The Company That Might Destroy WiMAX

Each year, at the Mobile World Congress in Spain, executives at leading telecom companies unite to talk about the Next Big Thing on your phone.

For Verizon (NYSE: VZ  ) , that's LTE, or Long-Term Evolution, a 4G wireless broadband alternative to the WiMAX technology backed by Intel (Nasdaq: INTC  ) and Comcast (Nasdaq: CMCSA  ) , among others, and delivered by Clearwire (Nasdaq: CLWR  ) and Sprint Nextel (NYSE: S  ) .

Verizon Chief Technology Officer Dick Lynch on Monday said that his company's LTE deployment is on track to go live this year, News.com reports.

Why this matters
A broadband battle between LTE and WiMAX has been brewing for years, with WiMAX rolling out faster internationally, thanks to global equipment suppliers such as Alvarion (Nasdaq: ALVR  ) . In October, a collaboration of vendors successfully tested WiMAX roaming in Taiwan.

Here in the U.S., it's a different story. WiMAX hasn't caught on as fast domestically, because there's already so much wired broadband infrastructure, unlike the developing world. WiMAX networks also have to be built from the ground up, whereas LTE is being built upon existing carrier networks -- Verizon's, for instance.

The net impact of Verizon deploying LTE first may be negligible. We've known its plans for a year.

Meanwhile, AT&T (NYSE: T  ) is also planning an LTE rollout -- in 2011. As my Foolish colleague Anders Bylund points out here, the former Ma Bell is taking her time to ensure a smooth upgrade from her existing 3G network.

Verizon is upgrading first, betting that customers will add equipment to try LTE even as the carrier works on building a bridge to its older 3G EV-DO network, for areas where its fastest connections are unavailable, News.com reports.

In short: The move is an experiment. But if Clearwire and Sprint Nextel can't do more than rely on combination routers, Verizon's LTE leap of faith could stunt the growth of WiMAX.

Who will win the broadband war, LTE or WiMAX? Does there need to be a winner? Share your thoughts in the comment box below.

Alvarion is a Motley Fool Rule Breakers recommendation. Intel and Sprint Nextel are Motley Fool Inside Value picks. Motley Fool Options has recommended subscribers buy calls of Intel. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock picking team. He owned shares of Alvarion at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is maxed out on disclosure for tonight. (Yawwwwwwwwnnnnnn.)


Read/Post Comments (10) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 17, 2010, at 3:52 PM, conradsands wrote:

    Verizon and AT&T = The Most Expensive Wireless Companies in America

    Wireless Profit Margins:

    Verizon Wireless = 45 percent

    AT&T = 39 percent

    Sprint = 18.2 percent

    Now we know where Verizon and AT&T get all that money to run commercials 24x7 and pay out big executive bonuses -- the American consumer.

  • Report this Comment On February 17, 2010, at 6:08 PM, WimaxoverLTE wrote:

    Destroy Wimax? How about deploy your first LTE Tower, maybe catch up to the 700K customers using Wimax in the US then you can join the conversation of wireless broadband.

    good luck ATT/VZ...your about 5 years behind.

  • Report this Comment On February 17, 2010, at 6:17 PM, ddeleo wrote:

    I'm not sure I have ever read a positive comment or positive analysis in a Motley Fool article concerning wimax in the U.S. Even before these technologies became tangent as they currently are, wimax always took a back seat in your articles. Rather than bringing into play the positiveness of the companies driving LTE and/or why LTE might be better in your analysis, you simply chose to down play and negate the potential of the WIMAX technology itself. Back when Wimax and LTE were more theory than tangiable, I would think it would have been natural to have taken a more "lets watch this pony race and see what happens" perspective, giving your readers insights on both technologies. But instead, even back, then when it was simply theory you insisted on being the tech experts and subtly casting your vote against WIMAX. With more current articles, such as this one, you continue this trend. I have to say though, in regards to this article, that it's nice to finally see a spec of objectivity in your writing as you chose to use the objective word "Might" in the title. Unfortunetly the rest of the article was the usual from the Motley Fool concerning WIMAX - casting doom and gloom. For example why has there never been mention in your WIMAX articles about backhauling. For no matter what happens, backhauling will keep WIMAX relevant in the U.S. Including that in your articles would be objective - you are observing each camps strength and weaknesses and each technologies strengths and weaknesses and writing about the weight of each, then summarising with a possible opinion, pros, cons, etc. Anyways, it is kindof nice your same ol' same ol' perspective continues because what will happen out there in the real world, specifically the U.S., will happen in spite of the articles. If that happening turns out to be WIMAX and your articles keep the stocks low prior to that happening, its a win-win for the U.S. wimax believers.

  • Report this Comment On February 17, 2010, at 6:28 PM, RobinsonHome wrote:

    As anything, it all depends on the price.

    WiMax is currently positioned as "computer" internet access and wants to push into the phone domain.

    LTE is currently positioned as "phone" internet access and wants to push into the computer domain.

    To my knowledge the major carriers (in the US) all discourage "tethering" (connect your computer to the internet via your phone) by charging hefty prices for those who do this. If they treat LTE the same way, LTE will be a limited proposition. If they position it as a technology that can eliminate your ISP, then you've got something more interesting.

    If Wimax is built into handsets (think google) and the network has sufficient coverage, then it could eliminate the need for a cellphone plan.

    I believe the technical obstacles for either option will be cleared in the near future. This one all comes down to business decisions and how the technology is priced. Looking at "current" pricing policies combined with Android (potential game changer), my bet goes to Wimax.... if and only if coverage is quickly rolled out across the US.

  • Report this Comment On February 18, 2010, at 4:29 PM, TMFMileHigh wrote:

    Hello ddeleo,

    Thanks for your note.

    >>Rather than bringing into play the positiveness of the companies driving LTE and/or why LTE might be better in your analysis, you simply chose to down play and negate the potential of the WIMAX technology itself.

    You've missed quite a bit of coverage, then:

    http://www.fool.com/investing/high-growth/2008/02/20/innovat...

    http://www.fool.com/investing/value/2008/12/01/wimax-set-to-...

    http://www.fool.com/investing/general/2009/10/27/wimax-gets-...

    http://www.fool.com/investing/high-growth/2009/06/19/meet-th...

    Certainly I and others have expressed what I consider to reasonable skepticism that WiMAX will trample LTE, but as the Fool who recommended Alvarion to Rule Breakers subscribers, I'm as bullish about its long-term prospects as any.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On February 19, 2010, at 3:53 PM, jackrobertwilson wrote:

    Please, Have you tried AT&T home INTERNET lately. You may be surprised to find out it does not work, it is far too slow. They just can't get their act together.

  • Report this Comment On February 21, 2010, at 3:35 PM, Rushster wrote:

    @WimaxoverLTE-I don't believe Clearwire has 700K customers, unless you're also including the Expedience customers (pre WiMax deployed markets). Even then I don't think it's close.

    @Susan-Clearwire is only unmatched in quality if you include just yourself. Your network stats are no where near the class of the larger carriers. LTE is also an all IP network (using ethernet backhaul) so there is no difference in that aspect. I would also challenge the spectrum notion, where VZW & LTE have quite a substantial holding in more valuable (RF wise as far as penetration rates) 700Mhz spectrum.

  • Report this Comment On February 23, 2010, at 9:28 AM, wirelessdoctor wrote:

    Hello there:

    I have read all your comments and thank goodness we can hear everyones opinion this way.

    I have been involved in many fixed and mobile WiMAX deployments around the world. And let me tell you that whatever the executives from big Telcos like AT&T , Verizon , etc tell you about LTE is not true. Most 3G networks currently are scared of WiMAX , and basically are scared of change. I remembered the times when these operators were saying no to Mobile WiMAX , yes to LTE, but they don't know that Mobile WiMAX (the IEEE802.16m version) is 90% similar to LTE, the only thing that changes are the way the Uplink is handled and the operating frequency range. Migrating a 3G to either WiMAX or LTE will required new hardware and substantial investment, since the processing of SOFDMA takes a lot of processing power and in the core network there will also be substantial investment since current 3G core network is not compatible with a LTE or WiMAX all IP network.

    Bottom line don't believe everything they said, see for your self, go visit each of these operators you mentioned and see what they really have. It is all about creating consensus, and if you have a true mobile WiMAX IEEE802.16e Wave 2 MIMO , migrating to LTE will be much much easier and less costly than migrating a 3G networks to LTE. That is why a lot of WiMAX manufacturers are now making Mobile WiMAX Base Stations with the "LTE Ready" sticker.

    The advantage will most likely be for the telcos who have and are currently deploying Mobile WiMAX networks around the world, since the are gaining subtantial experience operating a network that is very similar to LTE.

  • Report this Comment On February 24, 2010, at 4:43 AM, condorsoft001 wrote:

    Hi all, I am writing this from Sydney Australia and I just subscribed to Unwired the Wimax service provider ad 1024/256. I am amazed how this leaves the 3G behind and screams, ofcourse not as fast as the cable and ADSL2 but for the price, I am very satisfied. I put my bets on the Wimax service providers.

    cheers

    Bruce

  • Report this Comment On May 31, 2010, at 8:56 PM, AJL203PSU wrote:

    "WiMAX hasn't caught on as fast domestically, because there's already so much wired broadband infrastructure, unlike the developing world. WiMAX networks also have to be built from the ground up, whereas LTE is being built upon existing carrier networks"

    Seems to me that WiMax will be the choice in emerging markets without infrasctructure. LTE will be better in developed nations. Most likely both will win depending on the host market.

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