Does the market have a workable business plan for leveraging femtocell topology for WiMAX?
I believe we do. If you look at Sprint WiMAX plans they are putting femtocells in McDonalds and various such places. It is definitely part of other service provider plans as well, such as in Korea. These service providers realize that having just the macro cell infrastructure is not enough for WiMAX.
Do you see CPE vendors working right now on integrating Mobile WiMAX with the existing residential gateways so that it could be affordable to a certain extent?
Absolutely. Most of the CPE guys are on it. WiMAX started initially with fixed nomadic deployments which is really CPE based. On the CPE side you have many types of devices which are either just for data or the residential gateway. Many of them, particularly ODMs in Taiwan like Quanta, Alpha, Gemtech, etc. have some kind of residential gateways for this.
Right now how mobile and fixed WiMAX end users do you see?
If I talk about pure WiMAX it’s around half a million subscribers.
What sort of subscriber forecasts are you working around?
Take Sprint again as an example. Sprint will cover 100m users mid next year. Let us say they have 10% penetration. That means about 10 million subscribers that you can reach in North America quite quickly. This is all a question of timing more than a question of technology. Within our plan we see around 30 million subscribers by 2010 which is not very aggressive in reality.
Handset vendors like Nokia, Samsung, and Motorola do not seem that aggressive about WiMAX.
Samsung and Motorola are pushing with Motorola working with its own silicon. May be Nokia is not so aggressive. One aspect that people forget when they think about WiMAX, is that this technology comes in from the WiFi angle. So it is there to provide data first. And when you take it from this angle the first application of this super WiFi is not in the phone. I believe we will see mobile WiMAX happening first, before really reaching the phone market and then you can start to see devices where you will have dual mode like CDMA-WiMAX and GSM-WiMAX, etc. This explains in my opinion why there is no big push.
Cell operators are pushing 3G services and ISPs are pushing WiMAX. Ultimately whom do you see winning? Or would there be trends defined by geographies?
Take the best 3G data technology, say HSDPA, and compare it to the WiMAX. You find that WiMAX is 3 times better than HSDPA in terms of throughput. Forget the speed. Let us think a little bit in terms of application. Do you think that the 3G operator is able to give me always ON connection. I am not asking 1MB, just 500Kbps on my device for a flat rate. They will never do this because if they do, they will kill their networks in terms of voice application. The 3G network is there to offer data as complementary service to voice service. Data will mean the death of 3G networks in terms of load.
What proportion of service providers do you think will adopt WiMAX as opposed to other competing technology?
Almost 90% of the industry today is in the camp of WiMAX. On the equipment side only Ericsson and Qualcomm are outside that camp. Even Qualcomm today is getting very quiet than what they used to say a year ago.
WiMAX has so far penetrated mostly those areas where you find no or little infrastructure. These markets will not have a great deal of demand in terms of features. Does that make you complacent or less innovative?
Well, even if you take a standard like WiMAX, a chip from Sequans is not the same as someone else’s although we are both compliant with the standard. It is about a lot of performance stuff that you need to implement. When you talk about WiMAX going to the handset you need to have very low power. We are talking about high throughputs. So the innovation will not stop in my opinion on this side.
There is already too much load on a cell phone. Adding a WiMAX chip will be an added load. How are handset vendors planning to solve these issues?
Obviously it is a challenge. And the only solution for this is integration. For example, you see today WiFi being integrated with other technologies like Bluetooth.
Apart from pure Internet access, what applications are you seeing taking off on WiMAX networks?
Today it is Internet access and some limited VoIP. When mobile WiMAX catches on, I believe everything related to gaming, peer to peer applications, downloading and whatever … it would be over WiMAX.
And what about Video over WiMAX?
You will have Video I believe but its not going to be broadcast. It will be kind of video you have on 3G or what we have today on the PC. Essentially WiMAX is not suitable for broadcast. It will cost you a lot in terms of traffic if you start putting a lot of video channels.
WiMAX is a big threat to cell operator revenues because voice traffic will be offloaded on to the WiMAX networks? Does that mean that WiMAX platform vendors will have to look for greenfield and new cell operators to push WiMAX?
I believe you have two types of service providers that can push WiMAX. For the new operators and new comers that don’t have networks, obviously WiMAX is the cheapest and an elegant way to get started. You start with data and then you put VoIP on top of it. However I don’t believe that the 3G or the cellular operators can afford to wait and watch because if they sit aside and let the new guys play, they will lose everything. That is why we see companies like Vodafone and Sprint embracing WiMAX.
What we saw in VoIP is that incumbent service providers opted for upgrades to legacy TDM equipment rather than pure switch replacement. Can we extend that analogy and say that cell operators will evolve along the 3G path and do less of WiMAX-from-scratch?
I believe you are right. I mean that is good analogy. Yes.
How is Sequans doing in terms of business turnover?
Our target for this financial year was generating revenues between $12 million and $19 million. So far we are near $16 million. Next year we are targeting $40 million. That depends on mobile WiMAX deployments such as that of Sprint.
Are you selling more CPE or the core network WiMAX processors?
We are selling more CPE in terms of Silicon. For each base station we have 10 CPEs. So the ratio is 1:10. In future it will get close to 1:30 and 1:50 because at the beginning you deploy a lot of networks which is mainly base stations and may be limited number of CPE. Later you add on CPE.
Should we expect Sequans expanding into other areas in near future?
Absolutely.
And those would be wireless or some other technologies?
No I believe we will stay within the wireless space.