WiMax Rollout Outpacing Government Broadband ‘Investment’

Published August 1, 2009

Clearwire Corp. is building a high-speed wireless network in the Silicon Valley this summer, another sign government efforts to provide free or subsidized broadband are becoming largely redundant in addition to being costly and ineffective.

Clearwire, backed by wireless pioneer Craig McCaw, said its network is based on WiMax, an emerging technology expected to be capable of blanketing entire cities with high-speed wireless Web access. The current project will initially cover more than 20 square miles in the Silicon Valley, home to many high-tech companies.

Clearwire cochairman BenjaminWolff announced the plan during his keynote speech in Las Vegas this spring at the annual showcase of the wireless telecommunications technology association CTIA.

Seeking ‘Qualified Developers’

Wolff said Clearwire would bring its wireless service to the campuses of two of its financial backers—Google and Intel—and will provide the service free for “qualified developers.”

Cisco Systems will provide the equipment for the wired connections between the network’s wireless towers.

In addition to the mobile WiMax network in the Bay Area, Clearwire plans to cover up to 120 million people with its wireless service in more than 80 cities by the end of 2010. These will include Atlanta, Baltimore, Charlotte, Chicago, Dallas/Ft. Worth, Honolulu, Las Vegas, Philadelphia, and Seattle.

Good Early Reviews

“This has already been rolled out in Atlanta,” said Atlanta-based telecom and wireless industry analyst Jeff Kagan. “Clearwire offers high-speed wireless Internet connectivity, like a wi-fi hot spot, but covers an entire city instead of just a store.

“It gives subscribers the ability to have high-speed wireless Internet access anywhere in the city. The company plans on rolling this out in market after market,” Kagan added.

The effort in Atlanta and a few other cities is backed by several large companies who not only support the rollout but also intend to market the service to their customers.

Government Failures

The Atlanta rollout is a good example of the private market successfully driving technology, Kagan said.

“We have seen the government try to enter this space; however, that generally fails,” Kagan said. “The technology changes too quickly, and government, since it is not a company and does not care about profitability, does not take care of customers with service and innovation the way a company would.

“Government can support this private industry rollout, [but] it does not do a good job of competing,” Kagan added.

Beating Government Efforts

“We feel Clearwire’s WiMax rollout and expansion is a great thing, as it delivers a service to meet end customers’ accelerating demand for mobile broadband,” said Paul Obsitnik, senior vice president of business development at BridgeWave.

“We feel the marketplace is in the best position to meet these needs [and] do not view the federal government’s efforts as a ‘competitive’ alternative,” Obsitnik added.

Obsitnik said the market will continue to roll out these networks regardless of whether the government hands out money for them. But while demand is accelerating, mobile broadband is still an expensive option for the average consumer.

“The public funds being discussed are around making the economics more attractive to operators and service providers, either through network subsidies to reduce the cost of building the network or through end customer incentives to further increase the demand for mobile broadband services,” Obsitnik said.

“As we see it, the objectives are less about the federal government building a competitive provider and more about providing incentives to increase broadband deployment in order to achieve public policy/social goals as well as provide stimulus to an ailing economy,” Obsitnik added.

Government Investment a Waste

Allowing the market to handle the development has economic benefits as well, says Azita Arvani, president of Arvani Group, Inc., a boutique strategic consulting firm based in Los Angeles.

“Once the objectives are aligned, implementation by the private sector is generally more cost-efficient,” said Arvani.

“With the economics as they are today, mobile broadband rollout and adoption will increase at a certain pace,” Obsitnik added. “The government does have the capability to increase that rollout and adoption rate. In the near term, it will be cheaper for the government not to invest here.”

Phil Britt
([email protected]) writes from South Holland, Illinois.