This article is part three of a six-part online series that culminates with a final analysis feature in Oct. 9 issue of Telephony. The other parts in this series can be found on our WiMAX World Page.

If there is such a thing as an entrenched upstart, Alvarion fits the definition. The run-away leader in WiMAX’s first, fixed-wireless iteration, Alvarion has a global market share of 81%, according to Sky Light Research. That’s a heck of a position to start from in any new industry. But every percentage point of that market share was gained without the interference of the Tier 1 infrastructure vendors and, in the case of OEM agreements, with their help. Now that those same vendors have chosen to enter the market with Mobile WiMAX products, Alvarion has suddenly relocated to a very big pond, where it’s not only a small fish--it’s swimming against barracuda.

Alvarion isn’t the only guppy. Aperto Networks, Airspan Networks, Redline Communications and a few others led WiMAX’s first wave based on the IEEE 802.16d standard. They helped build the broadband wireless sector into a $500 million a year industry today. But if Mobile WiMAX lives up to its hype and turns broadband wireless into a multi-billion dollar annual industry, than those companies will find themselves competing against the likes of Alcatel-Lucent, Motorola, Samsung, Nortel Networks and Nokia Siemens—all global companies with billions of dollars in annual revenues, sales tendrils into every major operator and R&D divisions that dwarf the overall staffs of their smaller competitors.

It’s a daunting contest by anyone standards, but Alvarion CEO and president Tzvika Friedman said his WiMAX shop is up to the challenge. Through a combination of selling into its existing customer base of regional ISPs and competitive providers and extending its fixed WiMAX partnerships to the Mobile WiMAX space and by producing a very flexible and varied product line, Friedman said, Alvarion can carve itself a modest 10% market share—enough not only to survive in what is expected to be a highly competitive marketplace, but for a small vendor like Alvarion, enough to thrive.

“I know the tendency is to say the big guys will come in and force the small guys out,” Friedman said. “We have some execution challenges, but I don’t think we’re blind to those challenges. We’re cutting those challenges up and addressing them one by one.”

Alvarion’s biggest advantage is its established customer base of fixed-wireless operators around the world. It has installed its 802.16d-compliant BreezeMAX base station and customer premises equipment in 180 networks from Kenya to Chile, landing contracts with established wireline carriers such as Deutsche Telekom’s T-Com as well as broadband wireless startups. Today it announced its 802.16e base station for the 2.3 GHz and 2.5 GHz bands. That may be the first kit Alvarion submits to the Forum for certification, but it certainly won’t be the gear it will sell to its existing customer base, because most of those customers are locked out of those spectral bands. Instead, Alvarion is targeting the other potential WiMAX bands at 3.5 GHz, planning a dual-technology chassis that will support both fixed and mobile iterations of the technology. That will be the attractive proposition for the growing number of operators deploying fixed wireless, Friedman said. With the exception of Siemens, no Tier I vendor has an in-house fixed WiMAX solution—it’s either a new mobile network or nothing at all.

Outside of that existing customer base of small operators and big customers making small deployments, Alvarion runs into trouble. A dozen small deals can’t add up to the scale of single multi-billion dollar national rollout such as the one Sprint announced last month. Tier 1 carriers opt for Tier 1 vendors, which would seem to shut Alvarion out of the loop. Alvarion, for its part, didn’t even compete for Sprint contract, whether it was for lack of desire or for lack of invitation. Friedman said Alvarion isn’t under the illusion that it can pursue a major nationwide deployment the scale and scope of the Sprint deal alone. But, he added, Alvarion can do it with partners.

While Alvarion’s impressive list of OEM partners for fixed WiMAX won’t translate into mobile WiMAX agreements (those manufacturers have their own mobile WiMAX lines), there are still vendors without a mobile WiMAX strategy. IBM has already announced a partnership with Alvarion to use its infrastructure in public safety and governmental networks contracts, and Friedman claimed that Alvarion is already in discussions with other Tier I vendors for either straight-up OEM resale agreements or more equitable partnerships, in which both companies would jointly pursue contracts.

Friedman would not confirm which companies those might be, but considering that the number of major vendors without a WiMAX portfolio is dwindling, helped along by vendor mergers, the choices are limited. Ericsson is the most obvious, but as the world’s largest mobile networks manufacturer, it has consistently denigrated WiMAX as an unnecessary technology. Nokia’s WiMAX strategy is still unclear but it plans to make an announcement at next week’s WiMAX World, and if its networks merger with Siemens goes through, it will have instant access to the German vendor’s WiMAX portfolio. It might be on the other side of the network equation that the Alvarion’s biggest partnership opportunities lie. Cisco is world’s largest IP infrastructure dealer, and has made a substantial business with Wi-Fi. Cisco partnering or acquiring Alvarion or another vendor could make it an instant WiMAX competitor.

“Don’t take Sprint as an example that we won’t go after a big account,” Friedman said. “Sprint was an example of an account that was not within our strategy or resources to win. It doesn’t mean we won’t pursue them in the future, and it doesn’t mean we wouldn’t pursue a similar-sized account tomorrow. … We’re not sitting passively waiting to be approached. We are actively selecting contracts to go after that fit with our strategy.”

Until those purported partnerships materialize though, Alvarion will likely have to stick to what it knows, the WISPs. And while it may have unquestionable dominance in that niche today, it could face challenges—not only from other fixed WiMAX equipment providers but also possibly from the Tier I vendors. While conventional wisdom has it that the big players will go after the big contract, the little operators will also be looking to take advantage of the potentially enormous economies of scale Mobile WiMAX can offer. Since WiMAX is a fully standardized technology, they will be free to look at any vendor for their infrastructure and particularly their CPE needs. TowerStream, which uses Aperto and Alvarion gear to sell T-1 replacement services in several major U.S. markets, may pursue spectrum in the upcoming 700 MHz auction, TowerStream CEO Jeff Thompson said. If the nationwide carriers grab the same spectrum, spurring the major vendors to release 700 MHz WiMAX gear, he said, TowerStream would suddenly have a whole new array of choices available to it.

“We’re not as handcuffed technology-wise as we were before,” Thompson said. “We’ve had great success with the Apertos and Alvarions of the world, but we can’t ignore these bigger vendors with enormous scale.”

That possibility is still far off, however. While TowerStream and other WISPs have their sights set on fixed wireless deployments and pure broadband access, the big vendors are focusing obsessively on mobility. The smaller operators are using different spectrum than their larger counterparts and so far the Mobile WiMAX community is accommodating the latter, submitting their 2.3 GHz and 2.5 GHz equipment to the Forum for certification, rather than the 3.5 GHz gear most smaller WISPs are using for fixed or portable services.

Ironically Alvarion’s biggest opportunity for success in WiMAX might come if the technology fails to live up to its hype. If Sprint remains the only Tier I vendor to deploy WiMAX, the market will remain small and the carriers diverse, said Peter Jarich, wireless infrastructure analyst for Current Analysis. The Tier I vendors are awfully good at supplying big rollouts to a few dozen major customers, but most of them wouldn’t know what to do with a market divided among hundreds of tiny customers, he said. There would be some exceptions (Motorola did surprisingly well with its Canopy proprietary gear) but most of the Tier Is would likely pull out of the market, Jarich said. That would leave a lucrative—though not enormous—business for Alvarion and its fellow specialty vendors.

“There seems to be a big question hanging over the industry: “Will WiMAX be successful?” Jarich said. “If you think about it, that’s a really dumb question. There are two markets for WiMAX. There will be fixed wireless, which Alvarion, Redline and Aperto have sold to for a while; and there will be mobile broadband. If mobile broadband doesn’t take off, WiMAX will still take over from those proprietary fixed wireless products today. WiMAX will be successful. It’s just a question of how successful.”

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