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WiMax backers upbeat despite economic fears

WiMax rollouts in developed countries may suffer, but in developing nations the need for widespread Internet access is so great investment will continue.

Even after Monday's stock market drop in the US and a general tightening in the financial sector, WiMax equipment makers and wireless operators at WiMax World remain optimistic.

Several industry executives said the biggest impact of any sustained financial downturn will be on WiMax rollouts in developed countries such as the US. But in developing nations, the need for widespread Internet access is so great that investments are likely to continue.

"You can't think of a time in history where there is so much pent up demand for [WiMax]...," said Ben Wolff, CEO of Clearwire, which is setting up a joint venture with Sprint Nextel to run a nationwide US WiMax network. "WiMax will thrive.... The industry needs to seize the opportunity before us."

Wolff's comments came during a keynote on-stage interview here at WiMax World, just days after Sprint Nextel launched its Xohm WiMax service in Baltimore.

Wolff didn't address how smaller carriers might get the billions of dollars in loans from lenders needed to finance new WiMax deployments. But that might not as big a problem for the Sprint Xohm network that Clearwire is merging with. The new Clearwire venture, expected to close by the end of the year, has been valued at US$14.5 billion, including more than $3 billion from Google and cable companies.

Several other WiMax industry executives agreed with Wolff, saying that despite an obvious tightening of credit, many carriers around the globe have already secured financing for WiMax deployments and in some cases are relying on government funding. Some governments, especially in developing regions of the world, are using WiMax to leapfrog the need for wired networks in poor and rural regions.

"WiMax is the fastest way to cross the digital divide," so some governments in emerging countries find it necessary to invest in the technology even in bad economic times, said Kevin Suitor, vice president of marketing and business development for Redline Communications in Markham, Ontario. Redline is a maker of WiMax devices and infrastructure.

Suitor said studies have indicated that some Asian countries see WiMax and related broadband technologies as a way to reap a tremendous return on growth in Gross Domestic Product. Redline tells carriers eyeing its technology that they can receive a return on their investment in as little as 18 months, since the cost of deploying a WiMax network is less than many other technologies.

"There's such high growth" with WiMax in emerging countries, he said. "I suspect the impact in those areas from the economy should be isolated, but I'm not an economist."

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Allen Nogee, an analyst at In-Stat, said it can cost up to US$10 billion to build cellular base stations for an entire national network in a country of average geographic size. "That's pretty expensive," he said in an interview.

Even if WiMax turns out to be cheaper than alternatives, it generally requires more cell towers per region than other wireless technologies, given the pecularities of the spectrum WiMax uses. "It's harder to get good coverage, and more base stations are needed," Nogee said.

In general, Nogee said it seems obvious that a new WiMax project might face financing problems, given the current economic slowdown. "It will certainly be hard to get funding," he said.

But Ron Resnick, president of the WiMax Forum, argued in a keynote address that governments, including leaders in India, are aware of the value of bringing WiMax to millions of people who want a broadband Internet connection, but don't have a wired infrastructure to get it easily.

Resnick ticked off a list of countries where operators have started networks, including in India and the Caribbean, and then quickly added subscribers, due to pent-up demand.

"Money is always an issue" with emerging technologies, added Mohamma Shakouri, vice president for the WiMax Forum, in an interview. But he said that outside of the US, especially, WiMax growth should be healthy. "The world economy is in better shape than here."