special report What technology can blast data up to seven times faster and a thousand times further than Wi-Fi?

Officially known as IEEE 802.16, WiMax could be the broadband story of 2004, thanks to backing from industry heavyweights like Intel, Nokia and Alcatel. Analysts expect it to account for anywhere from 10 percent to 50 percent of the wireless market within ten years -- and products haven't even shipped yet.

While Wi-Fi hot spots provide wireless Internet access over distances of up to 100 feet, Wi-Max networks cover distances up to 30 miles. This means it has the potential to provide broadband access in rural areas that are too far from exchanges to provide wired or Wi-Fi access.

Distances up to 30 miles
"The biggest potential market for WiMax is residential users and small businesses," says Richard Dineen, a research director with Ovum. "In Europe, there are plenty of areas where people live too far from an exchange to get broadband, or the terrain is too hilly to lay cables. In that situation, WiMax does something that DSL can't."

WiMax is also likely to be used in places like campus sites, says Jeff Orr, product marketing manager at wireless hardware vendor Proxim. "There could be a company's headquarters, its manufacturing plant and a few remote locations all within close proximity to one another," he says. "To use a wired fibre-optic solution to network all of these buildings together would be an extremely expensive proposition. WiMax could offer a better total cost of ownership than a wired solution because recurring monthly costs of multiple T-1 and E-1s could be avoided and would come at a much lower cost than trenching."

One of the strongest selling points of WiMax over other broadband access technologies is its scalability -- one base station can support thousands of subscribers without lowering performance. With a Wi-Fi network, administrators usually notice a drop in performance if more than 10 people access the Internet simultaneously. WiMax supporters also say that the technology is more flexible than the alternatives -- service providers can offer multi-megabit broadband services to rural underserved markets at distances of up to 70 kilometres and WiMax doesn't depend on a line-of-sight to provide service.

Costs have held WiMax back
The underlying technology of WiMax has been around for several years, in various forms. WiMax is a user-friendly name associated with the IEEE 802.16 standard. 802.16 is designed to support last mile BWA (broadband wireless access) -- the wireless connection from a major trunk line to a business or residential user. While vendors have been providing proprietary solutions for many years now, it's only recently that suppliers have agreed on standards for wireless broadband access, and the WiMax Forum was created. WiMax promises to standardise the equipment, making it interoperable and more affordable.

The involvement of Intel has helped to further push standards, which has reduced the cost of WiMax kit enormously, Dineen says: "One of the reasons this technology hasn't succeeded so far has been cost --- base stations and related infrastructure costs could total upwards of $25,000," he says. "WiMax is still expensive compared to DSL or Wi-Fi, but it's getting less so."

Internet virtually anywhere
WiMax kit should be widely available by the end of 2005, letting people access the Internet virtually anywhere. Analysts expect prices of WiMax technology to fall even further once Intel incorporates WiMax into laptops and PCs in the same way it currently builds in Centrino for Wi-Fi connectivity.

Whereas first generation WiMax suppliers charged as much as $1,200 for every customer site, this year's WiMax base stations cost around $500. Thanks to standardisation, prices should plunge even further in the future, to less than $200 for the gear that sits at the customer's site. Then, when WiMax migrates into laptops, the cost to buy into it will edge toward zero.

Pyramid Research, one of the few analyst groups currently tracking WiMax, believes that four million people will be using the technology by 2008. Revenues from broadband wireless services -- which are mostly based on WiMax -- could top $2.1bn annually by that time.

"We're very confident in the numbers of the industry analysts that say 10 to 20 percent of customers will be served by an alternative access technology such as WiMax," says Zvi Slonimsky, chief executive of the industry's largest WiMax supplier, Alvarion. "This will be a billion dollar market in the very near future."

A billion dollar market?
Alvarion is one of the first companies to bring WiMax technologies to market, with its BreezeMax platform. The platform includes built-in QoS for differentiated voice and data services and a very high spectrum utilisation, making it extremely cost-effective, says Slonimsky. "You get up to 280Mbps per base station -- enough to simultaneously support hundreds of businesses with T1/E1- type connectivity and thousands of homes with DSL-type connectivity," he says.

There are some barriers to WiMax's success. Some observers argue that consumers don't need yet another internet access technology, and that DSL and Wi-Fi are in too strong a position for WiMax to succeed. Currently, DSL accounts for 70 percent of European high-speed internet access, according to Ovum.

One of the technology's limitations is that WiMax isn't designed for mobile use, adds Proxim's Orr. "The price-points and form factors of current WiMax products will not be appropriate for vehicular speed mobility," he says. "In this sense WiMax will extend the coverage area provided by Wi-Fi, as opposed to 3G, which is best suited for high mobility, low data rate applications."

Who needs another wireless technology?
Despite the challenges, Pyramid Research predicts that network operators will spend $5.4bn over the next four years on broadband wireless gear. For consumers and business users, WiMax could deliver increased broadband competition, lower prices, and more freedom. That's a combination worth some consideration.

ZDNet UK's Sally Whittle reported from London. For more coverage on ZDNet UK Insight, click here.

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