Catalysts for Innovation: Comparing Verizon and Clearwire Open Developments

By Robert Syputa, Senior Analyst and Partner
Contact the author at robert@maravedis-bwa.com

The WiMAX and LTE deployments pursued by Clearwire and Verizon are pivotal brew houses for the lon- fermenting mix of technologies and market factors of in-process 4G unified communications. Close on the heels of the introduction of Clearwire’s shell open development effort, Verizon launched their OpenDevelopment effort and device specification.

A lot of work still needs to be done: Clearwire’s site looks more like a shell for gathering ideas than a structure for innovation. Nonetheless, both Clearwire and Verizon are embarking on open access developments, the catalysts for creativity of both applications and new business methods that are needed to flesh out revenues for next generation networks.

The differences are significant: Verizon has specified how device suppliers can create new categories of devices but in doing so this shows that most suppliers are at the starting gate and it will take time for development and certifications to take place. This makes clear that devices for the LTE network will take several more months to develop.

Let’s compare factors of the open developments. I include projections based on spectrum, market position and other factor, using common classes of devices and similar network elements. Several factors, e.g. marketing campaigns or apps stores, are not discussed.



Clearwire

Verizon

Mobile Devices

CW should be first to market for mobile devices due to early lead in development. Range, penetration and battery life are weaknesses. CW benefits from the PC/Internet partnerships and rich bandwidth. Laptops, Netbooks, UMDs, and high definition graphics media devices should proliferate.

LTE lags in development compared to WiMAX but VZW hopes to reduce the gap through leverage of existing device suppliers. Availability of LTE ICs are a gating factor. But this gap may be only 1 year.
Smartphones, UMDs, netbooks, with long-term upper bandwidth limits should dominate trends.

Spectrum Characteristics

CW benefits from very large spectrum bandwidth, about 120 MHz. This can be leveraged through smart antenna technologies and SONs/MMR distributed network architecture to deliver unique classes of high bandwidth devices and services.

VZW benefits from long range and penetration which can help reduce power consumption in mobile devices leads to better service factors for low power handheld class devices. The spectrum has less potential for microcell development which impacts bandwidth

Openness

Both efforts will be open for devices and applications. Commercial factors will determine how this works out: the marketing is gated by network deployments and size of market penetration. 3rd Parties will help determine openness by the degree of emphasis they place on the nascent network. Clearwire is dependent on open development.

FCC requires openness in the VZW C-Band 700MHz spectrum.
VZW’s CEO stated that the company must rely on open development to dynamically take advantage of the 700MHz LTE network. The larger size and capitalization of the company makes VZW less dependent on open development.

Breakthrough Strategies:

Both networks will be determined by how well they leverage the characteristics of their spectrum resource through the new field of MIMO-OFDMA technology and nexus of converging market factors



Mode of Deployment

CW can develop microcell, tiered, MESH smart network/SONs deployment architectures that can be leveraged to advantage in a variety of applications scenarios. This might be characterized as a PC/IT centric opportunity but the belittles the creative potential.

VZW benefits most from a more traditional macro-cell architecture that brings lower cost, rural reach, and good use experience more along the lines of 3G. However, VZW can deliver higher bandwidths through their 22 MHz of spectrum than is typical of 3G.

Dominant Architecture

CW has started out with a traditional macro-cell architecture. This should evolve to a distributed, tiered spectrum sub-band architecture. Longer term, this should take advantage of advanced networking methods which leverage Co-MIMO, MU-MIMO, and distributed intelligent network methods.

Microcell network architecture is not as leveraged in sub-1GHz spectrum. The advantage is range and penetration which leads to macrocell dominated architecture. But his has a major advantage for suburban-rural coverage which will find new markets and fits high coverage expectations established by 3G.

Partnerships

CW welcomes participation of Google, Cisco, Comcast, TW, Brighthouse and Intel to share in network and applications development. RAN infrastructure partnerships are necessary but less visible.

VZW partnerships are on infrastructure developments: Alcatel-Lucent and Ericsson. They can be expected to utilize device and applications developers but this may not amount to partnership relationships.

Application Strength

Its early to discuss specific of applications that might be developed unique to either deployment. However, video and other data-rich apps will play a major role for CW. Cisco should be able to leverage their conferencing and intelligent network capabilities into corporate as well as social networking apps. And they certainly won’t be alone.

VZW should exploit MtM, suburban to rural, high mobility and unified communications applications to provide a ‘3G on steroids’ type experience.
The extent of MtM remains a question: MtM has not been well exploited by 3G even though coverage is substantial. Rate structure has to be accommodating.

Weaknesses

Capital and penetration into the market that stems from the spectrum’s range and penetration limitations.
Time to deployment and market development. The advantage CW brings is bandwidth and microcell based apps and service models. But this will take time unless virally enabled.

Cannibalization of 3G revenues into a shared apps and service environment. Time to market is not as much of a problem in the long term as it takes time for deployments, applications and markets to develop.