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Future is Ripe for WiMAX VoIP
Written by Frank Ohrtman
Monday, 12 September 2005
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Future is Ripe for WiMAX VoIP
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By providing the ability to bypass incumbent telcos (see WiMAX as a Local Loop Alternative), and because of its potential as possibly the best “bang for the buck” delivery vehicle of converged triple (or even quadruple) play, WiMAX (IEEE 802.16) is emerging as the standard that will have the greatest impact on VoIP in the near future. While it is not a VoIP standard per se, WiMax has the potential to turn the industry upside down.


WiMAX is a last mile wireless broadband access as an alternative to cable/DSL/T1. It provides fixed/portable/mobile non-line-of-sight wireless broadband from a base station with a cell radius up to 6 miles point-to-multipoint and a non-line-of-sight throughput of 40 Mbps per channel for fixed and portable access applications.

A mobile version of the WiMAX standard, known as 802.16e, is in the works and will make its debut in 2006 or 2007. Some vendors are shipping proprietary versions of mobile products. Projected mobile deployments include 15 Mbps cell radius of 2 miles with enough bandwidth per cell site to support hundreds of businesses with T1 speeds and thousands of residences at DSL speeds.

The WiMAX standard is based on the DOCSIS (data over cable service interface specification) standard. WiMAX will be in notebook computers and PDAs in 2006. Nokia has announced a WiMAX handset will be available in 2007 and other vendors may beat them to the market. Wireless ISPs and rural telcos are already incorporating WiMAX VoIP into their access models. The addition of IPTV adds a video component.

Bypassing the “Last Mile”

I began selling VoIP platforms in 1998. More than once, I was told by my superiors, “I want you to call on tier one service providers only. I don’t want you wasting any time on any Farmers Coop Telephone Company!” This meant, in 1998 through 2001, I was supposed to convince the RBOCs and Big Three long distance companies that they should dump their multibillion dollar investment in circuit switches for my VoIP gateway or softswitch. As I am not alone in my humiliation, I don’t feel bad in my total failure to convince USWest or GTE to see the light on VoIP. The rest of the VoIP industry, to date, has failed to switch a single RBOC central office to VoIP.

VoIP service providers would be wise to package their services with a WiMAX service provider, which would allow them to undercut competitors by offering a less expensive local loop alternative to telco T1/DS3 local loop charges. In addition, the VoIP service provider partnered with the WiMAX service provider is free of its dependence on the incumbent telco for UNE-P, UNE-L, installation delays, billing problems, etc.

As long as the PSTN is primarily copper-based and connected to circuit switches in RBOC central offices, there is only marginal opportunity for the vendors of VoIP gear such as media gateways, softswitches, feature servers, session border controllers, etc. Once the incumbent’s copper wire last mile can be bypassed, the other 99 percent of the telephony market can be reached.

Saving with WiMAX VoIP

Capital expenditures (CAPEX) and operational expenditures (OPEX) traditionally have presented such huge cost structures that they ensured monopoly standings of telephone companies. What is really interesting about WiMAX VoIP is that it potentially offers a cost structure that some argue is as little as 1 percent of traditional CAPEX/OPEX structures.

While some argue that WiMAX is being overhyped, when one considers WiMAX as part of a wider value network (telephony in this case) and applies it to a legacy industry (mobile telephony, for example), we begin to see real potential for WiMAX VoIP.

MeshDynamics (http://www.MeshDynamics.com) provides a cost comparison of legacy cellular vs. Wi-Fi VoIP. This comparison can be applied to WiMAX VoIP OPEX estimates as well. In their analysis, the total cost per user for three years, including CAPEX and OPEX for their Wi-Fi VoIP model is $241 using the G.711 codec (64 Kbps + VoIP overhead) and $117 with the G.729 codec (8Kbps + VoIP overhead). The overall cost-per-minute-per-user, including the cost for DS3 Internet connections as well as installation, service, and maintenance costs, is put at .027 cents using the G.711 (64Kb) codec. If this is compared to the overall cost for cellular at 5 cents, the mesh solution beats cellular by 200 times. Even if cellular sold at 2.5 cents, their Wi-Fi VoIP solution is still 100 times more cost effective.


Delivering Services


We’ve all heard a lot about the so-called “triple-play” or “quadruple-play” where one service provider offers voice, video, and data (triple play)—add mobile voice and data for quadruple play. Such models on the market today are rather awkward, where an incumbent telco offers their traditional TDM voice with DSL internet, others may discount satellite TV and resell a cellular provider’s service.

There are a lot of misleading elements in this picture. First, there is no truly combined billing. This lack of automation can prove expensive to the would-be all-in-one service provider. More importantly, the margin on reselling another service provider’s product may prove much thinner than offering the service by one’s self. In short, it’s a nice marketing play, but falls far short of the industry ideal of one service provider having ownership of the network and enjoying a healthy margin in offering a triple or quadruple play.

Owning a network that will enable a triple or quadruple play using conventional technologies is prohibitively expensive in the current telecommunications market. Costs of deploying fiber-to-the-home (FTTH) range from $1,000 to $2,000 per home and do not permit mobility. Adding technology that will permit broadband Internet and video over copper (telco TV) is helpful, but the cost per subscriber may not offer an advantageous cost structure and, again, this does not offer a high margin mobility play.

Simply put, the only cost effective means of delivering a true quadruple play is via a wireless (enables mobility), integrated, all-IP network. There has been much talk over the last five years of 3G and 4G networks being offered by cellular providers; however, they have yet to materialize. Part of the reason may be the cost of that infrastructure.

As a few VoIP service providers profitably demonstrate their independence from PSTN infrastructure, I would predict a stampede to the exit. That is, the abandonment of telco copper for WiMAX by alternative VoIP-based service providers. An interesting scenario includes enterprise subscribers having a choice of multitudes of VoIP services—not unlike Vonage, Lingo, 8x8, and others that are now available via DSL or cable modem. Given the low CAPEX/OPEX barriers to entry to the WiMAX delivery market, no one dominant player could block VoIP on their network without risking a loss of subscriber base. The WiMAX service provider that offers the most open network wins.

Frank Ohrtman is an independent telecom consultant and the author of several books, including Softswitch: Architecture for VoIP and Wi-Max Handbook: Building 802.16 Wireless Networks. He can be reached at [email protected].

http://www.voip-magazine.com/content/view/461/