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Softbank could get 4G by the back door with Willcom rescue plan

10 февраля 2010

With China turning off its low cost PHS (Personal HandyPhone Service) networks, Japan’s Willcom is left as the world’s only significant user of the technology.

This has raised doubts over the commercial viability of its roadmap to a mobile data upgrade for PHS, called XGP, and despite rumors of an acquisition, the operator is now set to file for bankruptcy protection in order to turn itself around.

Willcom, reports the Nikkei news agency, will work out a radical turnaround plan under the auspices of Japan’s Enterprise Turnaround Initiative, with the help of third cellco Softbank, which was previously said to be bidding to acquire the smaller firm. This may still happen, as part of the restructuring, but the main thrust of the plan will be to split Willcom into two entities. One will run the existing PHS business, and the other will build and run the network for high speed services.

The latter will use the 2.5 GHz license awarded to Willcom in 2008, but the firm is likely to abandon XGP and move to another OFDM-based TDD system, either WiMAX or TD-LTE. This unit will be led by Softbank, which would gain access to a 4G-class network and spectrum, without the burden of the legacy PHS business, with its low margins and declining user base.

This arrangement would also get round the conditions set on the 2.5GHz licenses, which barred an incumbent cellco from having a majority stake in a winning bidder. Softbank would presumably take a large, but not controlling, share in the new business, to avoid a long process of reversing this rule, which could have been necessary in the face of a direct takeover plan.

Both top mobile operators, DoCoMo and KDDI, bid in the auction as part of consortia and, along with Willcom, the latter won a license, with its Intel-backed UQ Communications joint venture. This has given KDDI a headstart over rivals in the mobile broadband sector, where UQ’s WiMAX build-out is targeting high margin data plans - important to fend off the rapidly rising, data-driven upstart eMobile - and a wholesale model.

As of the end of September 2009, Willcom’s liabilities stood at JPY173.1bn, including JPY93.5bn in loans. ETIC will oversee the reorganization of the existing services company. If the talks go smoothly, Willcom could be applying for court protection from creditors as early as February. Investment fund Advantage Partners is still considering participating in the turnaround plan.

Hopes that XGP, an OFDM-based technology like WiMAX, would become a standard and ecosystem outside Japan were dashed when China decided not to support a new generation for PHS, and instead ordered the PHS services to be would down over the coming few years, and their spectrum in 1.9 GHz turned over to 3G. As a single operator solution, the OFDMA-based XGP clearly has a limited ecosystem, which could encourage the new unit to seek permission to replace the technology with a more mainstream option like WiMAX or LTE. If the latter, this could also create the combined China-Japan ecosystem, around TD-LTE, originally envisaged for PHS’ successor.

Although initial roll-outs of XGP in Tokyo and elsewhere are said to be delivering very strong performance and spectral efficiency, and release 2.0 will add MIMO and other enhancements next year, there are very few devices. The two chip suppliers are Altair of Israel and WaveSat of Canada, both of which applied WiMAX experience to the creation of XGP silicon, but while this is now incorporated in PC cards and Altair promises a dongle soon, there has not yet been sufficient customer base to attract handset makers. Eran Eshed, head of marketing at Altair, said recently: “There are between 300 and 400 base stations across Tokyo now. XGP is very high capacity, scalable and supports self-instal. But the ecosystem is not robust and OEMs like Sharp are sitting on the fence.”

In May, Altair announced a common platform for WiMAX, TD-LTE (and later FD-LTE) and XGP. All use its O2P software defined processor architecture, with integrated baseband and RF transceivers and protocol stacks from PHY up to NAS layers. One of Altair’s main focuses has been on ultra-low power consumption.


Источник: 4G Trends

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