Mumbai: The world’s largest computer chip maker, Intel Corp., which promotes the so-called wireless inter-operability for microwave access, or Wimax, technology as the standard for wireless broadband Internet, now says it may support the rival Long Term Evolution (LTE) technology.
“Question is, (in the) long term is LTE much bigger? Possibly yes, quite possibly yes,” said Tom Kilroy, Intel’s global sales and marketing head. “Whenever LTE makes it to the market, Intel will support LTE.”
Looking ahead: Intel’s Tom Kilroy says Intel will support Long Term Evolution whenever the new technology enters the market.
Wimax and LTE are similar but competing technology standards that telecom operators can choose between for offering wireless broadband services. Intel, which earned $35 billion (Rs1.41 trillion) of revenue in 2009, manufactures chips that make computing devices Wimax-enabled. LTE is backed by another chip-maker, Qualcomm Inc.
In June, India auctioned wireless broadband spectrum for Rs38,540 crore, with just one company—Infotel Broadband Services Pvt. Ltd, now owned by Reliance Industries Ltd (RIL)—emerging as a pan-India operator. Qualcomm participated in the auctions and won access to four regions, or circles.
Kilroy, who met local telecom operators during his trip to India last week, said Intel was not “religious” about Wimax and its research and development (R&D) plans are geared to support LTE if that technology becomes the industry standard.
But the chip-maker continues to bet on an interim Wimax phase as network equipment for LTE is evolving slowly.
For Intel, the uptake of Wimax by Indian operators translates into demand for Wimax-enabled devices. India, with low Internet and computer penetration levels, offers a huge opportunity for companies such as Intel.
“They (Indian telecom operators) have signed the big checks, they’ve got the spectrum,” said Intel’s managing director, sales and marketing, South Asia and India head Sivakumar Ramamurthy. “These are like tomatoes on the shelf; they tend to rot if you don’t make use of them. And you paid for that already.”
He added that the operators know if they want to deploy a technology today, they have only one choice—Wimax. “The question is: Do you jump in, go the whole hog and build that business out, and then figure out what your long-term strategy is?”
RIL, which bought Infotel after that company won the pan-India spectrum, talked about the spectral efficiency of LTE but remained silent on Wimax in a statement announcing its entry into telecom space.
RIL’s choice of technology is crucial as others are likely to follow suit to avoid being sidelined from a technology perspective as well as to ensure smooth inter-operator roaming for users.
Mint reported on 6 July that Tikona Digital Pvt. Ltd, having spectrum to offer wireless broadband in five telecom circles, will go with RIL’s choice of technology.
Analysts tracking the evolution and adoption of these competing technologies appear to have already called the game in favour of LTE in the long run.
“There is increasing momentum around LTE,” said Jim McGregor, chief technology strategist at Arizona-based market researcher In-Stat, who has tracked Intel’s business over several years. “LTE will take away the lion’s share from Wimax as the future is definitely tending more towards LTE.” Wimax is facing a fall in support, both among operators globally and telecom equipment makers.
Clearwire Corp., Intel’s $1.6 billion Wimax vehicle and one of the largest Wimax operators in the US as well as globally, has already stated its intent to consider LTE as the technology standard going forward. So has Yota, the Russian Wimax operator.
Among network equipment makers, Cisco Systems Inc. and Telefonaktiebolaget LM Ericsson have been slowly withdrawing support for core Wimax equipment.
NTT DoCoMo Inc., the largest telecom operator in Japan, and Verizon Wireless, one of the largest carriers in the US, are set to roll out LTE-based network by December. Another US carrier, AT&T Inc. has awarded equipment contracts to Alcatel-Lucent and Ericsson for LTE’s commercial deployment in 2011.
The moment of truth for Intel came in January 2009 when it announced writing off $950 million from the value of its investment in Clearwire, based on the current market valuation of the company listed on the US technology exchange Nasdaq.
Besides its $1.6 billion investment in Clearwire, it has invested in $43 million in UQ Communications in Japan, $26 million for buying radio spectrum in Sweden, $15 million in Packet One Networks in Malaysia, besides unknown amounts in similar projects in Egypt, Mexico and Taiwan to promote Wimax.
“They have invested a considerable amount through Intel Capital, but have never broken that information out, but it is likely many times higher than the company’s investment in Clearwire,” In-Stat’s McGregor said.
Intel Capital is Intel’s venture capital arm.
“We’re certainly proud about the investments we’ve made in Wimax. We are steadfastly behind our partners and we will continue to support them, and stand behind Wimax,” Kilroy said. “On the other hand, we will support LTE when it comes out.”
Asked if it is possible that Intel may have recouped its investments in Wimax through device sales, McGregor said, “No. Not a chance.”
Even as Intel appears to be signalling its willingness for a course correction, analysts say it is not as though Intel backed the wrong horse.
“Intel backed a technology that evolved from the computing industry, and then LTE evolved from the telecommunication industry and got wider acceptance.” said McGregor.