WiChorus, a WiMAX management product maker, on Tuesday said it took $18 million in funding from new investor Pinnacle Ventures and three existing investors.
San Jose, California-based WiChorus' funding total climbs to $43 million, providing the company with additional resources at a time of economic uncertainty.
“Nobody can say for certain how bad or how long the downturn will be, but that is part of the reason why we sought a cushion just in case the economy impacts the [carrier] rollouts [of WiMAX],” said Renan Jalil, CEO of WiChorus.
Guessing how the economy and in particular the credit crunch will affect carriers, which make up the bulk of WiChorus’ customer base, is turning into a popular sport in the telecommunications market.
“This recession looks different from the 2001 shock because the downturn is likely to be across all sectors,” said David Molony, principal analyst at Ovum. “Last time the telcos were able to respond by cutting spending on their own global and pan-regional network plans. This time the problem is out of the telcos' hands and is wider.”
But Mr. Jalil believes that many of the major WiMAX network projects are already active or in the pipeline and will be unaffected by the current credit crunch.
“Two of the major projects, one in the U.S. in Clearwire and one in Japan, are on track, and many of the other projects don’t require billions of dollars. So far we have not seen a direct economic impact,” Mr. Jalil said.
WiMAX, a wireless broadband technology that competes directly with DSL and cable modems and indirectly with services such as cellular broadband and WiFi, has moved slowly from concept to deployment.
But it has picked up some steam in the last year. In May Google and cable operators Time Warner Cable, Comcast, and Bright House joined longtime WiMAX backer Intel and carriers Sprint and Clearwire in a $14.5 billion investment in a nationwide WiMAX network in the United States.
The high-profile investment was the largest to date in WiMAX and an opportunity for product suppliers to begin seeking some much-needed economies of scale and lower unit costs.
“There may be some credit impact eventually, but if you already have the money in the bank like Clearwire does you just go ahead and roll out your network,” Mr. Jalil said.
While current high-profile WiMAX projects tend to be in developed countries such as the United States and Japan, a large percentage of the projects are likely to be centered in emerging markets.
Building wireless networks in places that don’t currently have broadband communications would be a lot less expensive than deploying wireline networks.