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Why WiMAX is Still a Broadband Contender

While mobile broadband is mostly "a business of tomorrow," some early consumer response is quite promising. Clearwire, a U.S. startup with $2 billion in financing including investments by Intel and Motorola, says it has achieved penetration rates of 10-15 percent in seven areas where it has offered its wireless broadband service for at least 11 months.

"This low-double-digit penetration rate from Clearwire is about double expectations of a mid-single-digit penetration," notes Kagan Research senior analyst John Mansell.

Telecommunications giants are scrambling to carve out a beachhead in wireless broadband either with their own proprietary systems or aligned with the WiMAX Forum, an industry group setting standards. Broadband wireless will require billions of dollars for spectrum licenses, technology development and infrastructure to deploy nationally -- since current cell phone technology and infrastructure is inadequate.

"The holy grail is true mobility in wireless broadband that would be analogous to today's mobile phone service but with faster speeds," says Mansell. "But we're not there yet. Service providers today are offering at best just portability that is experienced in hotspots."

WiMAX aims to drive down costs by standardization, which also will facilitate roaming capability allowing customers to be handed off between different carriers. "While there's a growing consensus WiMAX faces a significant set of financial, technical and regulatory challenges, there's also tremendous upside," Mansell writes in a Kagan Research report.

"At mid-year, of the 400 million with Internet access worldwide, there were about 100 million dial-up and 300 million broadband subscribers. Only 1-2 percent of the broadband subscribers were wireless." Like I've said before, it's essentially an open field.

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