Doubts remain among operators and analysts about WiMax

By Victoria Shannon

In Japan, the country that set the gold standard for mobile phone technology in the 1990s, it is probably no shocker that nearly 20 companies have raised their hands to be part of what may be the next wireless communications sensation.

By Friday's deadline, companies ranging from Intel to Goldman Sachs and NTT DoCoMo had applied in one of three joint ventures for the two mobile WiMax licenses to be granted by the Japanese government by the end of the year. A fourth applicant, Wilcom, is bidding on its own.

WiMax is the same technology in which Samsung in South Korea, Sprint Nextel in the United States and Intel around the world are staking billions of dollars in research and capital investments.

But doubts remain among operators and analysts about whether WiMax will triumph. Today, the number of actual WiMax users around the globe can be counted in the tens of thousands, compared to the nearly one billion using the Internet and more than two billion using mobile phones. And today's use of the mobile Internet over third-generation cellphone networks has lagged below expectations in most of the world.

Still, the bidders in Japan are counting on WiMax. It is a wireless technology that, like Wi-Fi and its hot spots, would let users sign onto the Internet with their laptops or mobile phones in public locations. But unlike Wi-Fi, this mobile Internet technology would work over large areas, handing off a signal from antenna to antenna and allowing a device to keep a connection while in motion.

A handful of personal computer manufacturers, including Lenovo and Acer, have committed to using Intel's new WiMax chips, due on the market in May. Nokia, meanwhile, said last month that it would make its N-series of tablet devices WiMax-enabled with Intel products when they ship next year.

But the future of WiMax is largely a leap of faith, and how Japan's licensees proceed will be studied for clues to deployment elsewhere.

At a technology conference in Budapest last week, Sachio Semmoto, founder and chief executive of eMobile, a 32 percent partner in one of the bidding consortia, agreed that the mobile broadband data market will explode in the next four or five years.

But the technology behind it may not be WiMax. "There is no measurable success with WiMax yet in the world," said Semmoto, who also started Japan's second-largest cellphone operator, KDDI.

EMobile has joined with Softbank and a handful of Internet service providers to bid for a license in a group called Open Wireless Network. They are pitted against a partnership called Wireless Broadband, which is led by KDDI and includes Intel as an investor.

The third group is headed by the Japanese mobile phone leader, NTT DoCoMo, and joined by Acca Networks, a fixed broadband provider, and KT of South Korea, which has drawn about 67,000 subscribers to a similar service called WiBro that it started there last year.

Kyodo News predicted last week that Wilcom was "highly likely" to get one of the two new licenses, leaving the other three groups to compete for the remaining spot. The Japanese government is requiring license holders to start services within three years and cover at least 50 percent of the nation's population within five years.

"If Intel can't make a successful WiMax business in Japan, my opinion is it's gone," Semmoto said, cautioning that Intel is "a total amateur" in the phone business.

If that worst-case scenario does happen, several other mobile broadband technologies - for instance, those called HSPA, LTE, UMB and iBurst - are in the wings ready to take the spotlight.

But the major players are not pulling back from WiMax quite yet. Sprint has committed $5 billion over the next three years to WiMax and said last month that Chicago and the Washington-Baltimore area would be its first trial markets at the end of this year, before a commercial rollout in 2008. And at an event for developers last week, Paul Otellini, Intel's CEO, predicted that 150 million people would be covered by WiMax by the end of 2008.