Virtually all inhabitants of large cities use mobile phones these days and quite some of them do require not only voice communications, but also rapid data transmission and Internet access everywhere. That said, cell networks operators are now gearing up to launch WiMAX networks in order to address that needs. Some analysts even believe that the majority of operators will have to launch WiMAX networks within the following years.

Though both cellular and WiMAX have unique strengths due to their origins, there is overlap, and they will compete in certain markets, ABI Research firm believes. Recently Sprint operator has announced a partnership with Motorola to conduct wireless broadband trials in 2005 and 2006 for future interactive multimedia services. O2 lately also concluded a four month WiMAX trial in Ireland, delivering broadband services to households and small businesses over a broad area.

“It may be true that the first step was easier for Sprint because they have plentiful 2.5GHz spectrum and for O2, WiMAX was a natural extension of the WLAN hotspots they have deployed across Ireland. But every cellular operator is going to have to consider WiMAX in their strategic planning,” said Alan Varghese, principal analyst of semiconductor research at ABI Research.

The analyst cites five reasons for cell network operators to deploy WiMAX:

• Cellular network congestion due to high speed data;
• Multimedia take-rates;
• Spectral efficiencies and cost per bit of transmission;
• Operator frequency spectrum strategy;
• The vision of delivering personal broadband.

This will have a disruptive effect on the product strategies of the entire ecosystem, starting with infrastructure manufacturers, CPE and handset OEMs, all the way to semiconductor vendors, ABI Research thinks.

Various versions of WiMAX allow devices to connect to a network at speeds of up to 70Mb/s in the range of 31 miles around the “access point”. 3G is next-generation implementation of cellular phone technology, such as GSM, that allows to connect to the Internet at the speeds of up to 2Mb/s (depending on the situation and network settings).

Considering that WiMAX requires considerable sums to be invested in networks and infrastructure before the system can even be turned on, can the operators make money? ABI Research believes there are three ways they can do so without cannibalizing their existing businesses: two of them involve raising revenue; the third has to do with reducing costs.