| YTL Communications Sdn Bhd's (YTL Comms) WiMAX network is still in the deployment phase, but if everything goes according to plan, the company is expecting to eat into the wireless broadband market of the incumbent telcos.
The model YTL Comms is employing might best mirror the method used by Apple's iPhone which has enjoyed tremendous commercial success.
The iPhone revolutionised the smartphone business by letting consumers decide how services are to be integrated and facilitate the delivery of content through applications, or "apps". It seems that YTL is trying to replicate this model using its WiMAX platform.
"My opinion is that there is no killer app," Wing K Lee, the CEO of YTL Comms, tells The Edge. "We are interested in an integrated service offering...but from our perspective, convergence is a matter of Internet compatibility. If you are Internet compatible, then you deliver convergence."
In a nutshell, that is what WiMAX, the next generation 4G technology, offers — a very broad, mobile pipe that allows Internet fidelity, delivering speeds that are on a par with some wired connections today. It is about mobile connectivity on a level that far surpasses traditional 3G speeds.
Michael Lai, the CEO of Packet One Networks Sdn Bhd (P1), the WiMAX arm of Green Packet Bhd, agrees with the assessment.
"We're all at a mobile Internet tipping point where we will see mobile broadband surge as more and more mobile devices become Internet-centric. This year, more people will want to be connected to the Internet from almost anywhere and anytime," he tells The Edge in an email.
"A virtually limitless amount of content on the Internet today is IP-based, and this is exactly the technology on which WiMAX is architected. In essence, anything that is developed for the Internet is developed for WiMAX.
"At the heart of it, WiMAX is not about technology, but about life. Mobile broadband has brought about a sea change in the broadband landscape. As WiMAX-embedded devices become more commonplace, people will not only adapt to WiMAX, but also demand it in their daily lives."
P1, which launched its WiMAX offering in late 2008, now has over 140,000 subscribers in its base. So far, its biggest competitor has been major fixed-line incumbent Telekom Malaysia Bhd and its Streamyx offering. Although at its best, WiMAX and fixed-line broadband should be complementary, Lai says WiMAX has the advantage of offering fixed connectivity should the need arise.
"All telcos, regardless of technology, will have to play their part in meeting the country's 50% broadband penetration target by the end of 2010," he adds. "Wired and wireless technologies complement each other in their unique ways. WiMAX is a single network that is capable of providing fixed, portable and mobile connectivity."
YTL Comms, which is proposing to wire up the entire peninsula by the end of this year with a WiMAX network, is one of the dark horses that threaten to take away the mobile broadband monopoly once enjoyed by traditional telecoms players like Celcom and Maxis.
On the other hand, P1, which at this time remains a portable rather than a mobile broadband service, still bills itself as a substitute for fixed-line connectivity, albeit with a portability component.
The interesting proposition in YTL Comms' plan is that it proposes an altogether different model when it comes to providing integrated services. Instead of bundling content with its offering, akin to Telekom Malaysia's IPTV service, the plan is to let users decide which services they want integrated with their device.
Effectively, packages offered by telcos such as TM come with IPTV while YTL Comms is leaving that choice to the customer.
"Our belief is that if you're Internet compatible, you'd better be in line with the Internet innovation model. The Internet creates a low entry barrier environment for developers to come in, put the best ideas out there and let the world judge whether it is the best idea," says Wing.
Towards that end, YTL Comms is putting up the US$1 million MyPrize, which is a competition to reward WiMAX innovations in applications. Wing says the reason for the prize is to encourage developers to come up with software and applications that take advantage of the capabilities of WiMAX. MyPrize, which was scheduled to close last March, has now been extended to September owing to popular global demand.
YTL Comms has, since mooting the project last year, signed a 25-year deal with Telekom Malaysia (TM) to use its fibre-optic backbone, and has started signing tower-sharing agreements with incumbent players. It has also signalled its intent by increasing its base station order to Samsung — from 1,900 to 2,500 pieces.
"In the last three months, we have continued to build the key foundation pieces to ensure that we can deliver this nationwide service," Wing says.
What may well pose the biggest threat to the incumbent telecoms players is that YTL Comms is planning on offering mobile voice on the devices it provides its customers.
The company has already lined up a number of strategic partners such as Samsung and GCT, which should give some indication of what devices are in the line-up. Samsung already has a WiMAX cellular phone in its stable and Lee says more "cool devices" are to be expected.
Meanwhile, P1, through parent Green Packet, has introduced a number of innovations to the market. It is also working with chipmaker Intel to integrate WiMAX capabilities into the new chipsets.
Lai agrees with Wing that WiMAX broadband innovation has to go beyond access — it should "not be viewed as an end in itself". Why WiMAX is appealing
The problem facing traditional telcos is that the existing 3G network has a capacity issue, especially in the face of data-hungry devices such as the iPhone, as well as the proliferation of 3G mobile broadband. The architecture of the traditional network is also such that providers have to set aside bandwidth for voice and for data, which means even more bandwidth limitations for the end-user.
The classic, albeit contentious, example is that of AT&T in the US. When the iPhone was launched, the popularity of the Apple phone meant that its data network was quickly clogged by users who streamed massive amounts of data from the Internet. According to a technology research house Bernstein Research, the average iPhone user in the US consumes five to seven times the monthly bandwidth of the average wireless voice subscriber and twice the amount of the average smartphone user.
The US carrier has since spent millions on improving its networks. But with iPhone popularity holding steady and the number of apps increasing daily, it is a losing battle. The problem has worsened to such an extent that AT&T is considering instituting usage-based pricing, meaning that the amount charged is dependent on the amount of data used.
And that's just the iPhone. Here, not only have we seen a proliferation of the Apple device on the Maxis network — and now the DiGi network as well — but there are about a million mobile broadband users who access the web through their laptops, netbooks and desktop computers.
Malaysians are broadband-hungry, which makes the government's 50% broadband penetration rate by the end of 2010 an achievable target. The other side of the coin is whether existing networks can support that number of users.
Some of the incumbent telcos are already recognising the limitations of their existing networks and have taken steps to increase their capacity. Maxis, for example, is in the midst of deploying its high speed packet access+ (HSPA+), which should provide speeds that are comparable to those of WiMAX. However, it is faced with similar limitations that traditional 3G networks carry, which is that it has to still allocate space for voice and data in its pipe.
Also, a white paper study by Intel shows that WiMAX outperforms HSPA+ in terms of capacity, quality of service (QoS) and the number of subscribers supported per cell. However, Intel is a well-known WiMAX backer, and the delivery of service in laboratory conditions differs significantly from real-world situations.
Despite the exciting possibilities presented by WiMAX, its story is still very much at the beginning stage. WiMAX, at its best, is not meant to substitute fixed-line players. Whatever the merits of WiMAX, it does not have the capability of delivering high-definition television for protracted periods, for example. It will also be limited by the amount of global coverage as WiMAX is still not as ubiquitous as traditional cellular technology.
What it does offer, at least theoretically, is wireless broadband coverage that exceeds the capacities of most incumbent telecoms players, especially in areas where wired connections are impossible to hook up. It will certainly have a role to play in the broadband wars anticipated over the next few years, and will more than likely eat into the mobile broadband revenue of incumbent telcos.
The sustainability of WiMAX, however, will very much depend on whether it can deliver the speeds and bandwidth capacity that it claims on paper. It is a newcomer to the game and will find it difficult to prise customers away from incumbent telcos if its service is not noticeably superior to what is available now. This article appeared in Corporate page of The Edge Malaysia, Issue 801, Apr 12-18, 2010 |
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