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Who will win the wireless wars?

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New wireless access technologies are arriving with the promise of anywhere, anytime high-speed Internet access. Led by WiMAX, these technologies can provide connections to customers where wired and conventional cellular networks come up short. Billions are being spent on newly freed radio spectrum and on infrastructure and user devices to put that spectrum to work.

More importantly, open spectrum auctions and open interfaces to standardized devices will spark battles for customers among a multitude of service providers: established companies, start-ups, wired and wireless, public and private. Who will be victorious in these battles, and what can we expect?

Look at who holds licensed spectrum. Sprint Nextel owns the biggest chunk of 2.5 GHz licenses in the U.S. and has unveiled a WiMAX overlay on its existing networks. Clearwire, an upstart WiMAX carrier, is using its 2.5 GHz licenses to offer an alternative to wired broadband in targeted U.S. markets and has signed up nearly 300,000 customers, ranking it 12th among U.S. wired telcos. Clearwire and Sprint now say they'll partner for a nationwide WiMAX network with joint roaming. AT&T owns the 2.3 GHz licenses it acquired from BellSouth and has until 2010 to roll out services. It likely will use them for WiMAX in rural areas.

Last year's Advanced Wireless Services auction of 1.7 and 2.1 GHz band licenses attracted 104 buyers who anted up a collective $13.7 billion for 1087 licenses around the U.S. Large wireless and wired carriers were responsible for 98% of the spending, but the remaining 94 winners are an eclectic mix of rural telcos, cable companies, municipalities, private network operators and investor groups. WiMAX, again, is the likely technology of choice to put this spectrum to work.

The upcoming 700 MHz auction will attract another wave of competitive warriors. Although the big, deep-pocketed carriers will be leading the charge to acquire this spectrum, expect a gaggle of new players hoping to cash in on the wireless access land grab. AT&T made a pre-emptive strike, which set the tone for the auction, by paying $2.3 billion for a large block of existing 700 MHz licenses. The advantage of 700 MHz is that its propagation characteristics allow transmission over longer distances and at lower radiated power with minimal interference from weather and obstructions, making it less expensive to deploy in this band. While WiMAX Forum-certified products in the 700 MHz band are not yet available, strong market forces will likely speed the product cycle.

In addition, WiMAX in the 5.8 GHz range is a global standard that provides WiMAX speeds, but over shorter distances. Its low start-up costs, especially with no cost for spectrum, will draw many “guerrilla fighters” into the mix.

And just when you thought you understood WiMAX, along comes long-term evolution (LTE), a GSM derivative for high-speed wireless data. Verizon and Vodafone have declared their intentions to adopt LTE as their 4G alternative. No LTE standard exists today, so products and services may be a long way off. Whether these players will be able to sit on the sidelines while wireless wars are waged on the WiMAX front remains to be seen.

Who will win the wireless wars? It's too early for even astute observers to make such a call. What is certain, however, is that demand for high-speed connections, both hard-wired and over the air, is soaring, with no end in sight. That alone is enough to draw big and small combatants, along with their respective arms merchants, into a protracted, high-stakes battle.

John Celentano is president of Skyline Marketing Group. He can be reached at john@skylinemarketing.com.

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