Nortel: The Dilemmas of Wireless Broadband Adoption
Published on: 31st October 2007
The primary concern is the cost of handsets, which according to Kevin Taylor, Nortel's VP for mobility and converged core networks, can amount to 70% of an operator's costs when launching a new service. That cost can easily translate into a prohibitively high cost of the service for the end consumer.
Taylor recommends regulators and operators look at ways of achieving economies of scale to try and bring handset prices down.
In South and Central America, the two main mobile telecoms giants America Movil and Telefonica have a lot of buying power, which brings down the cost of handsets.
The Caribbean on the other hand is dominated by two much smaller companies Cable & Wireless and Digicel.
Taylor believes the trade association of Caribbean telecoms operators Canto could promote cooperation among the different players, consolidate their purchasing power and therefore have a better chance of bringing the cost of handsets down when negotiating with big suppliers such as Nokia, Sony Ericsson, Samsung and LG.
Without such cooperation Taylor sees the adoption of mobile broadband services in the Caribbean at the mercy of the speed with which terminal handset market prices fall globally.
"If you can't get the scale on terminals, then ultimately that is going to create problems in building out the service. I think we're going to see that again in WiMax. We see that in EV-DO [CDMA-based 3G technology] and I think you'd see that in UMTS [umbrella standard for 3G technology], which is one of the reasons it may not make sense to build out a UMTS network in the Caribbean," Taylor said.
Another challenge is that voice is still the killer application in the Caribbean - and most parts of Latin America - and the networks in many countries have speeds only equivalent to GPRS, or 2.5G technology. In the Caribbean only a few countries are moving towards EDGE, which has speeds closer to 3G.
Nortel therefore believes regulators ought to think long and hard before launching auctions for wireless broadband technology and choose the one that most suits their market, Taylor says.
Nortel is working with operators to show them the value of advanced applications and trying to help them understand how these can drive opportunities. Many trials are being carried out but no country in particular is taking the lead in the Caribbean.
The company offers both WiMax and cellular mobile technologies and Taylor believes many operators will opt for a hybrid of the two.
On the one hand WiMax technology will give an existing mobile operator the ability to offer higher bandwidth and services that could be marketed to the tourism industry, which is the mainstay of many Caribbean economies.
For mobile operators not wanting to invest in WiMax technology and licenses but offer more value added services on their existing networks, EDGE Evolution is an alternative as it enables operators to deliver data rates close to 3G while utilizing their existing GSM infrastructure and spectrum licenses.
Adequate Spectrum for WiMAX
One point that regulators should consider when auctioning WiMax spectrum is that they auction enough for each operator to launch adequate services. Regulators should be thinking of auctioning at least 30MHz of spectrum for operators interested in offering mobile WiMax, according to Taylor.
Some countries in Latin America are talking about auctioning off 12MHz blocks, which in Taylor's opinion is restrictive and drives down the overall value of the license for potential interested parties.
Nortel's vision for the future of WiMax is that eventually a whole range of devices will be connected to the network and for that reason operators need to have enough spectrum to develop new services to suit the particular demands of their markets.
"Nortel has been carrying out a campaign of mass connectivity in the belief that anything that is capable of being connected to a network will connect to a network. So when you get into scenarios like that you're going to need more spectrum in WiMax as a number of these devices, be it iPods, Sony Play Stations or your refrigerator, are going to require more spectrum capacity," Taylor said.