake will help lure big service providers and instil confi-
dence in the technology. But to succeed in the enterprise, aspects
such as security and quality of service, although already strong in
WiMAX, must be rock solid.

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Spectrum policy:

Limited spectrum options could be a brake on WiMAX’ pro-

gress. Initially, equipment will be available for 3.5GHz, which
will lead to a goldrush in parts of Europe, and in unlicensed
5.8GHz. While unlicensed bands will be attractive for early,
low risk experiments in deploying WiMAX, 5.8GHz has lim-
ited range and is no use for mobility, while enterprise and
fixed/mobile services will require the quality of licensed bands.
In 5.8GHz WiMAX will compete with Wi-Fi hotzones and this
could turn into a price war.

The next profile will be in 2.5GHz for the US MMDS bands,

but these are tied up by a small handful of operators – including
Clearwire and Sprint, which look likely to create a duopoly in
national broadband wireless networks that could be leased to
other players. Availability of spectrum, and profiles, for other
bands will be critical to WiMAX’ mobility objectives, allowing
full non-line of sight and cellular-like performance. Wi-Bro, the
Korean technology that will be the basis of 802.16e, was de-
vised for 2.3GHz and companies like Intel are eyeing the ‘holy
grail’ of sub-2GHz spectrum, but all will depend on the policies
of regulators in different territories.

Moves to mobility:

There is huge interest in the upcoming mobile version of the

WiMAX standard, 802.16e, but also a lot of hype and false ex-
pectation. To avoid an anti-hype backlash of disappointment,
the IEEE needs to ensure that the standard is ratified in timely
fashion and with minimal political battling. This will enable
realistic roadmaps to be set and will prevent too many vendors
fragmenting and confusing the market by launching ‘pre-
standard’ proprietary solutions for mobile operations, that may
force a difficult upgrade path later.

Moves by major vendors:

There is no doubt of the commitment of the major chip vendors,

Intel and Fujitsu, but for large operators to come on board – es-
sential to establish WiMAX as a global contender – the major
equipment suppliers must also have clear strategies. Although
all the vendors with whom these large customers are accus-
tomed to deal, from Lucent to Ericsson, are now in the WiMAX
Forum, few have concrete product plans. The main exception is
Motorola, while Siemens and Alcatel have OEM deals with Al-

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varion and Navini. But clearer signals from other large players
would be a major boost, giving operators the confidence that they
can buy from their usual manufacturers and that there will be a
choice of suppliers capable of meeting their service, volume and
quality demands.

All these criteria are capable of being met this year if the commu-
nity remains focused, confident and reasonably united, and if the
regulators take a sensible approach. Many milestones have al-
ready been crossed – the 802.16-2004 specification was created
with remarkably little delay and political upheaval, by IEEE stan-
dards, and a major split over the mobile version was averted by
the agreement by Intel and LG to integrate 802.16 and Wi-Bro.

The WiMAX Forum has had some success in its goal of attract-
ing operators to its ranks, with big names like AT&T setting out
ambitious WiMAX plans, and Sprint likely to join soon; though
it has been less effective in influencing regulators (perhaps focus-
ing too much on trying to achieve global harmonization of spec-
trum policy, rather than on getting new bands opened up for Wi-
MAX).

Already, the specter of WiMAX is prompting the cellular sector

to upgrade its technologies more rapidly than originally expected,
and to look towards future migration to OFDM platforms such as
802.16. Just the promise of WiMAX has been disruptive already.
For it to fulfil that disruptive potential, however, the technology
needs to be tried and tested in a short timeframe, or it risks disap-
pointing expectations before it is even launched in earnest.

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MobilePro seeks to cash in on cableco interest in wireless

MobilePro funds chip development through network of operators
Basing future on WiMAX, Wi-Fi and VoIP
Has CLEC licenses in 10 states as well as ISP business
Points to new combined business model as demonstrated by Clearwire

With the cable industry increasingly interested in broadband

wireless as a way to enter the ‘quadruple play’, MobilePro is one
start-up looking to cash in. The company, founded as a designer
of chips for the ZigBee short range wireless standard, has been
financing that project – and creating a viable business in its own
right – by buying up broadband wireless operators in the US.
Now it hopes to attract cable partners to take this business to a
new level.

Its business model is to build services expertise in internet ac-

cess, VoIP and other areas based on WiMAX and Wi-Fi, and
then to partner with more capital-rich companies such as cable-
cos, looking to expand into the wireless arena. It is now explor-
ing alliances with at least one cable operator for VoIP.

MobilePro has yet to generate any revenue from its ZigBee chips
and antennas, which are still in the development phase, but it re-
ceived a 100m capital investment from Cornell Capital Partners
last May to buy up ISPs and small telcos, which will offset high
R&D costs, provide an ongoing revenue stream and generate
cash to fund further development of the chips.

In following this strategy, it is building a far reaching network in

underserved US markets, based on Wi-Fi and WiMAX. As well
as its conventional wireless internet operation, it has a voice divi-
sion, which holds CLEC licenses in 10 states and puts it in a po-
sition to offer bundled services, either directly or leased to a lar-

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ger brand. As cablecos and other service providers look towards

bundled packages of offerings from video to mobile telephony,
such companies will be in an increasingly strong position, as the
larger example of Clearwire illustrates (see separate item).

MobilePro has bought 10 ISPs in seven states with a total of

70,000 internet customers over the past six months. Most have
had revenues of around $2m a year, and the names include Shre-
venet, Fiber Network, Web One and T1 Connect, though some
have been larger, such as the $25m Close Call. Last July alone, it
closed acquisitions of Clover Computing, an Ohio ISP, and US1,
a Kansas City long distance provider with customers in 40 states.
It has also signed purchase deals with Dallas-based CLEC
CommSouth, Michigan CLEC Affinity Telecom and Houston
ISP Crescent Communications.

On the CLEC side, MobilePro is licensed in 10 states with

110,000 customers and can offer local, long distance, Verizon
Wireless and Covad DSL services here, and in other areas where

“
it has resell arrangements.

An interesting acquisition was of Davel, with $50m a year in

revenue and 25,000 payphones in 42 states, mainly in retail and
The 14 acquisitions we commercial locations. With this network, MobilePro aims to ex-
made this year start to pand out of its current residential base into small businesses, and
fit together. You can to use the payphones as Wi-Fi or WiMAX access points for
also infer what addi- building hotzones and municipal networks in unlicensed spec-
tional acquisitions may trum. It aims to create public access hotspots in 2,000 payphone
make sense for us points by the end of this year. Its first municipal hotzone deal is
Jay Wright, MobilePro in Shreveport, Louisiana.

”
"In December 2003, we decided to pursue a strategy of acquiring
profitable broadband telecommunications service providers,"
stated an addendum to MobilePro’s 10K filing with the SEC last
summer. "These acquisitions are intended to provide revenue to
us and, to the extent they remain profitable, provide cash to fund
development of the ZigBee [802.15] chip and other projects."

The strategy is starting to bear fruit. MobilePro announced its

first ever revenues in March 2004, of around $310,000, following
its first acquisitions. Now it has moved to a $100m revenue run
rate with positive cashflow, seeing its stock price rise eightfold in
the past year and its market cap 16fold. Davel is expected to gen-
erate $1m per month in EBITDA by this April, while the ISP di-
vision is running at about $525,000 per quarter in revenue.

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In a letter to shareholders in December, CEO Jay Wright said that

the key for 2005 will be integrating the various acquisitions,
while pushing ahead with the chip business, called Neoreach.

“The 14 acquisitions we made this year start to fit together,” he

wrote. “Davel provides cashflow and 40,000+ access points for a
potential nationwide wireless network. CloseCall America pro-
vides a brand, a billing and customer support platform, and a su-
perior manager in Tom Mazerski. Affinity brings us the Red
Cross and Special Olympics brands. The ISPs bring us local pres-
ence, cashflow, management talent and a large customer base.
You can also infer what additional acquisitions may make sense
for us.”

The goal is to have $500m in revenue by the start of 2007, with

1m customers and over $80m in EBITDA.

Copyright Rethink Research Associates 2005 19

 WiMAX Watch

News Highlights:

Airspan acquires VoIP specialist

WiMAX was originally conceived as a data-oriented technology
but, as in the Wi-Fi world, there is rising interest in its potential
to carry voice over IP. The WiMAX equipment makers are rac-
ing to expand their voice capabilities to address this nascent mar-
ket, as highlighted by Airspan’s announcement that it will ac-
quire VoIP specialist ArelNet of Israel.

ArelNet is a provider of voice-oriented broadband wireless gear,

and Airspan will pay $4m in cash plus $4.7m in stock. ArelNet
specializes in VoIP infrastructure, making soft switches, gate-
ways and other products supporting all major VoIP standards.

Airspan will use this technology to enhance the voice aspects of

its WiMAX-ready products and to develop new carrier class
voice solutions based on 802.16 that will promise the same qual-
ity of service levels as traditional telecoms networks. Airspan is
also working to support mobile voice in compliance with the as-
yet unfinalized 802.16e standard.

Airspan, whose product range also spans non-WiMAX bands

such as 700MHz, made its most recent sale last month to Neda
Telecommunications of Afghanistan.

Completion of the ArelNet transaction is subject to Airspan's

completion of due diligence, approval of ArelNet's shareholders
and the District Court of Tel Aviv, and regulatory approvals.

NextWeb joins WiMAX Forum

NextWeb, the largest fixed wireless ISP in California, has joined
the WiMAX Forum, which has set a target for 2005 of expanding
its membership among operators. The Forum, which put signifi-
cant effort into attracting service providers last year, signing
names such as AT&T and BT, is still often perceived as being
driven by the agenda of vendors.

New members such as NextWeb will help change this. The ISP
has been highly active in launching broadband wireless services
in California and in campaigning for measures to avoid interfer-
ence and overcrowding in unlicensed 5GHz bands. It has a clear

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WiMAX Watch

roadmap for basing new networks, or upgrades to existing ones,

on WiMAX equipment in future.

Currently, NextWeb has 2,000 customers among medium-sized

businesses throughout California and uses proprietary OFDM-
based networks. Its service is available in 175 towns and is posi-
tioned as a low cost alternative to T1 or bigger leased lines, by-
passing the wireline network charges and also competing on the
basis of rapid set-up compared to wired links – less than one
week from order – and high speed. NextWeb claims its users
typically get 30% higher performance than a T1 at 70% of the
price, and systems can be scaled up to match six T1s without spe-
cial equipment.

CEO Graham Barnes commented: "We have been using a tech-

nology platform for many years that is similar to what the Wi-
MAX Forum is working to standardize, and applaud the efforts
of its members to further interoperability, higher performance
and greater functionality of fixed wireless broadband technology.
We also appreciate the efforts the WiMAX Forum has made to
increase awareness for this technology, as that will only help our
industry grow.”

NextWeb recently signed a VoIP partnership with Level 3 Com-

munications and will launch a voice service for its customers in
the middle of this year.

It has made a string of acquisitions of ISPs, with four in the past

two years - Innetix of San Jose, California, World Wide Wireless
Networks of Orange County, Oakland-based Libritas and finally
SkyPipeline, from another wealthy Californian area, Camarillo.

NextWeb uses equipment from Axxcelera, with roof-mounted

base stations covering a three mile radius, supporting 250 sub-
scriber units each with user rates of 25Mbps, and will migrate
these to WiMAX. In November it announced that it was upgrad-
ing its backbone using microwave radio systems from Alcatel, to
cope with expanding demand.

By focusing on business rather than residential, and on SME in

order to avoid the long sales cycles of the top enterprises,
NextWeb now boasts ARPU of $470 per month and achieved
positive cashflow a few months ahead of schedule. Scalability is
key to fixed wireless advantages, says the company, which
claims it can double the number of customers on its network for
only 10% of variable costs.

Copyright Rethink Research Associates 2005 21

 WiMAX Watch

NextWeb also offers a sub-1Mbps, SLA-less offering for small

businesses. This is not its key focus and, like other providers, it
says it is hard to make a business model based on such services
in the developed areas, since DSL is so price competitive. But it
offers the option for companies that may, in future, grow into
wanting the full platform – and will step up this focus when Wi-
MAX subscriber equipment falls to commodity prices.

In 2004, the company was named one of the 50 fastest growing

Bay Area companies. It is profitable and is backed by strategic
investors including Asset Management Partners, Cedar Grove
Investments, Kaiser Permanente, Monet Capital, Saints Capital,
Sage Venture Partners, and Sunsino VentureGroup.

WiMAX operators to gain from FCC ruling

Broadband wireless operators have welcomed the FCC’s Decem-
ber ruling that incumbent local exchange carriers (ILECs) in the
US no longer have to open up their networks at subsidized prices.
While the major impact of this change in policy has been to spur
the largest local carriers, the RBOCs, to step up their fiber net-
work plans, wireless providers like Towerstream, which sell their
services on the basis of undercutting the wireline vendors, be-
lieve they will benefit too. Competitive local exchange carriers
(CLECs), which could previously access the network at low
rates, will now see their cost base rise, making wireless even
more attractive in terms of rates.

Phil Solis, an analyst with ABI Research, commented: “Fixed

broadband wireless access solutions are a true form of competi-
tion for the last mile. The FCC's ruling will force CLECs to raise
their prices, and this will hurt their business. This is good news
for ILECs and good news for all true competitors."

TowerStream, which operates business-oriented services based

on pre-WiMAX gear in major cities such as New York, com-
mented: “The only way to avoid the impending rise in prices is to
bypass the ILEC's wires altogether.”

"The FCC ruling casts uncertainty over the CLEC industry for
months and perhaps years to come," said Jeff Thompson, the op-
erator’s president. "Subsidies have been steadily declining, and
have now reached the point where ILECs will have no con-
straints to raise their T1 prices in dense urban areas.”

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WiMAX Watch

Navini adds OSS partner

One of the possible obstacles in WiMAX’ way is a shortage of
supporting software, especially operations support systems (OSS)
of the caliber operators expect in the cellular world. Pre-WiMAX
vendor Navini is addressing this through a partnership with OSS
specialist Rodopi Software, combining this with its Ripwave Ele-
ment Management System.

Rodopi and Navini plan to work with operators to leverage their

combined technologies, offering an automated platform for ser-
vice providers, aimed at small and medium WISPs.

Rodopi's solution is a web-based application that allows online

provisioning and network management. The Rodopi-Navini solu-
tion enables automated online billing and customer care opera-
tions.

Copyright Rethink Research Associates 2005 23

 WiMAX Watch

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